EMERSON NETWORK POWER ( INDIA) P. LTD, MUMBAI v. ACIT CIR -1, THANE

ITA 118/MUM/2010 | 2005-2006
Pronouncement Date: 25-03-2011 | Result: Allowed

Appeal Details

RSA Number 11819914 RSA 2010
Assessee PAN AAACT4033H
Bench Mumbai
Appeal Number ITA 118/MUM/2010
Duration Of Justice 1 year(s) 2 month(s) 19 day(s)
Appellant EMERSON NETWORK POWER ( INDIA) P. LTD, MUMBAI
Respondent ACIT CIR -1, THANE
Appeal Type Income Tax Appeal
Pronouncement Date 25-03-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted E
Tribunal Order Date 25-03-2011
Date Of Final Hearing 24-02-2011
Next Hearing Date 24-02-2011
Assessment Year 2005-2006
Appeal Filed On 06-01-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES E MUMBAI BEFORE SHRI S V MEHROTRA ACCOUNTANT MEMBER AND SHRI VIJAY PAL RAO JUDICIAL MEMBER ITA NO. 118/MUM/2010 (ASSESSMENT YEAR 2005-06) EMERSON NETWORK POWER (INDIA) P LTD FORMERLY KNOWN AS TATA LIEBERT LTD. PLOT NO.20 RD.NO.19 WAGLE INDL ESTATE THANE (W) PAN:AAACT4033H . APPELLANT VS THE ACIT CIR -1 VARDAN BLDG LOWER GR.FLOOR MIDC WAGLE INDUSTRIAL ESTATE THANE RESPONDENT APPELLANT BY : SHRI DEEPAK P TIKEKAR RESPONDENT BY : SHRI SONGATE O R D E R PER VIJAY PAL RAO JM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 21.10.2009 OF THE CIT(A)-THANE FOR THE ASSESSMENT YEAR 2005-06. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS IN THIS APPEAL: 1. THE LD. CIT(A) ERRED IN REJECTING THE CLAIM OF THE APPELLANT COMPANY THAT THE INCOME IN THE NATURE RETENTION MONEY OF RS.1 12 68 153/-DOES NOT ACCRUE TILL PERIOD OF PERFORMANCE GUARANTEE IS OVER; ITA NO. 118/MUM/2010 (ASSESSMENT YEAR 2005-06) 2 2. THE LD. CIT(A) ERRED IN REJECTING THE CLAIM OF THE APPELLANT COMPANY FOR DEDUCTION OF PROPORTIONAT E LEASEHOLD PREMIUM OF RS.1 69 772/- PAID TO MIDC 3. GROUNDS OF APPEAL NO.1 IS REGARDING THE CLAIM FO R RETENTION MONEY. 3.1 WE HAVE HEARD THE LEARNED AR AS WELL AS THE LEA RNED DR AND CONSIDERED THE RELEVANT RECORD. AT THE OUTSET WE NOTE THAT THIS ISSUE HAS BEEN CONSIDERED AND DECIDED BY THIS TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO.1139 TO 1 140/MUM/ 2003 AND ITA NO.6291/MUM/2003 FOR THE ASSESSMENT YE AR 1994-95 AND 2001-02 RESPECTIVELY VIDE ORDER DATED 24.11.2008. SINCE THE ISSUE HAS BEEN DECIDED AGAIN ST THE ASSESSEE BY THIS TRIBUNAL IN THE ABOVE MENTIONED CA SE HENCE FOLLOWING THE ORDER OF THIS TRIBUNAL TO MAINTAIN T HE CONSISTENCY WE DECIDE THIS ISSUE AGAINST THE ASSES SEE. 4. THE GROUND NO.1 IS DISMISSED. 5. GROUND NO.2 IS REGARDING DEDUCTION OF PROPORTI ONATE LEASEHOLD PREMIUM. DURING THE COURSE OF ASSESSMENT THE AO NOTED THAT THE ASSESSEE HAS CLAIMED DEDUCTION OF RS.1 69 773/- UNDER THE HEAD LEASE HOLD PREMIUM ON ITS LEASE HOLD LAND. THE ASSESSEE HAS PURCHASED THE LEASE HO LD RIGHTS FOR THE FACTORY AT THANE MIDC IN THE EARLIER YEAR FOR WHICH THE ASSESSEE PAID A SUM OF RS.1.17 CRORES. THIS AM OUNT CAPITALIZED AS ASSETS IN THE BALANCE SHEET AND THE ITA NO. 118/MUM/2010 (ASSESSMENT YEAR 2005-06) 3 PROPORTIONATE EXPENDITURE WAS CLAIMED AS DEDUCTION U/S 37(1) OF THE ACT. THE AO DID NOT ACCEPT THE CLAIM OF T HE ASSESSEE AND DISALLOWED THE SAME. 5.1 ON APPEAL THE CIT(A) CONFIRMED THE DISALLOWAN CE MADE BY THE AO. 5.2 BEFORE US THE LEARNED AR HAS SUBMITTED THAT TH IS ISSUE STANDS COVERED BY THE DECISION OF THE HON. GUJARAT HIGH COURT IN THE CASE OF DCIT V/S SUN PHARMACEUTICAL IND LTD REPORTED IN (2009) 227 CTR (GUJ) 206. 5.3 THE LEARNED DR NARRATED THE FACTS OF THE CASE AND RELIED UPON THE ORDERS OF THE LOWER AUTHORITIES. 5.4 AFTER CONSIDERING THE RIVAL CONTENTIONS AND REL EVANT RECORDS WE NOTE THAT THIS ISSUE HAS BEEN CONSIDERE D AND DECIDED BY THE HON. GUJARAT HIGH COURT IN THE CASE OF DCIT V/S SUN PHARMACEUTICAL IND LTD (SUPRA). THE RELEVAN T PARAGRAPHS OF THE ABOVE DECISIONS IS REPRODUCED BEL OW : 6. THE FACTS ARE NOT IN DISPUTE. THE LEASE AGREEMENT ENTERED INTO BETWEEN THE ASSESSEE AND GIDC HAS BEEN ANALYZED AND RELEVANT TERMS SUMMARIZED BY THE TRIBUNAL. IT IS NOT NECESSARY T O REFER TO THE SAID TERMS IN DETAIL IN THE PRESENT PROCEEDINGS. SUFFICE IT TO STATE THAT THE TRIBUNAL ON APPRECIATION OF THE DEED IN QUESTION HAS RECORDED FOLLOWING FINDINGS OF FACTS: ITA NO. 118/MUM/2010 (ASSESSMENT YEAR 2005-06) 4 IT IS NOT DISPUTED THAT THE LAND WHICH HAS BEEN LE ASED OUT TO THE ASSESSEE DID NOT CEASE TO BE BELONG TO T HE GIDC THE LESSOR. THE LEASE DEED WAS REGISTERED BECAUSE AS PER THE REGISTRATION ACT IT IS COMPULSO RILY REGISTRABLE BUT IT HAS NOT CHANGED THE OWNERSHIP. IT IS NOT ALSO DISPUTED THAT THE LEASE RENT IS VERY NOMI NAL AND BY OBTAINING THIS LAND BY LEASE THE CAPITAL STRUCTURE OF THE COMPANY HAS NOT BEEN CHANGED ..THUS BY THIS PAYMENT THE ASSETS OF THE ASSESSEE COMPANY HAD NOT BEEN INCREASED BECAUSE THE LAND CONTINUED TO BE THE LAND . THE ISSUE CAN BE CONSIDERED IN ANOTHER ANGLE. IT CANNOT BE DISPUTED THAT IF THE LAND IS NOT OBTAINED BY THE ASSESSEE IT WOULD NOT BE POSSIBLE FOR IT TO CARRY ON THE BUSINESS. 7. THE TRIBUNAL HAS THUS AFTER REFERRING TO TWO DECISIONS OF SUPREME COURT HELD THAT THE LAND IN QUESTION WAS NOT ACQUIRED BY THE ASSESSEE. THAT MERELY BECAUSE THE DEED WAS REGISTER THE TRANSACTIO N IN QUESTION WOULD NOT ASSUMED A DIFFERENT CHARACTE R. THE LEASE RENT WAS VERY NOMINAL. BY OBTAINING HE LA ND ON LEASE THE CAPITAL STRUCTURE OF THE ASSESSEE DID NO UNDERGO ANY CHANGE . THE ASSESSEE ONLY ACQUIRED A FACILITY TO CARRY ON BUSINESS PROFITABLY BY PAYING NOMINAL LEASE RENT. 8. IN LIGHT OF THE AFORESAID FINDINGS OF THE FACTS THE RATIO OF THE APEX COURT DECISIONS. THE COURT DO ES NOT FIND THIS TO BE A CASE WHICH WARRANTS INTERFERE NCE. EVEN THE AO HAS RECORDED THAT THE PAYMENT WAS FOR USE OF LAND. THERE IS NO LEGAL INFIRMITY COMMITTED BY THE TRIBUNAL. 9. BEFORE PARTING IT IS NECESSARY TO NOTE THAT THE APPELLANT- REVENUE WAS NOT EVEN AGGRIEVED BY THE AFORESAID FINDING RECORDED BY HE TRIBUNAL AND HAD NOT EVEN PROPOSED A QUESTION ON THIS ISSUE WHEN THE TAX APPEAL WAS FILED AS THE MEMORANDUM OF TAX APPEAL REVEALS. 10. IN THE AFORESAID FACTS AND CIRCUMSTANCES OF THE CASE THE TRIBUNAL WAS JUSTIFIED IN HOLDING THAT TH E LEASE RENT PAID BY THE ASSESSEE TO GIDC WAS ALLOWABLE AS REVENUE EXPENDITURE. THE APPEAL IS DISMISSED ACCORDINGLY WITH NO ORDER AS TO COSTS ITA NO. 118/MUM/2010 (ASSESSMENT YEAR 2005-06) 5 5.5. WE FURTHER NOTE THAT THE SPECIAL LEAVE PETIT ION FILED BY THE REVENUE VIDE SLP NO.33784/09 HAS ALSO BEEN DI SMISSED BY THE HON. SUPREME COURT VIDE ORDER DATED 4.12.20 09 REPORTED IN 325 ITR (ST) 6. HENCE THE ORDER PASSED BY THE GUJARAT HIGH COURT HAS ATTAINED THE FINALITY. RESP ECTFULLY FOLLOWING THE ABOVE MENTIONED DECISION OF THE HON. GUJARAT HIGH COURT IN THE CASE OF DCIT V/S SUN PHARMACE UTICAL IND. LTD. (GUJ) WE DECIDE THIS ISSUE IN FAVOUR OF THE ASSESSEE. ORDER PRONOUNCED IN THE OPEN COURT ON 25 MAR 2 011 SD SD (S V MEHROTRA ) (VIJAY PAL RAO) ACCOUNTANT MEMBER JUDICIAL M EMBER MUMBAI DATED 25 TH MAR 2011 SRL:4311 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT CONCERNED 4. CIT(A) CONCERNED 5. DR CONCERNED BENCH BY ORDER TRUE COPY ASSTT. REGISTRAR ITAT MUMBAI