ADITYA BIRLA NUVO LTD, V. ASST CIT 3(2),

MA 219/MUM/2011

• Counselvise Citation: [2012] 123 COUNSELVISE.COM (IT) 7830 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 5 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 13-03-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: I
• Next Hearing Date: 13-01-2012
• Assessment Year: 1995-1996
• Appeal Filed On: 07-04-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: JI TENDRA YADAV
• Assessee Lawyers: J D MISTRY
• Keywords: Capital asset; Revenue expenditure; Capital expenditure
• Section: 37(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, G, BENCH BEFORE SHRI D.K. AGARWAL, J.M. AND SHRI RAJENDRA SINGH, A.M. MA NO: 219/MUM/2011 ARISING OUT OF : ITA NO.3614/M/2002 ASSESSMENT YEAR : 1995-96 M/S. ADITYA BIRLA NUVO LTD. (FORMERLY INDIAN RAYON AND INDUSTRIES LTD.) A-4, ADITYA BIRLA CENTRE S.K. AHIRE MARG, WORLI MUMBAI-400 030. PAN NO.: AAACI 1747 H ASSTT. COMMISSIONER OF INCOME TAX -3(2) MUMBAI. (APPLICANT) VS. (RESPONDENT) APPLICANT BY : SHRI J.D. MISTRY RESPONDENT BY : SHRI JITENDRA YADAV DATE OF HEARING : 17.02.2012 DATE OF PRONOUNCEMENT : 13.03.2012 ORDER PER RAJENDRA SINGH (AM). THIS MISCELLANEOUS APPLICATION HAS BEEN FILED BY THE ASSE SSEE REQUESTING FOR RECALL OF THE ORDER DATED 28.2.2010 OF THE TRIBUNAL IN ITA NO.3614/M/02. THE REQUEST FOR RECALL HAS BEEN MAD E ON THE GROUND OF LACK OF ADEQUATE OPPORTUNITY, INCORRECT APPL ICATION OF JUDGMENT CITED, NON-CONSIDERATION OF THE HIGH COURT JUD GMENT, THE JUDGMENT BEING CONTRARY TO THE JURISDICTIONAL HIGH CO URT AND THE DECISION OF THE TRIBUNAL AND SOME FACTUAL ERRORS. 2. IT WOULD BE APPROPRIATE TO GIVE A BRIEF BACKGROUN D OF THE CASE BEFORE WE PROCEED TO DEAL WITH THE MISCELLANEOUS APPLICA TION. THE MA NO.219/M/2002 ARISING OUT OF ITA NO.3614/M/2002 A.Y:05-96 2 REVENUE IN THE GROUND NO.6 HAD RAISED DISPUTE REGARDI NG DELETION OF ADDITION BY CIT(A) IN RELATION TO EXPENDITURE INCURR ED ON CONSTRUCTION OF ACCESS ROAD TO THE FACTORY AND LAYING OF 132 KV ELECT RIC TRANSMISSION LINE IN RELATION TO BIRLA PERICLASE PLANT. THE BIRLA PERICLASE PLANT WAS A NEW LINE OF BUSINESS. THE ASSESSEE ARGUED THAT IT WAS A MULTI-PRODUCT AND WELL DIVERSIFIED COMPANY HAVING SEVER AL UNITS IN WHICH THERE WAS COMPLETE INTERCONNECTION, INTERLACING, INTERDEPENDENCE AND UNITY OF CONTROL AND THEREFORE, T HE NEW UNIT WAS PART OF THE EXISTING BUSINESS. THE AO HOWEVER DISALLOWE D THE EXPENDITURE AS CAPITAL EXPENDITURE. IN APPEAL, THE C IT(A) AFTER OBSERVING THAT THE ASSESSEE WAS NOT OWNER OF THE APPROACH ROAD AND ALSO AFTER REFERRING TO SOME JUDGMENTS ALLOWED THE CLAI M OF THE ASSESSEE AGGRIEVED BY WHICH, REVENUE FILED APPEAL BEFOR E THE TRIBUNAL. 2.1 AT THE TIME OF HEARING OF THE APPEAL, THE LD. A R FOR THE ASSESSEE ARGUED THAT THE ISSUE WAS COVERED IN FAVOUR OF THE ASSES SEE BY THE JUDGMENT OF THE HONBLE BOMBAY HIGH COURT IN THE CASE O F CIT VS. EXCEL INDUSTRIES LTD. (122 ITR 995) AND BY THE DECISION OF THE LUCKNOW BENCH OF THE TRIBUNAL IN THE CASE OF INDO GULF CORPORA TION VS. ACIT (715/LUCK/1). THE LD. AR ALSO PLACED RELIANCE ON THE F OLLOWING JUDGMENT IN SUPPORT OF THE CASE :- I) 172 ITR 257(SC) CIT VS ASSOCIATED CEMENT CO. LTD. II) 125 ITR 293(SC) L.H. SUGAR FACTORY AND OIL MILLS(P.)L TD. VS. CIT III) 300 ITR 35 (DEL.) CIT. VS. SAW PIPES LTD. 2.2 THE LD. DR HAD ARGUED THAT BIRLA PERICLASE PLANT WAS A NEW PLANT WHICH WAS UNDER CONSTRUCTION DURING THE RELEVANT YEAR AN D HAD STARTED COMMERCIAL OPERATION FOUR YEARS AFTER THE END OF THE R ELEVANT YEAR, AND THEREFORE, EXPENDITURE COULD NOT BE ALLOWED A RE VENUE EXPENDITURE MA NO.219/M/2002 ARISING OUT OF ITA NO.3614/M/2002 A.Y:05-96 3 BEING RELATED TO THE PLANT UNDER CONSIDERATION. THE BENCH THEREAFTER RE-FIXED THE CASE FOR SEEKING CLARIFICATION AS TO WHETHE R PLANT HAD BECOME OPERATIONAL OR NOT. THE LD AR FOR THE ASSESSEE SU BMITTED THAT THIS WAS NOT A RELEVANT FACTOR IN DECIDING THE GROUND A ND ARGUED THAT THE EXPENDITURE HAD TO BE ALLOWED AS REVENUE EXPENDI TURE EVEN IF THE PLANT HAD NOT BECOME OPERATIONAL DURING THE YEAR. I T WAS FURTHER SUBMITTED THAT THE ISSUE WAS COVERED BY THE JUDGMENT OF THE HONBLE HIGH COURT OF BOMBAY IN CASE OF CIT VS. EXCEL INDUSTRIES LTD, (SUPRA) AND THE JUDGMENT OF HONBLE HIGH COURT OF DELHI IN CA SE OF SAW PIPES LTD. (SUPRA). HE, HOWEVER, ADMITTED THAT APPROACH ROA D WAS LINKED TO THE NEW PLANT. THE LD. DR POINTED OUT THAT THE PLA NT HAD STARTED COMMERCIAL PRODUCTION ONLY IN FEB.98 WHICH WAS CLEAR F ROM PAGE-27 OF THE ORDER OF CIT(A). THE EXPENDITURE INCURRED IN RELATION TO NEW PLANT WHICH WAS STILL UN-CONSTRUCTED WAS NOT REVENUE EX PENDITURE. 3. THE TRIBUNAL IN THE ORDER DATED 28.2.2010 HAD CON SIDERED ALL THE ARGUMENTS ADVANCED BY BOTH PARTIES AND ALSO JUDGMENTS RE LIED UPON. THE TRIBUNAL NOTED THAT, UNDOUBTEDLY, THE NEW PLANT WAS UNDER CONSTRUCTION AND HAD STARTED COMMERCIAL PRODUCTION ONLY 4 YEARS AFTER THE RELEVANT YEAR. THE TRIBUNAL ALSO OBSERVED THAT N O DOUBT THE NEW PLANT WAS PART OF THE EXISTING BUSINESS AS THERE WAS A CO MPLETE INTERDEPENDENCE, INTER-CONNECTION AND UNITY OF CONTROL OF ALL BUSINESSES BEING DONE BY THE ASSESSEE BUT EACH AND EVERY EXPENDITURE INCURRED IN THE BUSINESS COULD NOT BE ALLOW ED AS REVENUE EXPENDITURE. THE TRIBUNAL OBSERVED THAT ONLY REVENUE EXPENDITURE INCURRED FOR THE PURPOSE OF EXISTING BUSINESS COULD BE AL LOWED AND NOT CAPITAL EXPENDITURE. THE TRIBUNAL FURTHER OBSERVED T HAT THE CASE OF INTEREST ON BORROWINGS WAS DIFFERENT AS UNDER 36(1)(II I) INTEREST ON BORROWED CAPITAL HAD TO BE ALLOWED IF THE CAPITAL IS B ORROWED FOR THE MA NO.219/M/2002 ARISING OUT OF ITA NO.3614/M/2002 A.Y:05-96 4 PURPOSE OF BUSINESS IRRESPECTIVE OF THE FACT WHETHER CAPITA L IS USED FOR REVENUE EXPENDITURE OR FOR ACQUISITION OF CAPITAL ASSET. THE SAME, HOWEVER WILL NOT BE TRUE IN CASE OF THE OTHER EXPENSES WHICH COULD BE ALLOWED UNDER SECTION 37(1) ONLY IF INCURRED WHOLLY AN D EXCLUSIVELY FOR THE PURPOSE OF BUSINESS PROVIDED THESE ARE NOT CAPITAL I N NATURE. 3.1 THEREAFTER, THE TRIBUNAL APPLIED THE TEST LAID D OWN BY HON'BLE SUPREME COURT IN THE CASE OF EMPIRE JUTE CO. LTD. VS. CIT (124 ITR 1) IN DECIDING THE NATURE OF EXPENDITURE. THE HON'BLE SU PREME COURT IN THE SAID CASE HAD HELD THAT LUMPSUM PAYMENT OR TEST OF E NDURING BENEFIT WAS NOT CONCLUSIVE IN DECIDING THE TRUE NATURE O F EXPENDITURE. THE HON'BLE SUPREME COURT HELD THAT EXPENDITURE INCU RRED WOULD BE CAPITAL IN NATURE IF IT HAS RESULTED INTO ANY KIND OF ADVANTAGE IN THE CAPITAL FIELD BUT IF THE ADVANTAGE CONSISTS MERELY IN F ACILITATING THE ASSESSEES BUSINESS OR ENABLE THE MANAGEMENT TO CONDUCT THE ASSESSEES BUSINESS MORE EFFICIENTLY OR PROFITABLY, THE EXPE NDITURE WOULD BE REVENUE IN NATURE. THE HON'BLE SUPREME COU RT ALSO HELD THAT IF THE EXPENDITURE WAS INCURRED FOR OPERATION AN D WORK OF EXISTING PROFIT MAKING APPARATUS, IT WOULD BE REVENUE IN NATU RE, BUT IN CASE EXPENDITURE WAS ON ADDITION OR AUGMENTATION OF PROFI T MAKING APPARATUS THE NATURE OF THE EXPENDITURE WOULD BE CA PITAL. THE TRIBUNAL NOTED THAT THE APPROACH ROAD WAS LINKED TO O NLY THE NEW PLANT WHICH WAS STILL UNDER CONSTRUCTION AND THEREFORE, THE EX PENDITURE COULD NOT BE RELATED TO OPERATION OR WORKING OF EXISTING PROFIT EARNING APPARATUS WHICH CONSISTED OF OTHER UNITS WHICH WERE O PERATIONAL AND TO WHICH THE APPROACH ROAD WAS NOT LINKED. THE APPROA CH ROAD WAS LINKED TO THE NEW UNIT UNDER CONSTRUCTION WHICH WAS NO THING BUT AN ADDITION AND AUGMENTATION TO THE EXISTING PROFIT EAR NING APPARATUS. THE TRIBUNAL THEREFORE HELD THAT THE EXPENDITURE WA S CAPITAL IN NATURE. MA NO.219/M/2002 ARISING OUT OF ITA NO.3614/M/2002 A.Y:05-96 5 THE ASSESSEE HAS FILED MISCELLANEOUS APPLICATION POINTING OU T SOME MISTAKES WHICH HAVE BEEN DEALT WITH IN THE SUBSEQUENT PA RAS. 4. THE FIRST MISTAKE POINTED OUT IS THAT THE ASSESSEE HAD NOT BEEN GIVEN ADEQUATE OPPORTUNITY OF HEARING WHEN THE CASE W AS REFIXED FOR SEEKING CLARIFICATION AS TO WHETHER THE UNIT WAS STILL U NDER CONSTRUCTION OR HAD BECOME OPERATIONAL. WE HAVE PERUSED THE RECORD S CAREFULLY. THE CASE HAD BEEN RE-FIXED FOR LIMITED PURPOSE FOR SEEK ING CLARIFICATION AS TO WHETHER THE NEW UNIT HAD BECOME OPERATIONAL DUR ING THE YEAR OR NOT. THE LD. AR AS POINTED OUT EARLIER, HAD ARGUED THAT EVEN IF THE UNIT HAD NOT BECOME OPERATIONAL, EXPENDITURE WAS ALLOWABLE AS REVENUE EXPENDITURE. HE ALSO SUBMITTED THAT THE CASE WAS COVERED BY SEVERAL JUDGMENTS WHICH HAVE BEEN MENTIONED EARLIER. THE LD. AR NEVER SOUGHT ANY ADJOURNMENT TO ADVANCE ANY FURTHER ARGUMEN T. IT CAN NOT BE THEREFORE SAID THAT THE ASSESSEE HAD NOT BEEN PROVIDE D WITH ADEQUATE OPPORTUNITY OF HEARING. IN ANY CASE, THE LD . AR DID NOT PRESS THIS ISSUE AS NO SERIOUS ARGUMENTS WERE ADVANCED ON THIS ISSUE . WE, THEREFORE, REJECT THE GROUND RAISED AND HOLD THAT THE RE IS NO APPARENT MISTAKE ON THE GROUND OF LACK OF ADEQUATE OPPORTUNIT Y. 4.1 THE SECOND MISTAKE POINTED OUT IS THAT THE DECISION OF THE TRIBUNAL TO HOLD THAT THE EXPENDITURE WAS CAPITAL IN NATURE WAS CONTRARY TO THE JUDGMENTS OF THE HONBLE HIGH COURT OF BOMBAY IN CASE OF CIT VS. EXCEL INDUSTRIES LTD. (SUPRA) AND THE DECISION OF LUCKNOW BENCH OF THE TRIBUNAL IN THE CASE OF INDO GULF CORPORA TION LTD. VS. ADDL. CIT IN ITA NO.715/LUCK/01 DATED 21.4.2010 FOR THE ASSESSMENT YEAR 1998-99. BOTH THESE JUDGMENTS HAD BEEN DULY CONSI DERED BY THE TRIBUNAL IN PARA 3.6.5 AND 3.6.6 RESPECTIVELY. IT H AS BEEN POINTED OUT THAT THE TRIBUNAL HAD INCORRECTLY MENTIONED THAT THE NEW UNIT IN CASE MA NO.219/M/2002 ARISING OUT OF ITA NO.3614/M/2002 A.Y:05-96 6 OF EXCEL INDUSTRIES LTD. HAD ALREADY BEEN SET UP DURIN G THE YEAR. IT WAS POINTED OUT THAT AT PAGE 999 OF THE JUDGMENT, IT WAS CLEARLY MENTIONED THAT THE ASSESSEE HAD NOT ACQUIRED CAPITAL ASSET AS THE SAME REMAINED THE PROPERTY OF THE ELECTRICITY BOARD. WE HAVE PERUSED THE SAID JUDGMENT. THE HON'BLE HIGH COURT OF BOMBAY H AD OBSERVED THAT THE ASSESSEE HAD NOT ACQUIRED ANY CAPITAL ASSET ON TH E GROUND THAT THE ASSESSEE HAD NO OWNERSHIP OF THE ASSETS BUT THAT CAN NOT BE CONSIDERED AS A FINDING AS TO WHETHER THE UNIT HAD BEEN SET UP DURING THE YEAR OR NOT. IT IS VERY CLEAR FROM PAGE 996 AT WH ICH THE HONBLE HIGH COURT WHILE STATING THE FACTS OF THE CASE HAS CLEARLY MENTIONED THAT THE NEW UNIT TO MANUFACTURE PHOSPHORUS HAD BEEN SE T UP DURING THE YEAR ENDING 30.9.1972 WHICH RELATED TO THE ASSESSMEN T YEAR 1973-74 WHICH WAS UNDER CONSIDERATION. IT IS THUS CLEAR T HAT THE UNIT HAD BEEN SET UP DURING THE YEAR AND THERE IS NO MISTAK E IN THE ORDER OF THE TRIBUNAL. IT WOULD BE ALSO PERTINENT TO POIN T OUT HERE THAT THE OBSERVATION OF THE HONBLE HIGH COURT AT PAGE 999 THAT THE ASSESSEE HAD NOT ACQUIRED ANY CAPITAL ASSET AND THAT THERE WAS NO FINDING OF ANY ENDURING BENEFIT, HAS TO BE CONSIDERED IN THE CONTE XT OF PREVAILING LEGAL POSITION AT THAT TIME WHEN TEST OF ENDURING BE NEFIT WAS BEING CONSIDERED AS RELIABLE TEST FOR DETERMINING THE NATURE OF EXPENDITURE AS CAPITAL OR REVENUE. THE SAID JUDGMENT WAS PRIOR TO THE JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE OF EMPIRE JUTE CO. L TD. (SUPRA), IN WHICH TEST OF ENDURING BENEFIT WAS CONSIDERED AS NON CO NCLUSIVE AND IT WAS HELD THAT WHAT WAS REQUIRED TO BE SEEN WAS WHETHER THE EXPENDITURE HAD RESULTED INTO ANY ADVANTAGE IN THE CA PITAL FIELD OR IN THE REVENUE FIELD. THE JUDGMENT OF HON'BLE BOMBAY H IGH COURT IN CASE OF EXCEL INDUSTRIES LTD. (SUPRA), HAD THEREFORE BEEN RIGHTLY DISTINGUISHED BY THE TRIBUNAL, WHO APPLIED THE TEST LA ID DOWN BY THE MA NO.219/M/2002 ARISING OUT OF ITA NO.3614/M/2002 A.Y:05-96 7 HON'BLE SUPREME COURT IN THE CASE OF EMPIRE JUTE CO. L TD. (SUPRA). WE, DO NOT, THEREFORE, SEE ANY APPARENT MISTAKE ON T HIS ACCOUNT. 4.2 SIMILARLY, WE ALSO DO NOT SEE ANY MISTAKE ON ACCOUNT OF APPLICATION OF DECISION OF LUCKNOW BENCH OF THE TRIBUNA L IN THE CASE OF INFO GULF CORPORATION LTD. (ITA NO.715/LUCK/01). TH E LD. AR HAS POINTED OUT THAT IN PARA-48, IT WAS MENTIONED THAT N EW UNIT IN THAT CASE WAS UNDER CONSTRUCTION AND THEREFORE FINDING OF THE TRIBUNAL THAT THE UNIT HAD ALREADY BEEN SET ASIDE UP BECOME OPERATIO NAL IN THAT YEAR WAS NOT CORRECT. ON CAREFUL PERUSAL OF THE DECISION OF THE TRIBUNAL IN CASE OF INDO GULF CORPORATION LTD.(SUPRA), WE FIND THA T THERE IS NO APPARENT MISTAKE IN APPLICATION OF THE SAID DECISION B Y THE TRIBUNAL. IT IS CLEARLY MENTIONED IN PARA-38 AT PAGE 36 OF THE DECI SION IN CASE OF INDO GULF CORPORATION LTD. THAT THE COPPER UNIT HAD COMMENCED COMMERCIAL PRODUCTION ON 16.3.1998 AND SAID DATE OF COM MERCIAL PRODUCTION WAS AGAIN MENTIONED IN PARA-40 AT PAGE -40 . THEREFORE, THE UNIT HAD BECOME OPERATIONAL DURING ASSESSMENT YEAR 1 998-99 TO WHICH THE SAID CASE RELATED. IN PARA-48, REFERRED TO BY THE LD. AR. THE AO HAD ONLY DISCUSSED THE ICAI GUIDELINES ON TREATMEN T OF EXPENDITURE DURING CONSTRUCTION PERIOD AND, THEREFORE, THE SAME CANNOT BE CONSIDERED AS FINDING OF THE TRIBUNAL AS TO WH ETHER THE UNIT HAD BECOME OPERATIONAL DURING THE YEAR OR NOT. FURT HER IN PARA-55, THE TRIBUNAL CLEARLY MENTIONED IN THE OPERATING POR TION OF THE JUDGMENT THAT THE ASSESSEE WAS USING APPROACH ROAD FOR IT S BUSINESS AND IT WAS FURTHER MENTIONED IN THE SAID PARA THAT T HE USE OF THE ASSETS ENABLED THE ASSESSEE TO CONDUCT THE BUSINESS MORE EFFICI ENTLY. IT IS THUS CLEAR THAT UNIT IN THAT CASE HAD BECOME OPERAT IONAL IN THAT YEAR AND THE TRIBUNAL HAD ALSO DECIDED THE CASE IN THE UNDERSTANDING THAT UNIT WAS ALREADY WORKING AND ASSETS WERE BEING USE D FOR EFFICIENT MA NO.219/M/2002 ARISING OUT OF ITA NO.3614/M/2002 A.Y:05-96 8 CONDUCT OF THE BUSINESS. THEREFORE, IT WAS HELD AS REVENU E EXPENDITURE WHICH IS IN CONFORMITY WITH THE JUDGMENT O F THE HON'BLE SUPREME COURT IN THE CASE OF EMPIRE JUTE CO. LTD.(SUPR A). THE SAID DECISION OF THE TRIBUNAL THEREFORE, COULD NOT BE CONSIDE RED AS A PRECEDENT FOR A SITUATION WHERE THE UNIT IS UNDER CONSTR UCTION AND BECAME OPERATIONAL FOUR YEARS LATER. THUS THERE IS NO APPARENT MISTAKE IN THE ORDER IN NOT FOLLOWING THE SAID DECISION OF THE TRIBUNAL. 4.3 IT HAS ALSO BEEN POINTED OUT IN THE MISCELLANEOUS A PPLICATION THAT THE ISSUE WAS DIRECTLY COVERED BY THE DECISION OF THE HONB LE DELHI HIGH COURT IN THE CASE OF CIT VS. SAW PIPES LTD. (308 I TR 35) WHICH HAD NOT BEEN DEALT WITH BY THE TRIBUNAL. HOWEVER, W E FIND THAT THE SAID JUDGMENT OF THE HON'BLE DELHI HIGH COURT HAD BEEN DULY CONSIDERED BY THE TRIBUNAL IN PARA 3.6.2 OF THE ORDER . IT IS MENTIONED IN THE SAID PARA THAT THE BENCH HAD DRAWN THE ATTENTI ON OF THE LD. AR TO THE EARLIER JUDGMENT OF THE HONBLE HIGH COURT OF DELHI IN CASE OF TRIVENI ENGINEERING WORKS LTD. VS. CIT (232 ITR 639), IN WHICH EVEN THE EXPENDITURE ON PROJECT REPORT IN CONNECTION WITH T HE NEW UNIT HAD BEEN HELD AS CAPITAL EXPENDITURE EVEN THOUGH PROJECT H AD NOT TAKEN OFF. THE HONBLE HIGH COURT IN THAT CASE HAD FOLLOWED THE JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE OF EMPIRE JUTE CO. L TD. (124 ITR 1). IT MAY BE POINTED OUT THAT NEITHER THE EARLIER JUDGMENT OF HON'BLE DELHI HIGH COURT IN CASE OF TRIVENI ENGINEERING WORKS L TD. (SUPRA), NOR THE JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE OF E MPIRE JUTE CO. LTD. (SUPRA), HAD BEEN BROUGHT TO THE NOTICE OF THE HON'BLE DELHI HIGH COURT IN CASE OF SAW PIPES LTD.(SUPRA). THE TRIBUNAL HAD THEREFORE, NOT FOLLOWED THE JUDGMENT IN CASE OF SAW PIPES LTD. ( SUPRA). WE, THEREFORE, SEE NO APPARENT MISTAKE ON THIS ACCOUNT. MA NO.219/M/2002 ARISING OUT OF ITA NO.3614/M/2002 A.Y:05-96 9 4.4 THE ASSESSEE HAS ALSO POINTED OUT THAT THE TRIBUNAL WAS INCORRECT IN ITS CONCLUSION THAT THE CONCEPT OF SAME BUSINESS WAS RELEVANT ONLY FOR ALLOWANCE OF INTEREST EXPENDITURE A S THERE WERE SEVERAL CASES SUCH AS THAT OF HON'BLE SUPREME COURT IN CASE O F PRODUCE EXCHANGE CORPORATION LTD. VS. CIT (77 ITR 739) IN WHICH SAME BUSINESS CONCEPT WAS APPLIED FOR SETTING OFF OF LOSSES FROM ONE UNIT AGAINST PROFIT OF OTHER UNIT. ON CAREFUL CONSIDE RATION, WE DO NOT FIND ANY APPARENT MISTAKE IN DECISION OF THE TRIBUNAL ON THIS ACCOUNT. THE TRIBUNAL IN PARA 3.6.3 HAD POINTED OUT THAT BIR LA PERCLASE UNIT WAS PART OF THE EXISTING UNIT AS HELD IN RELATION TO THE SUBSEQUENT GROUND BUT THE TRIBUNAL OBSERVED THAT EACH AND EVERY EXPEND ITURE INCURRED FOR THE PURPOSE OF BUSINESS COULD NOT BE ALLOWED AS REVENUE EXPENDITURE. THE TRIBUNAL HAD GIVEN THE EXAMPLE OF INTEREST EXPEN DITURE BECAUSE THE SAID ISSUE HAD BEEN RAISED IN THE NEXT GROUND AND POINTED OUT THAT THE CASE OF ALLOWABILITY OF INTEREST UNDER SECTION 36(1) (III) WAS DIFFERENT AS THE ONLY CONDITION FOR ALLOWABILITY WAS THAT THE BO RROWED CAPITAL SHOULD BE USED FOR THE PURPOSE OF BUSINESS AND THE INTERE ST HAS TO BE ALLOWED EVEN IF THE BORROWING IS USED FOR ACQUISITION O F CAPITAL ASSET BUT FOR ALLOWABILITY OF ANY OTHER EXPENDITURE UNDER SECTION 37(1), IT WAS REQUIRED TO BE PROVED THAT THE EXPENDITURE WAS NO T CAPITAL IN NATURE. THEREAFTER, THE TRIBUNAL HAD EXAMINED THE NATURE OF EXPENDITURE FOLLOWING THE PRINCIPLE LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF EMPIRE JUTE CO. LTD.(SUPRA). SI NCE THE TRIBUNAL WAS EXAMINING THE ALLOWABILITY OF EXPENDITURE, THE I SSUE OF SET OFF OF LOSS AGAINST PROFIT OF OTHER UNIT BELONGING TO SAME BUSI NESS WAS NOT REFERRED TO NOR IT WAS RELEVANT AND THUS IT HAS NO BEA RING ON THE DECISION TAKEN BY THE TRIBUNAL AND, THEREFORE, THERE IS NO APPARENT MISTAKE ON THIS ACCOUNT. MA NO.219/M/2002 ARISING OUT OF ITA NO.3614/M/2002 A.Y:05-96 10 4.5 THE ASSESSEE IN THE MISCELLANEOUS APPLICATION HAS ALSO P OINTED OUT THAT SIMILAR EXPENDITURE HAD BEEN ALLOWED BY THE AO IN ASSESSMENT YEARS 1997-98 AND 1998-99 AND THIS ASPECT HAD B EEN OVER LOOKED BY THE TRIBUNAL BUT WE FIND THAT THE TRIBUNA L HAD DULY NOTED THIS ASPECT IN PARA 3.6. OF THE ORDER. THE TRIBUNAL HAD TO DECIDE THE ISSUE RAISED BEFORE IT AND, THEREFORE, IT COULD NOT BE GUIDED BY THE DECISION OF AO AND CIT(A) IN THE SUBSEQUENT YEAR. MORE OVER, NOTHING WAS BROUGHT ON RECORD TO SHOW THAT IN THE SUBSEQUENT YEA R, AO IN RELATION TO THE SAME APPROACH ROAD ALLOWED PART OF TH E EXPENDITURE, CONSCIOUSLY TREATING IT AS REVENUE EXPENDITURE. IN CASE, AO ALLOWED IN THE NEXT YEAR, THIS COULD BE ONLY BY MISTAKE BECAUSE ON THE SAME ISSUE RELATING TO THE SAME ROAD AO IN THE ASSESSMENT YEAR UNDER CONSIDERATION, HAD DISPUTED THE DECISION OF CIT(A) ALLOW ING THE EXPENDITURE BY FILING APPEAL BEFORE THE TRIBUNAL. A NY SUCH ORDER OF THE AO IN THE SUBSEQUENT YEAR CAN NOT BE A GROUND FOR THE TRIBUNAL TO ALLOW THE CLAIM IN THE EARLIER YEAR. WE DO NOT SEE AN Y APPARENT MISTAKE IN THE ORDER OF THE TRIBUNAL ON THIS ISSUE WHIC H HAS BEEN DECIDED BY THE TRIBUNAL AFTER CAREFULLY CONSIDERING ALL RELEVANT ASPECTS AND AFTER FOLLOWING THE LAW LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF EMPIRE JUTE CO. LTD.(SUPRA). THE ASSESSEE IN T HE MISCELLANEOUS APPLICATION HAS ALSO POINTED OUT THAT THE T RIBUNAL IN PARA 3.6.4 INCORRECTLY MENTIONED THAT THE UNIT BECAME OPERA TIONAL IN FEB.2008, WHEN IN FACT UNIT HAD BECOME OPERATIONAL IN 1998. IT IS TRUE THAT THERE IS A TYPOGRAPHICAL ERROR IN MENTIONING THE YEAR OF COMMERCIAL PRODUCTION AS 2008 IN PLACE OF 1998 BUT THI S HAS NO BEARING ON THE DECISION OF THE TRIBUNAL BECAUSE IN ANY CASE THE UNIT HAD BECOME OPERATIONAL LONG AFTER THE RELEVANT YEAR UNDER CONSIDERATION. HOWEVER, THIS MISTAKE IS CORRECTED AND YEAR 2008 MENTIONED IN PARA 3.6.4 IS SUBSTITUTED BY 1998. MA NO.219/M/2002 ARISING OUT OF ITA NO.3614/M/2002 A.Y:05-96 11 5. IN VIEW OF THE FOREGOING DISCUSSION AND FOR THE REA SONS GIVEN EARLIER, WE DO NOT FIND ANY APPARENT MISTAKE IN THE ORDER OF THE TRIBUNAL. THE TRIBUNAL HAS NO POWER TO REVIEW ITS OW N DECISION. WE, THEREFORE, FIND NO MERIT IN THE MISCELLANEOUS APPLICAT ION AND THE SAME IS REJECTED. 6. IN THE RESULT, THE MISCELLANEOUS APPLICATION IS REJECTE D. ORDER PRONOUNCED IN THE OPEN COURT ON 13.3.2012. SD/- SD/- (D.K. AGARWAL) ( RAJENDRA SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 13.03.2012. JV. COPY TO: THE APPLICANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.