M/S The Andhra Sugars Ltd., Tanuku, Tanuku V. The Ad.CIT, Rajahmundry., Rajahmundry

MA 81/VIZ/2011

• Counselvise Citation: [2013] 124 COUNSELVISE.COM (IT) 1323 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 11 month(s) 23 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 11-12-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 06-12-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 19-12-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: D MANOJ KUMAR
• Assessee Lawyers: C V K PRASAD
• Keywords: Rectification of order; Revenue expenditure; Capital expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, VISHAKHAPATNAM BEFORE S/SHRI B. RAMAKOTAIAH (AM) & SAKTIJIT DEY (JM) M.A.NO.81/VIZ/2011 ( ARISING OUT OF I.T.A. NO.365/VIZ/2008: ASSESSMENT YEAR : 2005 - 06 ) M.A.NO.82/VIZ/2011 ( ARISING OUT OF I.T.A. NO.280 /VIZ/2009: ASSESSMENT YEAR : 2006 - 07 ) THE ANDHRA SUGARS LTD., TANUKU. VS. ADDL. CIT, RAJAHMUNDRY PAN/GIR NO. : AAACT 6357 Q ( APPELLANT ) .. ( RESPONDENT ) APPELLANT BY : SHRI C.V.K.PRASAD RESPONDENT BY : SHRI D. MANOJ KUMAR DATE OF HEARING : 0 6/12/2013 DATE OF PRONOUNCEMENT : 11 /12/2013 O R D E R PER SAKTIJIT DEY, JM BY WAY OF THESE RECTIFICATION PETITIONS, THE ASSESSEE - APPLICANT HAS SOUGHT RECTIFICATION OF MISTAKE APPARENT ON RECO RD STATE D TO BE CREPT INTO THE CONSOLIDATED ORDER DATED 20.1.2011 PASSED BY COORDINATE BENCH OF THIS TRIBUNAL INASMUCH AS THE OBSERVATION OF THE TRIBUNAL THAT IN THIS YEAR ALSO THE PRODUCTION WAS NOT COMMEN CED IS A FACTUAL MISTAKE. THIS COMMON MISTAKE IS POINTED OUT BY THE ASSESSEE IN BOTH THE PETITIONS BY MAKING FOLLOWING AVERMENTS IN THE RECTIFICATION PETITION S : THE PETITIONER COMPANY SUBMITS THAT THE APPELLANT COMPANY IN ITS MISCELLANEOUS PETITION FILED EARLIER HAS SOUGHT RECTIFICATION TO THE EFFECT THAT PRODUCTION WAS COMMENCED IN THE RELEVANT ASSESSMENT YEAR 2005 - 06 AND CONTINUED TILL DATE. THE OBSERVATION OF THE TRIBUNAL THAT IN THIS YEAR ALSO THE PRODUCTION WAS NOT COMMENCED IS A FACTUAL MISTAKE. 2 THE FACT THAT PRODUCTION WAS COMMENCED FROM THE ASSESSMENT YEAR 2005 - 06 ONWARDS IS BORNE OUT BY RECORDS ON THE BASIS OF WHICH THE ASSESSMENT WAS COMPLETED AND WH ICH WAS SHOWN TO THE HONBLE TRIBUNAL AT THE TIME OF HEARING. THEREFORE, THIS PETITION IS FILED ONCE AGAIN WITH A PRAYER TO THE HONBLE INCOME TAX APPELLATE TRIBUNAL TO DELETE THE SENTENCE IN THIS YEAR ALSO THE PRODUCTION WAS NOT COMMENCED: AS THE SENTENC E WOULD GO AGAINST FACTS OF THE CASE 2. IT IS PERTINENT TO MENTION HERE THAT AGAINST THE ORDER DATED 20.1.2011 OF THE TRIBUNAL IN I.T.A. NOS.365/VIZ/2008 AND 280/VIZ/2009, THE ASSESSEE HAD FILE D MISCELLANEOUS PETITIONS ON A COMMON ISSUE AND AFTER CONSIDERING THE ASSESSEES SUBMISSIONS AND CONTENTS OF THE PETITIONS, THE TRIBUNAL VIDE ORDER DATED 30.8.2011 DISMISSED THE PETITIONS. HENCE, ONCE AGAIN THE ASSESSEE HAS FILED THESE PETITIONS UNDER SECTION 254(2) TO RECTIFY THE MIS TAKE AS ALLEGED BEFORE THE TRIBUNAL. 3. AT THE TIME OF HEARING OF THESE PETITIONS, LD A.R. SUBMITTED BEFORE US THAT IN I.T.A. NO.365/VIZ/2008, ASSESSEE IN GROUND NO.6 HAD OBJECTED TO THE DISALLOWANCE OF REPAIRS IN SUGAR DIVISION, BHIMADOLE OF RS.52,49,207/ - AS CAPITAL EXPENDITURE. IT WAS SUBMITTED THAT BHIMADOLE SUGAR UNIT WAS TAKEN OVER IN THE ASSESSMENT YEAR 2004 - 05 AND WAS KEPT UNDER A TEMPORARY LULL FOR REPAIRS TO PLANT AND MACHINERY, ETC. HOWEVER, FROM THE SUBSEQUENT ASSESSMENT YEAR, I.E. 2005 - 06, BH IMADOLE SUGAR UNIT WAS IN PRODUCTION WHICH WAS BORNE OUT FROM THE RECORDS OF THE COMPANY. IT WAS SUBMITTED THAT WHILE DECIDING ASSESSEES APPEAL FOR ASSESSMENT YEAR 2004 - 05 IN I.T.A. NO.162/VIZ/2006, THE TRIBUNAL HAD TAKEN A VIEW THAT THERE WAS NO COMMENC EMENT OF PRODUCTION IN THAT YEAR AND THE EXPENDITURE INCURRED HAS TO BE CAPITALIZED. LD A.R. SUBMITTED THAT THIS FACT IS TRUE SO FAR AS ASSESSMENT YEAR 2004 - 05 IS CONCERNED AS THERE WAS NO PRODUCTION IN THAT YEAR DUE TO TEMPORARY LULL FOR REPAIRS. HOWEVE R, THE TRIBUNAL COMMITTED A MISTAKE WHILE DECIDING THE APPEAL FOR ASSESSMENT YEAR 2005 - 06 BY OBSERVING THAT IN THIS ASSESSMENT YEAR ALSO, THE PRODUCTION WAS NOT COMMENCED, HENCE, WHATEVER EXPENDITURES ARE INCURRED EITHER ON REPAIR OF THE ASSETS, BUILDING S AND MACHINERIES ALONGWITH MISCELLANEOUS EXPENDITURES AND THE PROFESSIONAL CHARGES, THE ENTIRE EXPENDITURE IS REQUIRED TO BE CAPITALIZED BECAUSE THE EXPENDITURE WAS INCURRED BEFORE THE COMMENCEMENT OF PRODUCTIONS. LD A.R. SUBMITTED THAT THIS IS A FACTUAL ERROR ON THE PART OF THE TRIBUNAL WHILE OBSERVING THAT IN THIS ASSESSMENT YEAR ALSO, THE 3 PRODUCTION WAS NOT COMMENCED AND URGED FOR DELETING THE SAID OBSERVATIONS MADE BY THE TRIBUNAL. 4. ON THE OTHER HAND, LD D.R. STRONGLY OBJECTING TO THE MISCELLANEOUS PETITIONS FILED BY THE ASSESSEE CONTENDED THAT THESE PETITIONS ARE SECOND MISCELLANEOUS PETITIONS FIL ED BY THE ASSESSEE RAISING THE VERY SAME ISSUE WHICH WAS RAISED AND DISMISSED BY THE TRIBUNAL VIDE ORDER DATED 30.8.2011 IN M.A.NO.35VIZ/2008 AND NO.36/ VIZ/2009, HENCE PRESENT PETITIONS OF THE ASSESSEE ARE NOT MAINTAINABLE AND HAVE TO BE DISMISSED ON THE THRESHOLD ITSELF. IN SUPPORT OF THIS CONTENTION, LD D.R. RELIED ON THE FOLLOWING DECISIONS: I) POONAM KUMAR, SMT. VS ITO, 5 9 ITD 106 (AHD) II) CIT VS. ITAT & ANR., 196 ITR 640(ORISSA) III) CIT VS. KAMAL BHAI ISMAILJI, 288 ITR 297 (ALL) 5. WE HAVE CONSIDERED SUBMISSIONS OF LD REPRESENTATIVES OF PARTIES, PERUSED ORDERS OF AUTHORITIES BELOW AS WELL AS ORDERS PASSED BY THE TRIBUNAL WHILE DISPOSING OFF THE QUANTUM APPEALS AND MISCELLANEOUS PETITIONS FILED BY THE ASSESSEE. AS CAN BE CULLED OUT FROM THE SUBMISSIONS OF LD A.R. AS WELL AS AVERMENTS MADE IN THE MISCELLANEOUS PETITIONS, THE GRIEVANCE OF THE ASSESSEE IS WITH REGARD TO THE OBSERVATION MADE BY THE TRIBUNAL WHILE DECIDING THE APPEALS OF THE ASSESSEE THAT IN THE IMPUGNED ASSESSMENT YEAR ALSO, THE PRODUCTION HAS NOT COMMENCED. ON PERUSAL O F THE ASSESSMENT ORDER PASSED FOR THE IMPUGNED ASSESSMENT YEARS, IT HAS TO BE NOTED THAT THE AO AFTER CONSIDERING ALL ASPECTS OF THE ISSUE AND THE NATURE OF EXPENDITURE INCURRED BY THE ASSESSEE, HELD THAT ASSESSEE COMPANY HAS INCURRED THE SAID EXPENDITURE TOWARDS COMPLETE RENOVATION, REMODELING OF THE BUILDINGS, WHICH WERE COMPLETELY UNDER DAM AGED CONDITION AT THE TIME OF THE PURCHASE OF THE UNIT. HE FURTHER HELD THAT THE NATURE OF WORKS CARRIED OUT BY THE ASSESSEE CLEARLY SHOW THAT THEY WERE NOT CURRENT REPAIRS WITHIN THE MEANING OF SECTION 30 & SECTION 31 AND IT WAS A CASE OF TOTAL RENO VAT ION OR REMODELING OR MODIFICATION OF THE BUILDING AND PLANT & MACHINERY IN THE ASPIRIN DIVISION. THE MODIFICATIONS ARE OF SUCH MAGNITUDE THAT IT WOULD PROVIDE AN ENDURING BENEFIT TO THE ASSESSEE OVER A LONGER PERIOD AND, THEREFORE, IT CANNOT BE SAID THAT THE EXPENDITURE WAS INCURRED FOR CURRENT REPAIRS. SIMILARLY , IN RESPECT OF PROFESSIONAL CHARGES OF RS.30,18,055/ - , ASSESSEES CLAIM OF REVENUE EXPENDITURE WAS NOT 4 ACCEPTED CONSIDERING THE FACT THAT ASSESSEE HAD ITSELF ADMITTED THAT THIS EX PENDITURE WAS INCURRED TOWARDS THE LAYOUT OF THE FACTORY BUILDINGS AND MACHINERY, ETC AND REVIEW CHARGES INCLUDING TRAVELLING EXPENSES PAID TO CONSULTANTS. THE AO, THEREFORE, TREATED THE EXPENDITURE INCURRED AS CAPITAL IN NATURE. LD CIT(A) ALSO UPHELD T HE ADDITION MADE BY THE AO HOLDING THE SAME TO BE CAPITAL EXPENDITURE. LD CIT(A) HELD THAT SAID FACTORY AT BHIMADOLE WAS ACQUIRED BY WAY OF A SICK UNIT FROM A CO - OPERATIVE SOCIETY THAT RAN THE BUSINESS OF MANUFACT URE OF SUGAR AT BHIMADOLE, THEREFORE, IT REQUIRED CONSIDERABLE INVESTMENT OF FUNDS FOR EVEN MAKING IT OPERATIONAL, THEREFORE, ASSESSEE HAD TO UNDERTAKE REMODELING, MODIFICATION AND RENOVATION OF THE BUILDINGS AND THAT TOO AFTER OBTAINING THE EXPERT ADVISE OF A CONSULTANT FROM GERMANY FOR MODIFI CATION OF THE LAY OUT OF THE EXISTING FACTORY BUILDING AND PLANT & MACHINERY, WHICH RESULTED IN COMPLETE DEPARTURE FROM THE DESIGN PATTERN OF THE EARLIER FACTORY BUILDING OWNED BY THE CO - OPERATIVE SOCIETY. SINCE THE MODIFICATION TO THE FACTORY INVOLVED EX TENSIVE STRUCTURAL ALTERATION AND RENOVATION, LD CIT(A) HELD THAT IT WOULD CONSTITUTE EXPENDITURE IN THE NATURE OF CAPITAL OUTLAY . WHEN THE MATTER CAME UP FOR CONSIDERATION BEFORE THE TRIBUNAL, THE DECISION OF THE LOWERS AUTHORITIES WERE UPHELD AND WHILE DOING SO, T HE COORDINATE BENCH FOLLOWED ITS OWN DECISION IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2004 - 05 ON IDENTICAL FACTS AND OBSERVED THAT THE EXPENDITURE HAS TO BE TREATED AS CAPITAL EXPENDITURE AS THE PRODUCTION WAS NOT COMMENCED. THIS OBSERVATI ON OF THE TRIBUNAL, ACCORDING TO THE ASSESSEE, IS NOT CORRECT. IT APPEARS FROM THE RECORD THAT AGAINST THE ABOVE OBSERVATION OF THE TRIBUNAL, ASSESSEE FILED MISCELLA N EOUS PETITIONS RAISING THE VERY SAME ISSUE AS RAISED IN THE PRESENT PETITIONS BUT THE TRIB UNAL HAD REJECTED THE PETITIONS VID E ORDER DATED 30.8.2011(SUPRA),. THE FINDINGS OF THE TRIBUNAL ARE CONTAINED IN PARAGRAPHS 13 & 16 OF THE ORDER . 6. THE SCOPE AND AMBIT OF SECTION 254(2) OF THE I.T.ACT IS LIMITED ONLY TO THE EXTENT OF RECTIFYING THE MIS TAKES APPARENT ON THE FACE OF RECORD. RECALLING OF THE ORDER IS NOT PERMISSIBLE UNDER SECTION 254(2) OF THE ACT. IT MAY BE A FACE THAT ASSESSEES GRIEVANCE MAY BE GENUINE BU T CONSIDERING THE FACT THAT VERY SAME ISSUE WAS AGITATED BY THE ASSESSEE IN EAR LIER M.AS AND THE TRIBUNAL HAS REJECTED THE CONTENTION OF THE ASSESSEE, THE PRESENT PETITIONS WILL NOT BE MAINTAINABLE AS ENTERTAINING THESE APPLICATIONS WOULD AMOUNT TO REVIEW OF THE ORDER PASSED BY THE TRIBUNAL NOT ONLY IN THE QUANTUM APPEALS BUT ALSO WH ILE DISPOSING OF THE EARLIER M.AS OF THE ASSESSEE. IT IS CLEAR THAT ASSESSEE 5 NOW WANTS A RECTIFICATION OF THE ORDER OF THE TRIBUNAL DATED 20.1.2011, WHICH HAS BEEN REJECTED VIDE TRIBUNALS ORDER DATED 30.8.2011 . IT IS AN ACCEPTED POSITION THAT THE APPELLA TE TRIBUNAL DOES NOT HAVE ANY POWER TO REVIEW ITS OWN ORDERS UNDER THE PROVISIONS OF THE ACT. THE ONLY POWER WHICH THE TRIBUNAL POSSESSES IS TO RECTIFY ANY MISTAKE IN ITS OWN ORDER WHICH IS APPARENT ON RECORD. THE POWERS SO CONFERRED U/S. 254 (2) DO NOT CONTEMPLATE REHEARING WHICH WOULD HAVE THE EFFECT OF REWRITING AN ORDER AFFECTING THE MERITS OF THE CASE. IN THE CASE AT HAND, SINCE THE ISSUE WAS CONSIDERED AND REJECTED BY THE TRIBUNAL UNDER SECTION 254(2) BY APPLYING ITS MIND TO THE EARLIER MISCELLANEOUS PETITION S, SEEKING RECTIFICATION AGAIN IN SECOND MISCELLANEOUS APPLICATION S ON THE VERY SAME ISSUE IS NOT MAINTAINABLE. THIS VIEW IS SUPPORTED BY THE DECISIONS RELIED UPON BY THE LD D.R. IN VIEW OF THIS, WE REJECT THE MISCELLANEOUS PETI TIONS FILED BY THE ASSESSEE. 7. IN THE RESULT, BOTH MISCELLANEOUS APPLICATIONS ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 11/12/2013 . SD/ - SD/ - (B.RAMAKOTAIAH ) ( SAKTIJIT DEY ) ACCOUNTANT MEMBER JUDICIAL MEMBER VISHAKHAPATNAM DATED 11 T H D E C E M B E R , 2 0 1 3 PARIDA , SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT : THE ANDHRA SUGARS LTD., TANUKU. 2. THE RESPONDENT : ADDL. CIT, RAJAHMUNDRY 3. THE CIT(A) - RAJAHMUNDRY 4. CIT , RAJAHMUNDRY 5. DR, ITAT, VISHAKHAPATNAM 6. GUARD FILE. BY ORDER SR.PS, ITAT, VISHAKHAPATNAM //TRUE COPY/ /