RAMACHANDRAN SHIVAN,COIMBATORE V. DCIT, NCC-2, COIMBATORE

ITA 2557/CHNY/2024

AI Insights

The case involves Ramachandran Shivan, the appellant, contesting the decisions made by the Deputy Commissioner of Income Tax, Coimbatore, regarding the assessment year 2018-19. The primary issues were the disallowance of pre-commencement business expenditure amounting to \\u20b969,39,374 and the denial of foreign tax credit due to non-filing of Form 67 within the prescribed time. The Tribunal found that the Assessing Officer and the CIT(A) had not adequately addressed the actual claims made by the assessee, leading to a decision to remand the matter for re-evaluation.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 708173 (ITAT-CHENNAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-07-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Assessment Year: 2018-2019
• Other Referred Cases: Jerry Nirmal Francis v. ADIT
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R.ANITA
• Assessee Lawyers: T. BANUSEKAR
• Keywords: Revenue expenditure; Business expenditure; Capital expenditure

Judgement Text

"आयकर अपीलीय अिधकरण, ’सी’ Ɋायपीठ, चेɄई IN THE INCOME-TAX APPELLATE TRIBUNAL ‘C’ BENCH, CHENNAI ŵी एस.एस. िवʷनेũ रिव, Ɋाियक सद˟ एवं ŵी अिमताभ शुƑा, लेखा सद˟ क े समƗ Before Shri S.S. Viswanethra Ravi, Judicial Member & Shri Amitabh Shukla, Accountant Member आयकर अपील सं./I.T.A. No.2557/Chny/2024 िनधाŊरण वषŊ/Assessment Year: 2018-19 Ramachandran Shivan, A-4, No. 18, Saffron Summers, Dr. Narayanaswamy Street, Red Fields, Coimbatore 641 045. [PAN:AREPS9702L] Vs. The Deputy Commissioner of Income Tax, Non Corporate Circle 2, Coimbatore. (अपीलाथŎ/Appellant) (ŮȑथŎ/Respondent) अपीलाथŎ की ओर से / Appellant by : Shri T. Banusekar, Advocate ŮȑथŎ की ओर से/Respondent by : Ms. R. Anita, Addl. CIT सुनवाई की तारीख/ Date of hearing : 02.06.2025 घोषणा की तारीख /Date of Pronouncement : 17.07.2025 आदेश /O R D E R PER S.S. VISWANETHRA RAVI, JUDICIAL MEMBER: This appeal filed by the assessee is directed against the order dated 08.08.2025 passed by the ld. Commissioner of Income Tax (appeals) – 16, Chennai for the assessment year 2018-19. 2. Ground Nos. 1 & 2 are general in nature and requires no adjudication. 3. The ld. AR Shri T. Banusekar, Advocate prayed to dismiss the legal grounds raised in ground Nos. 3, 4 & 5 as not pressed. I.T.A. No.2557/Chny/24 2 4. Ground Nos. 6 to 10 raised by the assessee are relating to confirmation of disallowance of pre-commencement business expenditure. 5. The ld. AR Shri T. Banusekar, Advocate submits that the assessee claimed a sum of ₹.69,39,374/- as expenditure to be carried forward for next assessment year. The assessee is entitled to claim the same. He submits that the Assessing officer disallowed the same on the ground that there was no commencement of business in the year under consideration, the assessee is not entitled to carry forward the said expenditure and drew our attention to para 4 of the assessment order. Further, he referred to the order of the ld. CIT(A) held that the same is in the nature of capital expenditure, but, not revenue expenditure and drew our attention to page 33 of the impugned order. The ld. AR argued that the both the authorities below did not consider the actual claim of the assessee, but, decided the issue on different footing by holding that the assessee is not entitled to claim carry forward of the same by the Assessing Officer and the same as capital expenditure by the ld. CIT(A). He drew our attention to the profit and loss account as on 31.03.2018 and submits that the expenditure is indirect expenses and requires to be carry I.T.A. No.2557/Chny/24 3 forwarded to subsequent assessment year. The ld. AR prayed to remand the matter to the file of the Assessing Officer for fresh consideration. 6. The ld. DR Ms. R. Anita, Addl. CIT relied on the order of the ld. CIT(A). 7. After hearing both the parties and perused the material on record, we note that the assessee has claimed indirect expenses in the profit & loss account, but, was denied by the Assessing Officer for carry forward the same to subsequent assessment year. On perusal of the profit & loss account, as furnished before us, we note that there was no reference to the expenses claimed by the assessee in the assessment order. Therefore, we deem it proper to remand the matter to the file of the Assessing Officer for fresh consideration in terms of the submissions made by the ld. AR before us. Thus, grounds Nos. 6 to 10 are allowed for statistical purposes. 8. Ground No. 11 to 13 raised by the assessee are relating to denial of foreign tax credit. 9. The ld. AR submits that the Assessing Officer denied foreign tax credit and made upward modification in the income of the assessee as taxable salary. He further submits that the ld. CIT(A) held that the view of I.T.A. No.2557/Chny/24 4 the Assessing Officer is correct in denying foreign tax credit for non-filing of Form 67 within the time prescribed. The ld. AR drew our attention to the order of this Tribunal in the case of Jerry Nirmal Francis v. ADIT vide order dated 28.02.2023 in ITA No. 846/Chny/2022, which held that the Assessing Officer should consider the tax paid by the assessee in other countries when income pertains to said tax credit has been offered to tax in India as per domestic tax law even though belated filing of Form 67. The ld. AR argued that the assessee is entitled to claim foreign tax credit and prayed to remand the matter to the file of the Assessing officer. 10. The ld. DR reported no objection. 11. The findings of the ld. CIT(A) vide para 11.4 of the impugned order is clear that the foreign tax credit was denied by the Assessing Officer for non-filing of Form 67 within the time limit prescribed. This Tribunal in the case of Jerry Nirmal Francis v. ADIT (supra) held that even in a case belated Form 67 is filed, the Assessing Officer has to consider tax paid in other countries. Therefore, following the order of this Tribunal, we deem it proper to remand the matter to the file of the Assessing Officer to verify, whether the assessee is eligible for foreign tax credit in assessment year under consideration and pass order in accordance with law. Thus, the grounds raised by the assessee are allowed for statistical purposes. I.T.A. No.2557/Chny/24 5 12. In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced on 17th July, 2025 at Chennai. Sd/- Sd/- (AMITABH SHUKLA) ACCOUNTANT MEMBER (S.S. VISWANETHRA RAVI) JUDICIAL MEMBER Chennai, Dated, 17.07.2025 Vm/- आदेश की Ůितिलिप अŤेिषत/Copy to: 1. अपीलाथŎ/Appellant, 2.ŮȑथŎ/ Respondent, 3. आयकर आयुƅ/CIT, Chennai/Madurai/Coimbatore/Salem 4. िवभागीय Ůितिनिध/DR & 5. गाडŊ फाईल/GF. "