M/s. Control & Switchgear Contractors Ltd, New Delhi V. Addl. CIT, New Delhi

MA 198/DEL/2011

• Counselvise Citation: [2012] 123 COUNSELVISE.COM (IT) 9324 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 5 month(s) 23 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 30-11-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 07-06-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SHUMANA SEN
• Keywords: Depreciation; Capital expenditure

Judgement Text

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH FRIDAY (E), NEW DELHI BEFORE SHRI S.V. MEHROTRA, ACCOUNTANT MEMBER & SHRI C.M. GARG, JUDICIAL MEMBER M.A NO. 198/DEL/2011 [IN ITA NO. 2972/DEL/2009] ASSESSMENT YEAR: 2005-06 M/S CONTROL & SWITCHGEAR CONTRACTORS LTD., VS. AD DL. CIT, 222, OKHLA INDUSTRIAL ESTATE, NEW DELHI 20. RA NGE-3, PAN NO. AAACT0682J NEW DELHI. (APPLICANT) (RESPONDENT) APPLICANT BY: SH. ANIL BH ALLA, CA RESPONDENT BY: MS. SHUMANA SEN , SR.DR ORDER PER S.V. MEHROTRA, A.M. THE ASSESSEE HAS FILED THIS MISCELLANEOUS APPLICA TION FOR RECTIFICATION OF CERTAIN MISTAKES ALLEGEDLY HAVING BEEN KEPT IN THE ORDER OF TRIBUNAL DATED 27/12/2010. 2. BRIEF FACTS, RELEVANT TO THIS APPLICATION ARE TH AT ONE OF THE GROUND BEFORE THE TRIBUNAL WAS THAT LD. CIT(A) HAD ERRED B OTH ON FACTS AND IN LAW IN UPHOLDING THE ACTION OF LD. ASSESSING OFFICE R IN DISALLOWING ON ADHOC BASIS BUILDING, REPAIRS AND MAINTENANCE EXPEN SES AMOUNTING TO RS. 41,63,344/- ALLEGEDLY ON THE GROUND OF BEING CA PITAL EXPENDITURE. IT MA NO. 198/DEL/2011 2 IS STATED IN THE MISCELLANEOUS APPLICATION THAT TRI BUNAL NOTICED ON PAGE 4 OF ITS ORDER THE FOLLOWING OBSERVATIONS OF AO AS UNDER: - THE BILLS INDICATE THAT THE EXPENDITURE PERTAINED TO FLOOR DISMANTLING, EARTH EXCAVATION, COLUMN FOOTING, COLUMN AND BEAM DISMANTLING, ROOF DISMANTLING, WALL DISMANTLING, WINDOW PROVIDING AND FIXING, STAIR-CASE DISMANTLING, ELECTRIC WORKS, KOTA STONE, PLASTERING AND DEBRIS SHIFTING ETC. AF TER CONSIDERING THE EXPLANATION OF THE ASSESSEE, THE EXPENDITURE WAS HELD TO BE IN THE NATURE OF CAPITAL EXPENDITURE. HOWEVER, DEDUCTION OF DEPRECIATION WAS ALLOWED @ 10% OF THE EXPENDITURE, LEADING TO NET ADDITION OF RS. 37,47,010/-. 3. IT IS FURTHER SUBMITTED THAT IN PARA 3.2 TRIBUNA L NOTICED THE FOLLOWING OBSERVATIONS OF LD. CIT(A) WHICH READS AS UNDER: - AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, IT HAS BEEN MENTIONED THAT THE AMOUNT IS SPENT TOWARDS EARTH EXCAVATION, FLOOR DISMANTLING, COLUMN FOOTING, COLUMN AND BEAM DISMANTLING, ROOF DISMANTLING, WALL DISMANTLING, WINDOW PROVIDING AND FIXING, STAIR-CASE DISMANTLING, ELECTRIC WORKS, KOTA STONE, PLASTERING AND DEBRIS SHIFTING, WOOD PROVIDING WINDOW AND GATES, MAKING BEAM TO THE BALCONY, PUTTING UP SLAB FROM GROUND FLOOR TO TOP, ELECTRIC WORK, USING KOTA STONE, WHITE WASHING, PROVIDING THERMOCOL, MA NO. 198/DEL/2011 3 PLASTERING ETC. THE LD. CIT(A) WAS OF THE VIEW THA T THE ASSESSEE HAS CARRIED OUT MAJOR CONSTRUCTION WORK, WHICH GIVES BENEFIT OF ENDURING NATURE TO THE ASSESSEE COMPANY. THEREFORE, THE ACTION OF THE ASSESSING OFFICER HAS BEEN UPHELD. 4. THEREAFTER, IT IS SUBMITTED THAT IN PARA 4.1 OF ITS ORDER, TRIBUNAL NOTICED THE ARGUMENTS OF LD. DR WHICH READS AS UNDE R: - THESE PAPERS SHOW THAT THE STRUCTURE WAS DEMOLISHED AND A TOTALLY NEW STRUCTURE WAS ERECTED. THEREFORE, THE EXPENDITURE IS CAPITAL IN NATURE. 5. AFTER CONSIDERING ALL THESE ASPECTS AT PAGE 7 IN PARA 5, TRIBUNAL OBSERVED AS UNDER: - WE HAVE CONSIDERED THE FACTS OF THE CASE, AND THE SUBMISSIONS MADE BEFORE US. ON PERUSAL OF THE BILLS, WE FIND THAT THE EXPENDITURE HAS BEEN INCURRED ON FLOOR DISMANTLING, COLUMN AND BEAM DISMANTLING, ERECTING NEW COLUMNS AND BEAMS, STAIR-CASE DISMANTLING PURCHASING MS BAR-TOR STEEL, PURCHASING WOOD FOR DOORS AND WINDOWS FIXING THEM, REMOVING DEBRIS ETC. AND PAYMENT TO THE CONTRACTOR. THUS, IT IS NOT A CASE OF REPAIRIN G THE EXISTING STRUCTURE BUT OUT OF DEMOLISHING THE EXISTING STRUCTURE FOR ERECTING A NEW STRUCTURE MA NO. 198/DEL/2011 4 WHICH IS SAFE AND CAN BE USED EFFECTIVELY FOR THE PURPOSE OF THE BUSINESS OF MANUFACTURING. 6. FURTHER IN PARA 5.6 ON PAGE 12 TO 13, TRIBUNAL O BSERVED AS UNDER: IT HAS BEEN SEEN EARLIER THAT THE CASE BEFORE US IS NOT ONE OF REPAIRS TO BUILDING BUT ONE OF DEMOLISHING THE EXISTING BUILDING AND ERECTING A NEW BUILDING. OBVIOUSLY, THE EXPENDITURE IS NOT IN THE NATURE OF CURRENT REPAIRS AS HELD IN THE CASE OF BALLIMAL NAVAL KISHORE AND ANOTHER (SUPRA). FURTHER THE CASE OF DELHI PRESS SAMACHAR PATRA PRIVATE LIMITED INVOLVED REPAIRING, RE-ENFORCING OF THE BUILDING AND AIR CONDITIONING ROOMS AND PLANT. SUCH IS NOT THE CASE THERE. THIS IS A CASE WHERE T HE STRUCTURE HAS BEEN REPLACED BY ERECTING NEW COLUMNS AND BEAMS, WALLS, RE-LAYING THE FLOOR AND THE ROOF AND PROVIDING NEW DOORS AND WINDOWS. 7. IN THE BACKDROP OF THESE FINDINGS, IT IS STATED THAT TRIBUNALS OBSERVATIONS THAT THE ISSUE IS NOT ONE OF REPAIRS O R BUILDING BUT ONE OF DEMOLISHING THE EXISTING BUILDING AND ERECTING A NE W BUILDING IS ERRONEOUS BECAUSE TRIBUNAL HAS NOT TAKEN NOTE OF TH E FACT THAT FROM THE DETAILS IT WAS EVIDENT THAT EXPENDITURE ON DISMANTL ING WAS ONLY RS. 2,26,14/-. BY INCURRING THIS EXPENDITURE THERE COU LD NOT BE COMPLETE DEMOLITION OF BUILDING. IT IS SUBMITTED THAT THIS MISTAKE HAS OCCURRED MA NO. 198/DEL/2011 5 BECAUSE OF NOT CONSIDERING THE FACTS AND MATERIAL A VAILABLE BEFORE TRIBUNAL IN THE FORM OF SYNOPSIS. 8. LD. DR SUBMITTED THAT TRIBUNAL HAS CONSIDERED TH E ENTIRE MATERIAL ON RECORD AND THEN HAS ARRIVED AT ITS FINDING. THE REFORE, ASSESSEE MERELY WANTS REVIEW OF THE ORDER OF THE TRIBUNAL. 9. WE HAVE CONSIDERED THE SUBMISSION OF BOTH THE PA RTIES AND HAVE PERUSED THE RECORD OF THE CASE. 10. THE FINDINGS OF TRIBUNAL REPRODUCED EARLIER IN PARA 5 AND 6 CLEARLY SHOWS THAT AFTER CONSIDERING THE NATURE OF EXPENDIT URE WITH REFERENCE TO BILLS, TRIBUNAL CONCLUDED THAT IT WAS NOT A CASE OF REPAIR OF THE EXISTING STRUCTURE BUT OF DEMOLISHING THE EXISTING STRUCTURE FOR ERECTING A NEW STRUCTURE WHICH WAS SAFE AND COULD BE USED EFFECTIV ELY FOR THE PURPOSE OF THE BUSINESS OF MANUFACTURING. THUS, THIS CONCLU SION CANNOT BE REVIEWED BY THE TRIBUNAL IN THE PROCEEDINGS U/S 254 (2) OF THE ACT. THE TRIBUNALS ORDER IS TO BE READ IN ENTIRETY TO FIND OUT ITS TRUE IMPORT. LD. COUNSELS CONTENTION THAT TRIBUNAL HAS NOT CONSIDER ED THE SYNOPSIS AND THE QUANTUM OF EXPENDITURE INCURRED IN DEMOLISHING THE STRUCTURE CANNOT BE ACCEPTED PARTICULARLY WHEN TRIBUNAL WAS SPECIFIC ALLY REFERRED TO THE BILLS FOR COMING TO THE CONCLUSION THAT THE EXPENSE S WERE CAPITAL IN MA NO. 198/DEL/2011 6 NATURE. WE, THEREFORE, DO NOT FIND ANY APPAREL MIS TAKE IN THE TRIBUNALS ORDER REQUIRING RECTIFICATION. IN THE RESULT, MISCE LLANEOUS APPLICATION STANDS DISMISSED. 11. IN THE RESULT, THE MISCELLANEOUS APPLICATION FI LED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30/11/2012 SD/- SD/- (C.M. GARG) (S.V. MEHROTRA) JUDICIAL MEMBER ACCOUNTANT MEMB ER DATED: 30.11.12 *KAVITA COPY TO: 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR TRUE COPY BY ORDER ASSISTANT REGISTRAR