The ACIT, Circle-4(1)., Visakhapatnam v. M/s Sri Girija Smelters Pvt Ltd,, Visakhapatnam

ITA 342/VIZ/2007 | 2004-2005
Pronouncement Date: 05-03-2010 | Result: Allowed

Appeal Details

RSA Number 34225314 RSA 2007
Bench Visakhapatnam
Appeal Number ITA 342/VIZ/2007
Duration Of Justice 2 year(s) 7 month(s) 23 day(s)
Appellant The ACIT, Circle-4(1)., Visakhapatnam
Respondent M/s Sri Girija Smelters Pvt Ltd,, Visakhapatnam
Appeal Type Income Tax Appeal
Pronouncement Date 05-03-2010
Appeal Filed By Department
Order Result Allowed
Bench Allotted DB
Tribunal Order Date 05-03-2010
Date Of Final Hearing 02-03-2010
Next Hearing Date 02-03-2010
Assessment Year 2004-2005
Appeal Filed On 13-07-2007
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV JUDICIAL MEMBER AND SHRI BR BASKARAN ACCOUNTANT MEMBER ITA NO.342/VIZAG/2007 ASSESSMENT YEAR : 2004-05 ACIT CIRCLE-4(1) VISAKHAPATNAM M/S. SRI GIRIJA SMELTERS PVT. LTD. VISAKHAPATNAM (APPELLANT) VS. (RESPONDENT) APPELLANT BY: SHRI SUBRATA SARKAR DR RESPONDENT BY: SHRI G.V.N. HARI CA ORDER PER SHRI S.K. YADAV JUDICIAL MEMBER:- THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST T HE ORDER OF THE CIT(A) ON A SOLITARY GROUND THAT THE CIT(A) OUGHT T O HAVE UPHOLD THE ACTION OF THE A.O. IN TREATING THE EXPENDITURE INCURRED BY THE ASSESSEE ON RENOVATION OF FACTORY BUILDING TO AN EXPENDITURE OF RS.55 71 750/- AS CAPITAL EXPENDITURE. 2. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y PERUSED THE ORDER OF AUTHORITIES BELOW AND DOCUMENTS PLACED ON RECORD . 3. DURING THE COURSE OF HEARING OUR ATTENTION WAS INVITED THAT THE ASSESSEE HAS INCURRED AN EXPENDITURE OF RS.55 71 75 0/- TOWARDS THE REPAIR AND THE MAINTENANCE OF THE FACTORY BUILDING WHICH W ERE TREATED TO BE THE CAPITAL EXPENDITURE BY THE REVENUE AUTHORITIES. AS SESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) AND BEING CONVINCED WITH THE EXPL ANATIONS OF THE ASSESSEE THE CIT(A) HAS ALLOWED THE CLAIM OF THE ASSESSEES. NOW THE REVENUE IS BEFORE US AND THE REVENUE HAS INVITED OUR ATTENTION TO THE DETAILS OF THE EXPENDITURE WITH THE SUBMISSIONS THAT OUT OF ENTIRE EXPENDITURE ASSESSEE HAS INCURRED THE MAJOR EXPENSES ON ACCOUNT OF STEEL BAR S AT RS.52 27 560/-. THE LD. D.R. HAD CONTENDED THAT THE ENTIRE EXPENDITURE WAS INCURRED FOR THE REPLACEMENT OF THE STRUCTURES IN THE FACTORY BUILDI NG. SINCE IT IS A 2 REPLACEMENT NOT A REPAIR IT WAS RIGHTLY TREATED TO BE THE CAPITAL EXPENDITURE BY THE ASSESSING OFFICER AS ASSESSEE ENJOYS THE END URING BENEFIT OUT OF IT. 4. THE LD. COUNSEL FOR THE ASSESSEE ON THE OTHER HA ND HAS SUBMITTED THAT IT WAS NOT A REPLACEMENT OF THE OLD STRUCTURES BUT IT WAS REPAIR OF THE OLD STRUCTURES AND ONLY THOSE STEEL BARS WERE REPLACED WHICH WERE RUSTED AND OUT DATED. THE LD. COUNSEL FOR THE ASSESSEE HAS ALSO P LACED THE PHOTOS OF THE STRUCTURES. 5. THE LD. D.R. HAS SUBMITTED IN REJOINDER THAT A S UM OF RS.52 LAKHS CANNOT BE SPENT IN REPAIR OF THE STRUCTURES. IT WA S A COMPLETE REPLACEMENT OF OLD STRUCTURES. 6. HAVING HEARD THE RIVAL SUBMISSIONS AND FROM A C AREFUL PERUSAL OF RECORD WE FIND THAT SUBSTANTIAL AMOUNT OF RS.52 27 560/- WAS INCURRED IN REPAIRING OR REPLACEMENT OF THE STRUCTURES OF WHICH PHOTOS ARE PLACED AT PG.11 OR 12 OF THE COMPILATION. A SPECIFIC QUERY W AS RAISED FROM THE LD. COUNSEL FOR THE ASSESSEES AS TO WHATEVER THE ORIGIN AL COST OF THESE STRUCTURES AND TO PLACE SOME EVIDENCE ON RECORD THAT IT WAS A REPLACEMENT OF FEW STEEL BARS WHICH WERE RUSTED AND NOT THE REPLACEMENT OF E NTIRE STRUCTURE. BUT NO EVIDENCE IS AVAILABLE BEFORE US. IN THE LIGHT OF T HESE FACTS BOTH PARTIES HAVE AGREED THAT MATTER MAY BE RESTORED BACK TO THE FILE OF THE A.O. FOR RE- ADJUDICATION OF THE ISSUES AND IF THE ASSESSEE SUCC EEDS IN PROVING THAT IT WAS NOT A COMPLETE REPLACEMENT OF THE STRUCTURES AND IT WAS A MERE REPAIRING OR REPLACEMENT OF FEW STEEL BARS OF THE STRUCTURE THE ENTIRE EXPENDITURE MAY BE CONSIDERED AS REVENUE EXPENDITURE OTHERWISE IT MAY BE TREATED AS CAPITAL EXPENDITURE IF THE ENTIRE STRUCTURE IS REPLACED. 7. WE ACCORDINGLY SET ASIDE THE ORDER OF THE CIT(A) AND RESTORE THE MATTER TO THE FILE OF THE A.O. WITH THE DIRECTIONS TO RE-ADJUDICATE THE ISSUE IN THE LIGHT OF EVIDENCE PLACED BY THE ASSESSEES. IF THE ASSESSEE SUCCEEDS IN PROVING THAT ENTIRE STRUCTURE IS NOT REPLACED AND T HE IMPUGNED AMOUNT WAS SPENT ONLY IN REPAIRING OF THE STRUCTURES OR REPLAC EMENT OF FEW STEEL BARS OF THESE STRUCTURES WHICH WERE RUSTED AND WERE OUTDATE D. THE EXPENDITURE BE 3 TREATED AS REVENUE EXPENDITURE. IF IT IS FOUND THA T THE IMPUGNED AMOUNT WAS SPENT IN REPLACEMENT OF THE ENTIRE STRUCTURE THE E XPENDITURE BE TREATED AS CAPITAL EXPENDITURE. 8. IN THE RESULT THE APPEAL OF THE REVENUE IS ALL OWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 5-3-2010 SD/- SD/- (BR BASKARAN) (SUNIL KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER VG/SPS VISAKHAPATNAM DATED 2010 COPY TO 1 THE ACIT CIRCLE-4(1) VISAKHAPATNAM 2 M/S. SRI GIRIJA SMELTERS PVT. LTD. MIG-225 TPT COLONY VISAKHAPATNAM 3 THE CIT VISAKHAPATNAM 4 THE CIT(A)-II VISAKHAPATNAM 5 THE DR ITAT VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM