Gujarat Mineral Development Corporation Ltd., Ahmedabad V. The ACIT, Circle-2(1)(1), Ahmedabad

MA 59/AHD/2023

AI Insights

The case involves Gujarat Mineral Development Corporation Ltd. (the assessee) filing a Miscellaneous Application (MA) against the order of the ITAT concerning the assessment year 2005-06. The ITAT had previously allowed the assessee's claim for project expenses to be treated as revenue expenditure and the income from these projects as business income. However, the AO, in implementing this order, inadvertently taxed the income from the projects separately, leading to double taxation. The assessee sought clarification to prevent this double taxation. The ITAT acknowledged the AO's error in implementation but clarified that there was no mistake in their original order. They directed the AO to treat the project expenses on a gross basis and the income from the projects separately as business income.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 133526 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 month(s) 15 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 12-10-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 05-10-2023
• Assessment Year: 2005-2006
• Appeal Filed On: 27-06-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Revenue expenditure

Judgement Text

आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरणआयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण, अहमदाबाद 瀈यायपीठ अहमदाबाद 瀈यायपीठअहमदाबाद 瀈यायपीठ अहमदाबाद 瀈यायपीठ ‘B’ अहमदाबाद। अहमदाबाद।अहमदाबाद। अहमदाबाद। IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, AHMEDABAD BEFORE SMT.ANNAPURNA GUPTA, ACCOUNTANT MEMBER AND SHRI T.R. SENTHIL KUMAR, JUDICIAL MEMBER Misc.Application No.59/Ahd/2023 IN ITA No.1747/Ahd/2009 Assessment Year :2005-06 Gujarat Mineral Development Corporation Ltd. Khanji Bhavan 132 Ft. Rig Road University Ground Ahmedabad. ACIT, Cir.2(1)(1) Ahmedabad. (Applicant) (Responent) Assessee by : Shri S.N. Soparkar, Sr.Advocate and Ms.UrvashiShodhan, AR Revenue by : Ms.Saumya Pandey Jain, Sr.DR स ु नवाई क तार ख/Date of Hearing : 06/10/2023 घोषणा क तार ख /Date of Pronouncement: 13/10/2023 आदेश/O R D E R PER ANNAPURNA GUPTA, ACCOUNTANT MEMBER The present Misc. Application has been filed by the assessee seeking rectification in the order passed by the Tribunal in the assessee’s appeal in ITA No.1747/Ahd/2009 dated 30.11.2022. 2. It is pleaded in the MA, amongst other, that the Tribunal while dealing with ground no.1 to 3 allowed claim of the assessee towards projects expenses on the ground that all three projects situated at MA No.59/Ahd/2023 2 Bhavnagar and Tadkeshwar were continuation of existing projects of the assessee and the expenses incurred therefor in the setting up of these projects, prior to the commencement of the business, were to be treated as revenue expenditure. The Tribunal also held to treat the income generated therefrom as business income, as these projects are continuation of existing business. 3. The grievance of the assessee in the MA is that since the assessee claimed project expenses on net basis i.e. after offsetting project expenses against project income, there remains no residual project income liable for taxation, which would otherwise amounted to double taxation, as done by the AO after giving effect to the order of the Tribunal. Therefore, the ld.counsel for the assessee seeks a clarification or a specific direction on the issue of treatment of project expenses and income from various projects, which being yet to commence its operation. 4. After hearing both the sides, and going through the impugned order of the ITAT, we find that the ITAT has allowed the project expenses as revenue expenditure and income earned therefrom to be treated as business income, as originally claimed by the assessee. In the return of income, the assessee had claimed net expenses on project expenses i.e. net of income as revenue expenditure, and the AO had held the entire projects expenses, as being capital in nature, and income earned thereform as assessable under the head “income from other sources”. After ITAT passing the order allowing the assessee’s claim intoto, restoring to its position as returned, the AO while giving effect to order of the ITAT allowed the project expenses net of income and at the same time he also taxed the income from MA No.59/Ahd/2023 3 project separately. Interpreting the ITAT’s order likewise, this resulted in double addition of income from project expenses. 5. Vide this MA the assessee seeks specific direction from the ITAT to the effect that gross expenses on the projects are to be allowed and the income from the project has to be taxed as business income. The ld.DR admitted to the fact that the AO had committed error/mistake while giving effect to the order of ITAT, as pointed out by the ld.counsel for the assessee. At the same time, she stated that the error was on part of the AO and not in the order of the ITAT . She was fair enough though to seek a specific direction from the ITAT while disposing of the present application to the effect as sought by the ld.counsel for the assessee. Both the parties agreed to the same. 6. In view of the above, we are not inclined to entertain the MA, since admittedly there is no mistake in the order of the Tribunal. At the same time, in the interest of justice, we direct the AO to allow the claim of project expenses allowed by the ITAT on gross-basis and treat the income earned from the projects separately. 7. In the result, the Misc. Application of the assessee is disposed of in the above terms. Order pronounced in the Court on 13 th October, 2023 at Ahmedabad. Sd/- Sd/- (T.R. SENTHIL KUMAR) JUDICIAL MEMBER (ANNAPURNA GUPTA) ACCOUNTANT MEMBER Ahmedabad, dated 13/10/2023 vk*