M/s Naraingarth Sugar Mills Limited, V. DCIT, New Delhi

MA 314/DEL/2010

• Counselvise Citation: [2014] 111 COUNSELVISE.COM (IT) 0514 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 7 month(s) 14 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 21-02-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2003-2004
• Appeal Filed On: 07-07-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: C S AGARWAL
• Keywords: Revenue expenditure
• Section: 13; 37

Judgement Text

MISC. APPLICATION NOS.314 TO 317/DEL/2010 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : FRIDAY : NEW DELHI BEFORE SHRI A.D. JAIN, JUDICIAL MEMBER AND SHRI J.S. REDDY, ACCOUNTANT MEMBER MISCELLANEOUS APPLICATION NOS.314 TO 317/DEL/2010 (ITA NOS.472, 550, 551 & 3038/DEL/2009) ASSESSMENT YEARS : 2003-04 TO 2006-07 M/S NARAINGARH SUGAR MILLS LTD., C/O HARRY RICKY, ADVOCATE, 1573, SECTOR 18-D, CHANDIGARH 1600018. PAN : AAACN0454G VS. DCIT, CIRCLE 13 (1), NEW DELHI. ( APP LICANT ) ( RESPONDENT ) ASSESSEE BY : SHRI C.S. AGARWAL, SR. A DVOCATE DEPARTMENT BY : S HRI KEYUR PATEL, SR. DR ORDER PER A.D. JAIN, JUDICIAL MEMBER: VIDE ORDER DATED 08.01.2010, THE DEPARTMENTS APPEAL FOR ASSESSMENT YEAR 2003-04 IN ITA NO.472/DEL/2009 AND THE DEPARTM ENTS APPEAL FOR ASSESSMENT YEAR 2006-07 IN ITA NO.3038/DEL/2009 WERE PA RTLY ALLOWED, WHEREAS THE DEPARTMENTS APPEALS FOR ASSESSMENT YEARS 2004 -05 AND 2005- 06 IN ITA NOS.550 & 551/DEL/2009 RESPECTIVELY WERE A LLOWED. THE PRESENT FOUR APPLICATIONS HAVE BEEN FILED BY THE ASSESSEE IN ALL THESE APPEALS. 2. IT HAS BEEN CONTENDED IN THE APPLICATIONS THAT APR OPOS THE ISSUE OF DEFERRED REVENUE EXPENDITURE, WHICH CLAIM HAS BEEN D ISALLOWED BY THE TRIBUNAL, OBSERVING THAT THERE BEING NO DISPUTE OF TH E ASSESSEE FOLLOWING THE MERCANTILE SYSTEM OF ACCOUNTING, THE LIABILITY INCURR ED ON ACCOUNT OF INTEREST MISC. APPLICATION NOS.314 TO 317/DEL/2010 2 PAYABLE ON TERM LOAN AND WORKING CAPITAL, AS WELL AS OTHER EXPENDITURE BY WAY OF DIRECTORS FOREIGN TRAVEL EXPENSES ARE ALLOWABL E AS DEDUCTION IN THE YEAR IN WHICH THE LIABILITY IS INCURRED AND THAT THE RE IS NO CONCEPT OF DEFERRED REVENUE EXPENDITURE IN THE INCOME-TAX ACT, IT HAD B EEN SUBMITTED ON BEHALF OF THE ASSESSEE BEFORE THE TRIBUNAL, AS BEFORE THE AUTH ORITIES BELOW, THAT EVEN IF THESE EXPENSES ARE NOT ALLOWED TO BE DEFERRED AND CLAIMED WHOLLY DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE IS STILL ENTITLED TO CARRY FORWARD LOSSES; THAT AS SUCH, THERE IS NO LOSS TO THE REVEN UE, THE ASSESSEE HAVING CLAIMED ONLY 1/5 OF THE TOTAL EXPENDITURE; T HAT THE ASSESSEE BE ALSO ALLOWED TO CLAIM THE ENTIRE EXPENDITURE ON ACCOUNT OF DIRECTORS FOREIGN TRAVEL AND BANK INTEREST DURING ASSESSMENT YEAR 2003-04 U/S 37 OF THE IT ACT AND BE ALLOWED TO CARRY FORWARD THE LOSSES ACCORDINGLY ; AND THAT THIS EXPENDITURE WAS ACTUALLY INCURRED BY THE ASSESSEE DURIN G ASSESSMENT YEAR 2003-04 UNDER CONSIDERATION AND THE ASSESSING OFFICER HA D HIMSELF ALLOWED THE BALANCE EXPENDITURE, WHICH HAD NOT BEEN DEFERRE D, DURING ASSESSMENT YEAR 2003-04. THE LD. COUNSEL FOR THE ASSESSEE HAS REITER ATED THE AFORESAID SUBMISSIONS CONTAINED IN THE APPLICATIONS. THE LD. DR, O N THE OTHER HAND, HAS SUBMITTED THAT THERE IS NO ERROR IN THE ORDER PASSED BY THE TRIBUNAL AND AS SUCH, THE APPLICATIONS FILED BY THE ASSESSEE BE DISMISSED . 3. WE HAVE HEARD THE PARTIES. IT IS SEEN THAT BY WAY O F ALL THESE MISC. APPLICATIONS, THE ASSESSEE IS EFFECTIVELY WANTING TO GET THE ENTIRE CLAIM OF EXPENDITURE INCURRED IN ASSESSMENT YEAR 2003-04 BE ALL OWED IN ASSESSMENT YEAR 2003-04. THIS, HOWEVER, IS NOT POSSIBLE. THE ASSESSEE CLAIMED EXPENSES OF ` 6.23 CRORE ON ACCOUNT OF INTEREST. THE ASSESSING O FFICER ALLOWED THIS EXPENDITURE TO THE EXTENT OF ` 1.07 CRORE. SO, EFFE CTIVELY, THE CLAIM OF ` 5.17 CRORE REMAIN ON ACCOUNT OF INTEREST. OF THIS, THE CIT (A) ALLOWED 1.03 CRORE BEING 1/5 OF THE EXPENDITURE ON ACCOUNT OF INTEREST. BESIDES, THE CIT (A) HAD ALSO ALLOWED THE ASSESSEES CLAIM OF ` 1.47 CRORE, BEING 1/5 OF THE EXPENDITURE ON ACCOUNT OF FOREIGN TRAVEL OF DIRECTO RS, AMOUNTING TO ` 7.39 CRORE. THUS, THE CIT (A) ALLOWED TOTAL EXPENDITURE O F ` 5,24,39,360/-. THIS WAS MISC. APPLICATION NOS.314 TO 317/DEL/2010 3 CHALLENGED BEFORE US BY THE DEPARTMENT. WE ALLOWED T HE DEPARTMENTS APPEAL. THE ASSESSEE DID NOT CHALLENGE THE COMMISSIONERS ORDER BY WAY OF EITHER CROSS APPEAL OR CROSS OBJECTION. HOWEVER, IT IS N OW SEEKING TO GET RELIEF BY WAY OF THE PRESENT MISC. APPLICATIONS, WHICH IS NOT PERMISSIBLE. HOWEVER, WITHOUT DOUBT, THE EXPENDITURE ACTUALLY IN CURRED DURING ASSESSMENT YEAR 2003-04, AMOUNTING TO ` 1,04,87,872/- N EEDS TO BE ALLOWED. TO THAT EXTENT, AN ERROR HAS CREPT IN OUR O RDER UNDER CONSIDERATION, WHICH IS HEREBY RECTIFIED AND THIS EXPENSE OF ` 1,04,8 7,872/-, ACTUALLY INCURRED BY THE ASSESSEE IN ASSESSMENT YEAR 2003-04, IS AL LOWED. TO THAT EXTENT, OUR ORDER STANDS MODIFIED. 4. IN THE RESULT, THE MISCELLANEOUS APPLICATION FOR ASS ESSMENT YEAR 2003- 04 IS ALLOWED AND THOSE FOR THE REMAINING YEARS STAND D ISMISSED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 21.02.201 4. S D / - [J.S. REDDY] S D / - [A.D. JAIN] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED, 21 ST FEBRUARY, 2014. DK COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT AR, ITAT, NEW DELHI.