M/s. M.P.Laghu Udyog Nigam Ltd., Bhopal v. The ACIT 2(1), Bhopal

CO 67/IND/2011 | 2008-2009
Pronouncement Date: 13-02-2012 | Result: Partly Allowed

Appeal Details

RSA Number 6722723 RSA 2011
Assessee PAN AABCM1366K
Bench Indore
Appeal Number CO 67/IND/2011
Duration Of Justice 1 month(s) 21 day(s)
Appellant M/s. M.P.Laghu Udyog Nigam Ltd., Bhopal
Respondent The ACIT 2(1), Bhopal
Appeal Type Cross Objection
Pronouncement Date 13-02-2012
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted DB
Tribunal Order Date 13-02-2012
Assessment Year 2008-2009
Appeal Filed On 23-12-2011
Judgment Text
1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH INDORE BEFORE SHRI JOGINDER SINGH JUDICIAL MEMBER AND SHRI R.C. SHARMA ACCOUNTANT MEMBER ITA NO. 296/IND/2011 A.Y. 2008-09 ASSTT. COMMISSIONER OF INCOME TAX 2(1) BHOPAL ... APPELLANT VS M/S M.P. LAGHU UDYOG NIGAM LTD. BHOPAL PAN AABCM 1366K ... RESPONDENT CO NO. 67/IND/2011 ARISING OUT OF ITA NO. 296/IND/2011 M/S M.P. LAGHU UDYOG NIGAM LTD. BHOPAL ... OBJECTOR VS ASSTT. COMMISSIONER OF INCOME TAX 2(1) BHOPAL ... RESPONDENT APPELLANT BY : SHRI ARUN DEWAN RESPONDENT BY : SHRI ANIL KHABYA 2 DATE OF HEARING : 13.2.2012 DATE OF PRONOUNCEMENT : 13..2.2012 O R D E R PER JOGINDER SINGH JUDICIAL MEMBER THE REVENUE IS AGGRIEVED BY THE IMPUGNED ORDER DAT ED 30.8.2011 PASSED BY THE LEARNED FIRST APPELLATE AUT HORITY AND THE ASSESSEE HAS PREFERRED CROSS OBJECTIONS. THE RE VENUE IS AGGRIEVED ON THE GROUND THAT ON THE FACTS AND IN T HE CIRCUMSTANCES OF THE CASE THE LD. FIRST APPELLATE AUTHORITY ERRED IN DELETING THE ADDITION OF RS.12 15 048/- MADE ON ACCOUNT OF PRIOR PERIOD EXPENSES WHEN THE ASSESSEE FOLLOWED TH E MERCANTILE SYSTEM OF ACCOUNTING. 2. DURING HEARING OF THIS APPEAL THE LEARNED SR. D R SUPPORTED THE ASSESSMENT ORDER WHEREAS THE LEARNED COUNSEL FOR THE ASSESSEE CONTENDED THAT THE IMPUGNED ISSUE IS COVERED BY THE DECISION OF THE TRIBUNAL (ITA NO. 604/IND/20 10 AND CO NO. 31/IND/2010 ORDER DATED 31.10.2011). THIS FACTU AL MATRIX WAS NOT CONTROVERTED BY THE REVENUE. 3 2.1 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE MATERIAL AVAILABLE ON FILE. IN VIEW OF THE ABOV E ASSERTION WE ARE REPRODUCING HEREUNDER THE RELEVANT PORTION OF T HE AFORESAID ORDER OF THE TRIBUNAL FOR THE ASSESSMENT YEAR 2007- 08 :- THIS IS AN APPEAL FILED BY THE REVENUE AND CROSS OBJECTION BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) DATED 3 RD FEBRUARY 2010 FOR THE ASSESSMENT YEAR 2007-08 IN THE MATTER OF ORDER PASSED BY THE ASSESSING OFFICER U/S 143(3) DATED 26.11.2009. 2. THE FIRST GROUND OF REVENUE RELATES TO DELETING DISALLOWANCE OF RS. 12 55 329/- AS PRIOR PERIOD EXPENDITURE. THE AO NOTICED FROM THE AUDIT REPORT THAT THE ASSESSEE HAD CLAIMED A PRIOR PERIOD EXPENSES OF RS. 12 55 329/-. THE AO OBSERVED THAT THE ASSESSEE IS FOLLOWING THE MERCANTILE SYSTEM OF ACCOUNTING AND ACCORDINGLY DISALLOWED THE SUM OF RS. 12 55 329/-. 3. BY THE IMPUGNED ORDER THE LD. CIT(A) DELETED THE DISALLOWANCE AFTER HAVING THE FOLLOWING OBSERVATIONS :- I HAVE CONSIDERED THE FACTS OF THE CASE. I FIND THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE APPELLANT BY THE DECISION OF THE HON'BLE I.T.A.T. REFERRED TO ABOVE. AS HELD IN THE CASE OF TOYO ENGG. EVEN THOUGH A PREVIOUS YEAR EXPIRES ON 31 ST MARCH EVERY YEAR THE ACTUAL CARRYING ON OF BUSINESS IS A LIVE PROCESS AND CANNOT BE CUT OFF PRECISELY ON THAT DATE ESPECIALLY WHEN THE ASSESSEES BUSINESS ACTIVITIES ARE SPREAD OVER A LARGE GEOGRAPHICAL AREA. IT WOULD BE NATURAL FOR AN OVERFLOW OF INFORMATION TO TAKE PLACE IN SUCH A CASE AND AS LONG AS THE ASSESSEE IS CONSISTENTLY 4 FOLLOWING THE PRACTICE OF ACCOUNTING FOR PRIOR PERIOD EXPENSES AS WELL AS INCOME ON THE RECEIPT OF THE RELEVANT INFORMATION THERE IS NO INFIRMITY IN THE ASSESSEES ACTION. SINCE THE DETAILS OF THE EXPENDITURE INCURRED WERE RECEIVED IN THE FOLLOWING ACCOUNTING YEAR THEY COULD BE ACCOUNTED FOR ONLY AT THAT POINT OF TIME. THE ASSESSEE HAS CONSISTENTLY FOLLOWED THIS PRACTICE WHICH HAS ALSO BEEN ACCEPTED BY THE ASSESSING OFFICER IN THE PAST. ACCORDINGLY THE DISALLOWANCE MADE BY THE ASSESSING OFFICER IS NOT JUSTIFIED AND THE SAME IS DELETED. THIS GROUND OF APPEAL IS THEREFORE ALLOWED. 4. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS AND FOUND THAT THE EXPENDITURE WERE CRYSTALLIZED DURING YEAR UNDER CONSIDERATION THEREFORE THE SAME WAS DEBITED AND CLAIMED DURING THE YEAR. FOR SIMILAR EXPENDITURE THE ASSESSEE WAS CONSISTENTLY FOLLOWING THIS PRACTICE WHICH HAS BEEN ACCEPTED BY THE ASSESSING OFFICER IN THE PAST. ACCORDINGLY WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A) FOR DELETING THE DISALLOWANCE OF EXPENDITURE CRYSTALLIZED DURING THE YEAR UNDER CONSIDERATION. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 31 ST OCTOBER 2011. 2.2 IN THE AFORESAID ORDER THE TRIBUNAL ON CONSIDE RATION OF RIVAL SUBMISSIONS FOUND THAT THE EXPENDITURE WAS CR YSTALISED DURING THE YEAR UNDER CONSIDERATION AND THE SAME WAS DEBITED AND CLAIMED IN THE YEAR OF CRYSTALISATION I TSELF. THIS SYSTEM OF THE ASSESSEE WAS FOLLOWED YEAR AFTER YEAR AND THE DEPARTMENT HAD BEEN ACCEPTING THE SAME. IN VIEW OF THESE 5 FACTS THE STAND OF THE LEARNED COMMISSIONER OF INC OME TAX (APPEALS) WAS AFFIRMED BY THE TRIBUNAL. IN THE PRE SENT APPEAL BEFORE US THE FACTS WERE ARGUED TO BE IDENTICAL T HEREFORE IN THE ABSENCE OF CONTRARY MATERIAL WE AFFIRM THE STA ND OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS). THIS APPEAL O F THE REVENUE IS THEREFORE DISMISSED. 3. IN ITS CROSS OBJECTION (CO NO. 67/IND/2011) THE ONLY OBJECTION RAISED BY THE ASSESSEE IS THAT THE LD. FI RST APPELLATE AUTHORITY ERRED IN MAINTAINING THE DISALLOWANCE OF RS.5 LACS OUT OF REPAIR AND MAINTENANCE EXPENSES OF THE BUILDING. THE CRUX OF ARGUMENTS ON BEHALF OF THE ASSESSEE IS THAT A RE ASONABLE ESTIMATION MAY BE MADE. ON THE OTHER HAND THE LE ARNED SR. DR CONTENDED THAT NECESSARY DETAILS WERE NOT FURNIS HED BY THE ASSESSEE. 3.1 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE MATERIAL AVAILABLE ON FILE. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE SHOWED TOTAL EXPENDITURE OF RS.42 54 702/- ON REPAIR AND RENOVATIONS OUT OF WHICH THE ASSESSEE HIMSELF A DDED BACK 6 RS. 29 22 159/- BY TREATING THE SAME AS EXPENSES OF CAPITAL NATURE. THE ASSESSEE FURTHER ADDED BACK RS.5 LACS O UT OF THE REMAINING BALANCE OF RS.13 32 534/- IN ITS COMPUTA TION OF INCOME BEING ESTIMATED EXPENSES OF CAPITAL NATURE MEANING THEREBY RS. 8 32 543/- WERE CLAIMED AS REVENUE EXPE NSES IN THE NATURE REPAIRS AND RENOVATION. THE LEARNED ASS ESSING OFFICER OBSERVED THAT THE ASSESSEE DID NOT FILE COM PLETE DETAILS OF EXPENSES ON ACCOUNT OF REPAIRS AND RENOVATION A CCORDINGLY HE FURTHER ESTIMATED RS. 5 LACS THE EXPENSES OF CAP ITAL NATURE AND AFTER ALLOWING DEPRECIATION OF RS.25 000/- DISA LLOWED RS.4 75 000/-. THIS STAND OF THE LEARNED ASSESSING OFFICER WAS AFFIRMED BY LEARNED COMMISSIONER OF INCOME TAX (APP EALS). IN VIEW OF THE ASSERTION MADE BY THE LEARNED RESPECTIV E COUNSELS AND THE MATERIAL AVAILABLE ON FILE WE GRANT RELIEF OF 50% OUT OF THE DISALLOWED AMOUNT OF RS.4 75 00/-. THE ASSESSIN G OFFICER IS DIRECTED ACCORDINGLY. THIS CROSS OBJECTION OF THE A SSESSEE IS ALLOWED IN PART. FINALLY THE APPEAL OF THE REVENUE STANDS DISMISSE D WHEREAS THE CROSS OBJECTION STANDS PARTLY ALLOWED. 7 THIS ORDER WAS PRONOUNCED IN THE OPEN IN THE PRESE NCE OF LEARNED REPRESENTATIVES FROM BOTH THE SIDES AT THE CONCLUSION OF THE HEARING ON 13.2.2012. (R.C.SHARMA) (JOGINDER SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 13.2.2012 COPY TO: APPELLANT RESPONDENT CIT CIT(A) DR GU ARD FILE DN/-