M.Lankalingam, CHENNAI v. ACIT, CHENNAI

ITA 2066/CHNY/2012 | 2003-2004
Pronouncement Date: 31-07-2015

Appeal Details

RSA Number 206621714 RSA 2012
Assessee PAN AACPL0314N
Bench Chennai
Appeal Number ITA 2066/CHNY/2012
Duration Of Justice 2 year(s) 8 month(s) 15 day(s)
Appellant M.Lankalingam, CHENNAI
Respondent ACIT, CHENNAI
Appeal Type Income Tax Appeal
Pronouncement Date 31-07-2015
Appeal Filed By Assessee
Bench Allotted D
Assessment Year 2003-2004
Appeal Filed On 15-11-2012
Judgment Text
IN THE INCOME-TAX APPELLATE TRIBUNAL D BENCH CHE NNAI . !' !' !' !' # # # # $% $% $% $% BEFORE SHRI CHANDRA POOJARI ACCOUNTANT MEMBER & SHRI V. DURGA RAO JUDICIAL MEMBER I.T.A.NO.2066/MDS/2012 ASSESSMENT YEAR : 2003-04 SHRI M. LANKALINGAM C/O SRI T.N. SEETHARAMAN ADVOCATE # 384 (OLD NO. 196) LLOYDS ROAD CHENNAI 600 086. [PAN: AACPL0314N] VS. THE ASSISTANT COMMISSIONER OF INCOME TAX COMPANY CIRCLE II(4) CHENNAI. ( &' &' &' &' /APPELLANT ) ( ()&' ()&' ()&' ()&' / RESPONDENT ) &' * + / APPELLANT BY : SHRI T.N. SEETHARAMAN ADVOCATE ()&' * + / RESPONDENT BY : SHRI N. MADHAVAN JCIT * / DATE OF HEARING : 08.06.2015 -./ * /DATE OF PRONOUNCEMENT : 31.07.2015 0 0 0 0 / O R D E R PER V. DURGA RAO JUDICIAL MEMBER : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-III CHENN AI DATED 13.09.2012 RELEVANT TO THE ASSESSMENT YEAR 2003-04. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S AN INDIVIDUAL FILED HIS RETURN OF INCOME BY ADMITTING TOTAL INCOME OF .4 46 18 011/-. THE RETURN FILED BY THE ASSESSEE WAS PROCESSED UNDER SECTION 143(1) OF THE INCOME TAX ACT AND SUBSEQUENTLY AFTER DUE PROCESS THE ASSESSMENT WAS COMPLETED. IN THE I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NO. .. .2066/M/12 2066/M/12 2066/M/12 2066/M/12 2 FIRST GROUND OF LITIGATION THE ASSESSEE HAS CLAIME D VARIOUS EXPENDITURES AND THE ASSESSING OFFICER DENIED THE EXPENDITURE CLAIME D BY THE ASSESSEE. ULTIMATELY THE MATTER REACHED THE ITAT AND THE ITA T HAS SET ASIDE THE ORDER PASSED BY THE LD. CIT(A) AND DIRECTED THE ASSESSEE TO FILE ALL DETAILS IN RESPECT OF EXPENDITURE INCURRED AND THEREAFTER THE ASSESSING OFFICER WAS DIRECTED TO DECIDE THE APPEAL AFTER CONSIDERING THE DETAILS. 3. THE ONLY ISSUE BEFORE US FOR OUR CONSIDERATION IS WITH REGARD TO DISALLOWANCE OF EXPENDITURES OF .7 57 366/- INCURRED IN RESPECT OF UTHANDI GUEST HOUSE AND THE EXPENDITURE INCURRED IN RESPECT OF KATHIRVEDU FACTORY OF .22 98 903/-. 4. IN SO FAR AS DISALLOWANCE IN RESPECT OF .7 57 366/- IS CONCERNED IT WAS SUBMITTED BEFORE THE ASSESSING OFFICER THAT THE PROPERTY HAD BEEN PURCHASED BY THE ASSESSEE IN THE YEAR 2000 AND EXPE NDITURE FOR RENOVATION AND REPAIRS FOR UTHANDI GUEST HOUSE INCLUDING SWIMM ING POOL HAD BEEN CLAIMED AT .28 38 865/- OUT OF WHICH AN AMOUNT OF .20 81 498/- HAS BEEN CONCEDED BY THE ASSESSEE AS CAPITAL EXPENDITURE. TH E ASSESSING OFFICER AFTER CONSIDERING THE DETAILS FILED BY THE ASSESSEE CAME TO A CONCLUSION THAT THE ENTIRE OF EXPENDITURE OF .28 38 865/- IS A CAPITAL EXPENDITURE. 5. ON APPEAL BEFORE THE LD. CIT(A) THE ASSESSEE H AS REITERATED THE SUBMISSIONS AS MADE BEFORE THE ASSESSING OFFICER. T HE LD. CIT(A) AFTER I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NO. .. .2066/M/12 2066/M/12 2066/M/12 2066/M/12 3 CONSIDERING THE EXPLANATION OF THE ASSESSEE CONFIR MED THE ORDER PASSED BY THE ASSESSING OFFICER. 6. BEFORE US THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE EXPENDITURE INCURRED BY THE ASSESSEE OF .7 57 366/- IS ONLY REVENUE IN NATURE AND THEREFORE THE EXPENDITURE HAS TO BE ALL OWED. 7. ON THE OTHER HAND THE LD. DR SUPPORTED THE ORD ERS OF AUTHORITIES BELOW. 8. WE HAVE HEARD BOTH SIDES PERUSED THE MATERIALS ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. WE FIND TH AT THE ASSESSING OFFICER AFTER CONSIDERING ALL THE DETAILS FILED BY THE ASSE SSEE CAME TO A CONCLUSION THAT THE ASSESSEE HAS CONSTRUCTED THE SWIMMING POOL IN THE GUEST HOUSE WHICH IS AN ENDURING BENEFIT TO THE ASSESSEE AND T HEREFORE HE HELD THAT THE CLAIM OF THE ASSESSEE IS RELATING TO CAPITAL EXPEND ITURE AND NOT RELATING TO THE REVENUE. THE ABOVE FINDINGS OF THE ASSESSING OFFICE R WAS CONFIRMED BY THE LD. CIT(A). THEREFORE WE FIND NO INFIRMITY IN THE ORDER PASSED BY THE LD. CIT(A) ON THIS ISSUE AND THE GROUND RAISED BY THE A SSESSEE IS DISMISSED. 9. IN SO FAR AS DISALLOWANCE IN RESPECT OF KATHIRV EDU FACTORY IS CONCERNED THE ASSESSEE HAS FILED BREAKUP OF EXPEND ITURE BEFORE THE ASSESSING OFFICER WHICH IS REPRODUCED AS UNDER: I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NO. .. .2066/M/12 2066/M/12 2066/M/12 2066/M/12 4 DATE NARRATION AMOUNT 05.04.2002 CEMENT FLOORING REPLACED WITH MARBLE .3 22 000/ - 05.06.2022 WEATHERING COURSE REPLACED WITH WATER PROOF MATERIAL .2 98 626/ - 25.06.2002 REFLOORING OF E4ASTERN SIDE OF FACTORY .2 81 397/ - 15.12.2002 DIVE WAY (GRAVEL ROAD) REPLACED WITH RCC ROAD .12 52 605/ - 21.03.2003 CANTEEN FLOOR REPLACED WITH GRANITE .1 44 480/ - 10. THE ASSESSING OFFICER AFTER EXAMINING THE ABO VE DETAILS FILED BY THE ASSESSEE WITH REGARD TO REPLACING THE EXISTING CEM ENT FLOORING WITH MARBLE; WEATHERING COURSE WITH WATER PROOF MATERIAL; REFLOO RING OF EASTERN SIDE OF THE FACTORY; DIVE WAY GRAVEL ROAD REPLACED WITH RCC ROA D; AND CANTEEN FLOOR REPLACED WITH GRANITE CAME TO A CONCLUSION THAT TH E ASSESSEE HAS CARRIED OUT THESE REPLACEMENTS WHICH ARE VALUE ADDED TO THE ADDITION OF EXISTING PROPERTY. THESE REPLACEMENTS WOULD DEFINITELY ENHAN CE THE VALUE OF THE PROPERTY AND HELD THAT THE EXPENDITURE INCURRED BY THE ASSESSEE IS CAPITAL IN NATURE. 11. ON APPEAL THE LD. CIT(A) AFTER CONSIDERING T HE SUBMISSIONS OF THE ASSESSEE HELD THAT THE EXPENDITURE INCURRED BY THE ASSESSEE IS CAPITAL EXPENDITURE AND CONFIRMED THE ORDER PASSED BY THE A SSESSING OFFICER. THE RELEVANT PORTION OF THE ORDER OF THE LD. CIT(A) IS REPRODUCED AS UNDER: 5.4 I HAVE GONE THROUGH THE CASE LAWS QUOTED BY TH E ASSESSEE. THE ISSUES DISCUSSED THEREIN ARE NOT DIRECTLY CONNECTED TO THE ISSUE ON HAND. IN FACT IN SOME JUDGMENTS THE POINTS DISCUSSED AR E IN FAVOUR OF REVENUE ONLY. FOR EX. IN THE CASE OF CIT VS. ASHER TEXTILES CITED SUPRA THE HON'BLE JURISDICTIONAL HIGH COURT HAD HELD THAT 'THE EXPEND ITURE INCURRED THEREON WAS HELD TO BE EXPENDITURE OF A REVENUE NAT URE AS NO NEW ASSET HAD BEEN CREATED AND NO ENDURING BENEFIT DERIVED FR OM THAT WORK'. IN I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NO. .. .2066/M/12 2066/M/12 2066/M/12 2066/M/12 5 THAT CASE THE ASSESSEE DID NOT DERIVE ANY ENDURING BENEFIT WHEREAS IN THE CASE OF THE APPELLANT ON HAND REPLACING OF CEM ENT FLOOR WITH MARBLE LAYING OF GRANITE FLOOR ETC. DEFINITELY GIVEN ENDUR ING BENEFIT TO THE ASSESSEE IN THE LONG RUN. HENCE THE FACTS OF THE CA SE CITED SUPRA WILL NOT APPLY TO THE CASE ON HAND. 5.5 IN THE CASE OF HONDA SIEL CARS INDIA LTD. VS A CIT CITED SUPRA THE HONBLE DELHI HIGH COURT HELD AS FOLLOWS: 'IT IS NOT THE AMOUNT OF EXPENDITURE THAT IS DECISI VE IN SUCH MATTERS. IT IS THE OBJECT FOR WHICH THE EXPENDITURE WAS INCURRED THAT IS MORE RELEVANT. HERE THE OBJECT WAS TO REPAI R AND RESTORE THE FIVE YEAR OLD ROOF TO ITS ORIGINAL LEAK-PROOF C ONDITION . THEREBY NO CAPITAL ASSET WAS CREATED .. ' IN THE CASE OF THE ASSESSEE THE ASSESSEE HAS NOT C ARRIED OUT ANY EXPENDITURE TO RESTORE THE ROAD OR ANY BUILDING TO ITS ORIGINAL CONDITION. THE ASSESSEE HAS COMPLETELY DEMOLISHED THE ORIGINAL FLOORING OR DRIVE WAY AND REPLACED THE SAME WITH A CONSTRUCTION WHICH BRINGS IN ENDURING BENEFIT TO THE ASSESSEE. HENCE THE FACTS OF THE CAS E CITED SUPRA CANNOT BE EQUATED TO THE CASE ON HAND. 5.6 THUS IN VIEW OF THE DISCUSSION IN THE FOREGOING PARAGRAPHS THE ASSESSING OFFICER IS JUSTIFIED IN DISALLOWING THE E XPENDITURE OF RS.22 98 903/- CLAIMED TOWARDS KATHIRVEEDU PROPERTY AS BEING CAPITAL IN NATURE. ACCORDINGLY THIS GROUND OF APPEAL IS DIS MISSED. 12. BEFORE US THE LD. COUNSEL FOR THE ASSESSEE HA S SUBMITTED THAT THE EXPENDITURE INCURRED BY THE ASSESSEE IS ONLY RELATI NG TO THE BUSINESS CARRIED BY THE ASSESSEE AND IT IS BUSINESS NECESSITY. THERE FORE IT HAS TO BE TREATED AS REVENUE EXPENDITURE. 13. ON THE OTHER HAND THE LD. DR STRONGLY SUPPORT ED THE ORDERS OF THE AUTHORITIES BELOW. I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NO. .. .2066/M/12 2066/M/12 2066/M/12 2066/M/12 6 14. WE HAVE HEARD BOTH SIDES PERUSED THE MATERIAL S ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. WE FIND FR OM THE DETAILS FILED BEFORE THE ASSESSING OFFICER THAT THE ASSESSEE HAS REPLACE D CEMENT FLOORING WITH MARBLE WEATHER COURSE WITH WATER PROOF MATERIAL R EFLOORING OF EASTERN SIDE OF THE FACTORY DIVE WAY GRAVEL ROAD WITH RCC RO AD AND CANTEEN FLOOR REPLACED WITH GRANITE. IT IS VERY CLEAR THAT THE AS SESSEE HAS REPLACED THE EXISTING FIXTURES & FITTINGS WITH NEW FACILITIES. T HEREFORE THE ACT OF THE ASSESSEE IS VALUE ADDED TO THE EXISTING PROPERTY AN D IT IS NOT REPAIRS AND MAINTENANCE AS CLAIMED BY THE ASSESSEE. UNDER THESE FACTS AND CIRCUMSTANCES WE HOLD THAT THE EXPENDITURE INCURRE D BY THE ASSESSEE ONLY RELATING TO CAPITAL AND NOT REVENUE EXPENDITURE. AC CORDINGLY THIS GROUND OF APPEAL IS DISMISSED. 15. IN THE RESULT THE APPEAL FILED BY THE ASSESSE E IS DISMISSED. ORDER PRONOUNCED ON FRIDAY THE 31 ST OF JULY 2015 AT CHENNAI. SD/ - SD/ - (CHANDRA POOJARI) ACCOUNTANT MEMBER (V. DURGA RAO) JUDICIAL MEMBER CHENNAI DATED THE 31.07.2015 VM/- 0 * (# 12 32/ /COPY TO: 1. &' / APPELLANT 2. ()&' / RESPONDENT 3. 4 ( ) /CIT(A) 4. 4 /CIT 5. 25! (# # /DR & 6. ! ' 6 /GF.