Jayem Impex Private Limited, Bangalore v. ACIT, Bangalore

ITA 1192/BANG/2009 | 2005-2006
Pronouncement Date: 05-03-2010 | Result: Dismissed

Appeal Details

RSA Number 119221114 RSA 2009
Bench Bangalore
Appeal Number ITA 1192/BANG/2009
Duration Of Justice 2 month(s) 20 day(s)
Appellant Jayem Impex Private Limited, Bangalore
Respondent ACIT, Bangalore
Appeal Type Income Tax Appeal
Pronouncement Date 05-03-2010
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 05-03-2010
Date Of Final Hearing 02-03-2010
Next Hearing Date 02-03-2010
Assessment Year 2005-2006
Appeal Filed On 15-12-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI GEORGE GEORGE K. JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY ACCOUNTANT MEMBER ITA NO.1192/BANG/2009 ASSESSMENT YEAR : 2005-06 JAYEM IMPEX PVT. LTD. NO.95/90 SOUJANYA 19 TH MAIN ROAD I N BLOCK RAJAJINAGAR BANGALORE 560 010. : APPELLANT VS. THE ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE 12(3) BANGALORE. : RESPONDENT APPELLANT BY : SHRI H.N. KHINCHA RESPONDENT BY : SMT. V.S. SREELEKHA O R D E R PER GEORGE GEORGE K. JUDICIAL MEMBER THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE CITS ORDER DATED 1.9.09 IN RELATION TO ASSESSMENT YEAR 2005-06. 2. THE SOLITARY ISSUE THAT IS RAISED IN THIS APPEAL IS WHETHER THE CIT(APPEALS) IS JUSTIFIED IN CONFIRMING THE AOS AC TION IN DISALLOWING A SUM OF RS.93.01 LAKHS BY TREATING IT AS CAPITAL EXPENDI TURE. ITA NO.1192/BANG/09 PAGE 2 OF 5 3. THE FACTS IN BRIEF ARE AS FOLLOWS. THE ASSESSEE IS A COMPANY. IT IS IN THE BUSINESS OF PROVIDING LOGISTIC SERVICES. FO R THE ASSESSMENT YEAR CONCERNED THE ASSESSEE CLAIMED TO HAVE INCURRED A SUM OF RS.93.01 LAKHS AS INTERIOR/REPAIR WORKS OF BUILDING AND SAME WAS C LAIMED AS REVENUE EXPENDITURE. THE AO HOWEVER HELD IT TO BE CAPITA L IN NATURE IN VIEW OF EXPLANATION 1 TO SECTION 32 OF THE I.T. ACT 1961 A ND ADDED THE SAME TO INCOME BUT DEPRECIATION @ 10% WAS ALLOWED ON SUCH ADDITION. 4. ON APPEAL DETAILED WRITTEN SUBMISSION WAS FILED BY THE ASSESSEE ON 6.3.09 AND SAME WAS FORWARDED TO THE AO. THE AO FI LED HIS REPORT ON 17.4.09. A REJOINDER TO THE AOS REMAND REPORT WAS FILED BY THE ASSESSEE ON 12.5.09. THE CIT(APPEALS) AFTER CONSIDERING THE ELABORATE SUBMISSION OF THE ASSESSEE DISMISSED THE APPEAL. 5. DISENCHANTED BY THE ORDER OF THE CIT(APPEALS) T HE ASSESSEE IS IN APPEAL BEFORE US. THE LD. AR REITERATED THE SUBMIS SIONS/CONTENTIONS RAISED BEFORE THE AUTHORITIES BELOW. PER CONTRA THE LD. DR SUPPORTED THE FINDINGS OF THE CIT(APPEALS). 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IN THE INSTANT CASE THE UNDISPUTED FACTS A RE THAT ASSESSEE HAD TAKEN LAND ON LEASE VIDE LEASE DEED DATED 1.4..03. THE ASSESSEE WAS GIVEN A RIGHT TO CONSTRUCT THEREON A BUILDING TO HO USE ITS LOGISTIC AND WAREHOUSING PROJECTS. THE ASSESSEE DID CONSTRUCT A BUILDING HOWEVER NO MATERIAL WAS PRODUCED TO SHOW THE PERIOD OF CONSTRU CTION OF THE BUILDING AND WHEN THE BUILDING WAS READY TO BE OCCUPIED. IN TOTAL A SUM OF RS.93.01 LAKHS WAS CLAIMED AS REVENUE EXPENDITURE O N ACCOUNT OF INTERIOR/REPAIR EXPENSES. ITA NO.1192/BANG/09 PAGE 3 OF 5 7. THE AO AFTER EXAMINING THE BILLS OF EXPENDITURE AT THE TIME OF REMAND CONCLUDED THAT SINCE THE EXPENDITURE HAD BE EN INCURRED BETWEEN OCTOBER 2003 TO MARCH 2004 I.E. A.Y. 2004-05 FOR THE ALLEGED INTERIOR WORKS OF LEASED BUILDING THE ENTIRE CLAIM DESERVES TO BE DISALLOWED AS PRIOR PERIOD EXPENSES IN THE A.Y. 2005-06. THE DETAILS OF BREAK UP OF EXPENSES AND THE COPIES OF THE BILLS AS EXAMINED BY THE AO I N HIS REMAND REPORT IS REPRODUCED BELOW FOR READY REFERENCE: A) THE BILL GIVEN BY MICRON ELECTRICALS FOR RS.34. 58 LAKHS IS DATED 17.03.2004 WHICH HAS BEEN INCURRED ON ACCOUN T OF ELECTRICAL LAN & TELEPHONE CABLING UPS WIRING INVERTER WIRING OFFICE LIGHTING EARTHING SYSTEM. B) WORK DONE BY VENKATESHWARA FOR RS.12.07 LAKHS O N ACCOUNT OF GLAZING SHUTTERS INCLUDING PATCHES FOR ROOMS PORTICOS. C) WORK DONE BY TECHNOWIZ FOR RS.6.30 LAKHS TOWARD S FABRICATION OF CANOPY ADDITIONAL WINDOWS RECTIFICA TION THEREOF. D) NO BILL WAS PRODUCED REGARDING THE WORK DONE BY RAPID CORPORATION FOR RS.38.19 LAKHS TOWARDS OFFICE INTER IOR WOOD WORKS CABINS WORK STATIONS ETC. ON ENQUIRY BY THE AO IT WAS STATED THAT THE SAME WAS DONE THROUGH A TENDER PROCESS BUT NO TENDER DOCUMENT WAS SUBMITTED TO IN DICATE THE DATE WHEN TENDER WAS CALLED FOR AND DATE WHEN T HE WORK WAS COMPLETED. E) WORK DONE BY PRAKRUIT CREATIONS FOR RS.0.90 LAKH S TOWARDS LANDSCAPING. F) WORK DONE BY SIGN CORP + OTHERS FOR RS.0.97 LAKH S FOR THE NEW OFFICE. 8. THE ABOVE BILLS CLEARLY SHOW THAT THE EXPENDITUR E INCURRED PERTAIN TO ELECTRICAL GLAZING FABRICATION ETC. AND CANNOT B E STATED TO BE A REVENUE EXPENDITURE AS THESE HAVE A CLOSE NEXUS WITH THE CO NSTRUCTION OF A BUILDING. ITA NO.1192/BANG/09 PAGE 4 OF 5 9. HERE IT IS A CASE OF PURE CONSTRUCTION THOUGH TE RMED AS INTERIOR DECORATION. AS RIGHTLY POINTED OUT BY THE CIT(APPE ALS) MAJOR CONSTRUCTION WORK WAS CARRIED OUT ON THE LAND WHICH THE ASSESSEE HAD CAMOUFLAGED BY NARRATING IT AS INTERIOR/REPAIR WORK. NO EVIDENCE/ MATERIAL WAS PRODUCED TO SHOW THAT THE IMPUGNED EXPENDITURE WAS INCURRED ON AN EXISTING BUILDING FOR INTERIOR DECORATION/REPAIRS. ON THE CONTRARY ALL THE MATERIAL FACTS POINT TO A SITUATION THAT EXPENDITURE CONCERNED WAS INCUR RED IN THE COURSE OF CONSTRUCTION OF THE BUILDING. THEREFORE WE ARE OF THE FIRM VIEW THAT CIT(APPEALS) WAS JUSTIFIED IN HIS CONCLUSION TREATI NG EXPENDITURE INCURRED AS A CAPITAL EXPENDITURE. 10. THE LD. AR ALSO SUBMITTED THAT THE EXPENDITURE INCURRED IS ON A LEASED LAND AND HENCE SAME SHOULD BE CONSIDERED AS REVENUE EXPENDITURE. THIS CONTENTION WE ARE AFRAID IS WI THOUT MUCH FORCE IN THE LIGHT OF THE EXPLANATION 1 TO CLAUSE (II) OF SECTIO N 32(1) OF THE I.T. ACT. MORE OVER BY VIRTUE OF SUPREME COURT DECISION IN THE CA SE OF CIT V. PODDAR CEMENTS PVT. LTD. (1997) 226 ITR 625 AND KARNATAKA HIGH COURT DECISION IN THE CASE OF CIT V. BHOOPALAM COMMERCIAL COMPLEX AND INDUSTRIES (P) LTD. (2003) 262 ITR 517 THE CONCEPT OF OWNERSHIP HAS BEEN GIVEN VERY WIDE MEANING TO CONCLUDE EVEN HOUSE CONSTRUCTED ON LEASED PLOTS AND ALSO BENEFICIAL OCCUPATION/POSSESSION IS TREATED AS OWNERSHIP. 11. IN LIGHT OF THE AFORESAID REASONS WE ARE OF TH E VIEW THAT THE ORDER OF THE AUTHORITIES BELOW IS CORRECT AND IN ACCORDANCE WITH LAW AND NO INTERFERENCE IS CALLED FOR. 12. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ITA NO.1192/BANG/09 PAGE 5 OF 5 PRONOUNCED IN THE OPEN COURT ON THIS 5 TH DAY OF MARCH 2010. SD/- SD/- (A. MOHAN ALANKAMONY ) (GEORGE GEORGE K . ) ACCOUNTANT MEMBER JUDICIAL ME MBER BANGALORE DATED THE 5 TH MARCH 2010. DS/- COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ITAT BANGALORE. 6. GUARD FILE (1+1) BY ORDER ASSISTANT REGISTRAR ITAT BANGALORE.