M/s Punjab Tractors Ltd., Mohali V. ACIT, Patiala

MA 11/CHANDI/2015

• Counselvise Citation: [2015] 124 COUNSELVISE.COM (IT) 2963 (ITAT-CHANDIGARH)
• Duration Of Justice: 5 month(s) 14 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 01-05-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 01-05-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 17-11-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S K MITTAL
• Assessee Lawyers: RAJAT JUNEJA
• Keywords: Depreciation; Revenue expenditure; Capital expenditure
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES A CHANDIGARH BEFORE JUSTICE (RETD,) DEV DARSHAN SUD, PRESIDENT AND SHRI T.R. SOOD, ACCOUNTANT MEMBER MA NOS.8,9,10 & 11/CHD/2015 IN ITA NOS. 599,600, 644 & 645/CHD/2013 ASSESSMENT YEAR: 2008-09 & 2009-10 M/S PUNJAB TRACTORS LTD. VS. THE ACIT, MOHALI CIRCLE PATIALA PAN NO. AAACP8578K (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI RAJAT JUNEJA RESPONDENT BY : SHRI S.K. MITTAL DATE OF HEARING : 01/05/2015 DATE OF PRONOUNCEMENT : 01/05/2015 ORDER PER T.R.SOOD, A.M. MA NO. 8 & 9/CHD/2015 THROUGH THIS MISC. APPLICATION ASSESSEE HAS SOUGHT RECTIFICATION OF ERRORS WHICH HAVE CREPT INTO THE ORDER OF TRIBUN AL IN ITA NO. 599 & 600/CHD/2013. 2. LD. COUNSEL FOR THE ASSESSEE POINTED OUT THAT IS SUE REGARDING NATURE OF EXPENDITURE RELATING TO REPAIR AND MAINTENANCE HAS BEEN ADJUDICATED VIDE PARA 7. IT WAS BASICALLY OBSERVED THAT CONSIDERING THE CIRCUMSTANCES 10% OF THE ITEMS LISTED BY BY ASSESSING OFFICER SHOULD BE TREA TED IN THE NATURE OF CAPITAL EXPENDITURE. HOWEVER, WHILE GIVING THE FINAL DIRECT ION A TYPOGRAPHICAL ERROR HAS BEEN COMMITTED BY STATING THAT AO SHOULD TREAT 10% OF THE REPAIR BUILDING , PLANT & MACHINERY REPAIR EXPENSES AS REVENUE EXPEND ITURE. 3. AFTER CONSIDERING THE SUBMISSIONS WE ARE OF THE OPINION THAT ERROR HAS CREPT IN THE ORDER OF TRIBUNAL INADVERTENTLY. THE P ERUSAL OF PARA 7 CLEARLY SHOWS 2 THAT TRIBUNAL HAS REACHED THE CONCLUSION THAT ONLY 10% OF THE EXPENDITURE ON ACCOUNT OF ITEMS LISTED BY THE AO SHOULD BE CONSIDE RED AS CAPITAL EXPENDITURE. THEREFORE WE RECTIFY THIS ORDER BY SUBSTITUTING THE LAST SIX LINES OF THE PARA 7 OF ITA NOS. 599 & 600/CHD/2013 BY FOLLOWING LINES : ACCORDINGLY WE SET ASIDE THE ORDER OF THE LD. CIT (A) AND DIRECT THE ASSESSING OFFICER TO TREAT 10% OF THE IT EMS FROM BUILDING REPAIR AS WELL AS PLANT & MACHINERY REPAIR AS LISTE D BY THE ASSESSING OFFICER AS REVENUE EXPENDITURE. WE MAY FURTHER CLAR IFY THAT ON CAPITAL PORTION OF THE ITEM REQUISITE DEPRECIATION MAY ALSO BE ALLOWED. 4. IN THE RESULT MISC. APPLICATIONS ARE ALLOWED. MA NO. 10 & 11/CHD/2015 5. THROUGH THESE MISCELLANEOUS APPLICATIONS, ASSE SSEE HAS SOUGHT RECTIFICATION OF ERRORS WHICH HAVE CREPT INT O ORDER OF TRIBUNAL IN ITA NOS. 644 AND 645/CHD/2013. 6. THE LD. COUNSEL FOR THE ASSESSEE REFERRED TO PAR A 19 OF THE ORDER AND POINTED OUT THAT TRIBUNAL HAS GIVEN A DIR ECTION THAT IF THERE IS NO EXPENDITURE, THEN NO PROPORTIONATE DISA LLOWANCE SHOULD BE MADE. HE SUBMITTED THAT IN FACT IN CASE OF ASSESSEE, SOME EXPENDITURE WAS INCURRED AFTER NETTING OFF INT EREST INCOME. 7. AFTER CONSIDERING THE SUBMISSIONS, WE FIND THAT THIS SUBMISSION IS NOT CORRECT, THOUGH IT HAS BEEN ADVAN CED AS A CONCESSION IN FAVOUR OF THE REVENUE. CAREFUL PERUS AL OF THE PAPER BOOKS PAGE NO. 51 FOR ASSESSMENT YEAR 2008-0 9 CLEARLY SHOWS THAT INTEREST EXPENDITURE WAS RS. 1.14 CRORES WHEREAS INCOME WAS RS. 15.98 CRORES WHICH MEANS THERE WAS N ET INCOME. 8. SIMILARLY IN ASSESSMENT YEAR 2009-10, PERUSAL OF PAGE 25 OF THE PAPER BOOK CLEARLY SHOWS THAT INTEREST EXPENDIT URE WAS RS. 3 74.05 LACS WHEREAS INCOME WAS RS. 804.40 LACS, WHIC H MEANS THERE WAS NET INCOME. THEREFORE, CLEARLY THERE IS NO ERROR IN THE ORDER OF TRIBUNAL. 9. THE LD. COUNSEL FOR THE ASSESSEE POINTED OUT THA T SECOND ERROR WAS WITH RESPECT TO NON CONSIDERATION OF DECI SION OF SOME OTHER BENCHES WITH REGARD TO THE ISSUE THAT RULE 8D COULD NOT BE APPLIED IN RESPECT OF INVESTMENT MADE IN SUBSIDIARI ES. 10. AFTER CONSIDERING THE SUBMISSIONS CAREFULLY, WE FIND THAT TODAY SHRI. RAJAT JUNEJA APPEARED WHO WAS NOT THE C OUNSEL WHO HAS ARGUED THE APPEALS, WHICH WERE INFACT ARGUED BY SHRI SUMEET KHURANA. DURING THE HEARING, IT WAS MADE CL EAR TO SHRI KHURANA THAT THERE IS NO EXCEPTION IN SECTION 14A O R RULE 8D IN RESPECT OF INVESTMENT MADE IN THE SUBSIDIARIES. IT WAS ALSO POINTED OUT TO HIM THAT THE DECISIONS OF HON'BLE PU NJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS WINSOME TE XTILE 319 ITR 204 AND CIT VS HERO CYCLES 323 ITR 518 WERE NOT APP LICABLE BECAUSE SAME WERE RENDERED FOR ASSESSMENT YEAR 2004 -05 AND HAD ALREADY BEEN DISTINGUISHED BY THE CHANDIGARH BE NCH OF TRIBUNAL IN CASE OF CHADHA SUPER CARS VS ACIT, LUDHIANA ITA NO. 1241/CHD/2011 AND ITA 36/CHD/2012. IT WAS ALSO POI NTED OUT THAT EVEN HON'BLE PUNJAB & HARYANA HIGH COURT IN A LATER DECISION IN CASE OF CIT VS PUNJAB STATE INDUSTRIAL DEVELOPMENT CORPORATION LTD. (ITA NO. 565 OF 2006) VIDE ORDER D ATED 18.07.2011 HAS CLEARLY OBSERVED THAT PROPORTIONATE DISALLOWANCE IS TO BE MADE WHEREVER IT IS PROVIDED. WHEN THESE ISSUES WERE CONFRONTED TO LD. COUNSEL FOR THE ASSESSEE, HE FAIR LY DID NOT ARGUE THE MATTER FURTHER. SINCE TODAY, A DIFFERENT COUNSEL HAS 4 COME WHO IS NOT AWARE OF THESE FACTS AND THEREFORE, WE DECLINE TO MAKE ANY COMMENTS. HOWEVER, THE TRIBUNAL HAS ADJ UDICATED THE ISSUE REGARDING APPLICABILITY OF RULE 8D IN DET AIL IN PARAS 16 TO 19 AND WE FIND NO ERROR IN THE SAME. THEREFORE, THIS GROUND IS ALSO REJECTED. 11. IN THE RESULT, MISCELLANEOUS APPLICATIONS ARE D ISMISSED. IN THE RESULT MA NO. 8 & 9/CHD/2015 ARE ALLOWED. IN THE RESULT MA NO. 9 & 10/CHD/2015 ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 01/05/20 15 SD/- SD/- [JUSTICE (RETD.] DEV DARSHAN SUD] (T. R. SOOD) PRESIDENT ACCOUNTANT MEMBER DATED : 01/05/2015 AG COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT, TH E CIT(A), THE DR