ADITYA BIRLA RETAIL LTD, MUMBAI v. ADDL CIT 2(2), MUMBAI

ITA 3718/MUM/2012 | 2008-2009
Pronouncement Date: 27-04-2015 | Result: Dismissed

Appeal Details

RSA Number 371819914 RSA 2012
Assessee PAN AAACP2678Q
Bench Mumbai
Appeal Number ITA 3718/MUM/2012
Duration Of Justice 2 year(s) 11 month(s) 2 day(s)
Appellant ADITYA BIRLA RETAIL LTD, MUMBAI
Respondent ADDL CIT 2(2), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 27-04-2015
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 27-04-2015
Date Of Final Hearing 27-04-2015
Next Hearing Date 27-04-2015
Assessment Year 2008-2009
Appeal Filed On 25-05-2012
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL ' A ' BENCH MUMBAI BEFORE SHRI D. MANMOHAN VICE PRESIDENT AND SHRI RAJENDRA ACCOUNTANT MEMBER ITA NO. 3572/MUM/2012 (ASSESSMENT YEAR: 2008 - 09 ) A DDL. CIT CIRCLE - 2(2) VS. M/S. ADITYA BIRLA RETAIL LTD. ROOM NO. 577 5TH FLOOR AYAKAR BHAVAN M.K. ROAD MUMBAI 400020 ADITYA BIRLA RETAIL CENTRE NEXT TO LE MERIDIAN HOTEL SAHARA AIRPORT ROAD ANDHERI (E) MUMBAI 400099 PAN - AAACP2678Q APPELLANT RESPONDENT ITA NO. 37 18 /MUM/2012 (ASSESSMENT YEAR: 2008 - 09 ) M/S. ADITYA BIRLA RETAIL LTD. VS. A DDL. CIT CIRCLE - 2(2) SKYLINE ICONE 5 TH & 6 TH FLOOR 86/92 ANDHERI KURLA ROAD NEAR MITTAL INDL. ESTATE ANDHERI (E) MUMBAI 40005 9 ROOM NO. 548 5TH FLOOR AYAKAR BHAVAN M.K. ROAD MUMBAI 400020 PAN - AAACP2678Q APPELLANT RESPONDENT APPELLANT BY: MS. S. PADMAJA RESPONDENT BY: NONE DATE OF HEARING: 27.04. 2015 DATE OF PRONOUNCEMENT: 27 .04.2015 O R D E R PER D. MANMOHAN V.P. THESE CROSS APPEALS ARE DIRECTED AGAINST THE ORDER PASSED BY CIT(A) - 5 MUMBAI AND THEY PERTAIN TO A.Y. 2008 - 09. 2. THE CASE WAS ADJOURNED FROM TIME TO TIME AT THE REQUEST OF THE ASSESSEE AND FINALLY IT WAS ADJOURNED TO 27.04.2015. HOWEVER ON THAT DATE NONE APPEARED ON BEHALF OF THE ASSESSEE. WE HAVE THEREFORE NO ALTERNATIVE EXCEPT TO DISPOSE OF THE APPEAL EXPARTE Q UA ASSESSEE. WE HAVE HEARD THE LEARNED D.R. AND CAREFULLY PERUSED THE RECORD. ITA NO. 3572 &3718 /MUM/2012 M/S. ADITYA BIRLA RETAIL LTD. 2 3. THE ONLY GROUND URGED IN THE APPEAL FILED BY REVENUE READS AS UNDER: - ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) ERRED IN ALLOWING DEPRECIATIO N @60% ON ALL EQUIPMENTS FALLING UNDER THE HEAD COMPUTERS INCLUDING BIZEBRA WEIGHING SCALE AND IGNORING THE FACT THAT THE SAME IS WEIGHING SCALE AND NOT INCLUDED IN THE LIST OF HARDWARES DEFINED AS COMPUTER. 4. AS COULD BE NOTICED FROM THE ASSESSMENT O RDER AS WELL AS ORDER PASSED BY THE CIT(A) ASSESSEE CLAIMED DEPRECIATION @60% ON BIZEBRA WEIGHING SCALE ON THE GROUND THAT THEY ARE PART OF COMPUTERS. THE AO CONSIDERED THE ISSUE IN PARA 7 OF HIS ORDER WHEREIN HE OBSERVED THAT AS PER THE DETAILS FURNISH ED THERE ARE VARIOUS ITEMS IN THE FORM OF ATTACHMENTS OF VARIOUS TYPES WHICH DO NOT FORM PART OF COMPUTER AND INDEPENDENT OF COMPUTERS. HE ALSO OBSERVED THAT A COMPUTER IN COMMON SENSE AND AS POPULARLY UNDERSTOOD REFERS TO ANY ELECTRONIC OR HIGH SPEED DA TA PROCESSING DEVICE WHICH PERFORMS LOGICAL ARITHMETIC AND MEMORY FUNCTIONS ON DATA WHEREAS WEIGHING SCALE FAIRLY DO NOT FALL WITHIN THE AMBIT OF COMPUTER . THESE ARE ONLY PERIPHERALS WHICH DRAW SUPPORT FROM COMPUTER FOR ITS FUNCTIONS. MOST OF THE COMPUTE RS ARE USED IN COORDINATING WITH OTHER MACHINERIES FOR WEIGHING ARTICLES GENERATING CASH MEMO ETC. THEREFORE THE BASIC FUNCTION OF THE WEIGHING SCALE FALLS IN THE CATEGORY OF PLANT AND MACHINERY AND DEPRECIATION @15% IS ALLOWED. 5. THE LEARNED CIT(A) MERELY REPRODUCED THE CONTENTIONS OF THE ASSESSEE AS WELL AS THE DECISION OF THE SPECIAL BENCH OF ITAT MUMBAI IN THE CASE OF DATACRAFT INDIA LTD. AND OBSERVED THAT WEIGHING SCALE SHOULD BE TREATED AS COMPUTER HARDWARE AND ACCORDINGLY ALLOWED THE CLAIM OF THE AS SESSEE. IT DESERVES TO BE NOTICED THAT THE DETAILED FUNCTIONS OF THE WEIGHING SCALE WERE NOT MENTIONED BY THE CIT(A). IT IS NOT KNOWN AS TO WHAT ARE THE SUBSTANTIAL FUNCTIONS OF THE WEIGHING SCALE AND WHETHER THEY CAN INDEPENDENTLY BE OPERATED OR NOT IN OR DER TO CONSIDER AS TO WHETHER THEY ARE PART OF COMPUTER HARDWARE OR NOT. 6. HAVING REGARD TO THE OVERALL CIRCUMSTANCES OF THE CASE IN THE INTEREST OF JUSTICE WE SET ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE AO TO RECONSIDER THE MATTER BY TAKING INTO CONSI DERATION THE TE CHNICAL DETAILS OF THE WEIGHING ITA NO. 3572 &3718 /MUM/2012 M/S. ADITYA BIRLA RETAIL LTD. 3 SCALE AND ANALYSE THE SAME IN ORDER TO APPRECIATE AS TO WHETHER THE FUNCTIONS OF THE WEIGHING SCALE FALL WITHIN THE MEANING OF COMPUTER HARDWARE AS SPECIFIED BY THE ITAT SPECIAL BENCH IN THE CASE OF DATACRAFT INDIA LTD. WITH THESE OBSERVATIONS THE APPEAL FILED BY THE REVENUE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 7. TH R E E GROUNDS WERE RAISED IN THE APPEAL FILED BY THE ASSESSEE - COMPANY I.E.: - I. W HETHER LEGAL/PROFESSIONAL AND SALES PROMOTION EXPENSES ARE TO BE TREATED AS CAPITAL EXPENDITURE OR REVENUE IN NATURE II. W HETHER FOREIGN TRAVELLING EXPENDITURE IS CAPITAL IN NATURE OR NOT ON THE GROUND THAT MOST OF THESE EXPENDITURES WERE INCURRED TO IMPORT C APITAL GOODS AND III. W HETHER THE CIT(A) ERRED IN DISALLOWING A SUM OF ` 9.33 CRORES AS EXPENDITURE INCURRED FOR EARNING EXEMPT INCOME UNDER SECTION 14A READ WITH RULE 8D. 8. THE LEARNED D.R. ADVERTED OUR ATTENTION TO THE ORDER OF THE AO AS WELL AS THE CIT(A) TO HIGHLIGHT THAT THE ISSUES URGED BEFORE THE TRIBUNAL WERE ANALYSED IN DETAIL BY THE AO AS WELL AS THE CIT(A) IN THE CORRECT PERSPECTIVE AND HENCE THE ORDER PASSED BY THE LEARNED CIT(A) DOES NOT CALL FOR ANY INTERFERENCE. IN THIS REGARD THE LEARNED CIT - DR AD VERTED OUR ATTENTION TO PAGE 5 OF CIT(A)S ORDER WHICH IS IN RELATION TO THE CLAIM OF EXPENDITURE DEBITED TO LEGAL AND PROFESSIONAL FEES AND SALES PROMOTION EXPENDITURE AND THEREAFTER FROM PARA 4.3 ONWARDS TO HIGH LIGHT THAT THE ASSESSEE WAS PLANNING TO DEVELOP THREE NEW RETAIL CONCEPTS FOR THE DOMESTIC INDIAN MARKET FOR WHICH M/S. FITCH WAS ASKED TO PROPOSE HOW THE ASSESSEE WOULD DESIGN AND BRAND BOTH STORE CONCEPTS WHICH WERE TO BE OPENED IN FUTURE IN ALL MAJOR CITIES AND TOWNS IN INDIA. SINCE THE PAYME NT MADE WAS BEFORE COMMENCEMENT OF BUSINESS AND RELATED TO CONCEPTUALIZATION AND IMPLEMENTATION OF SAME THE LEARNED CIT(A) OBSERVED THAT THE PAYMENTS WERE OF CAPITAL NATURE AND NOT AN ALLOWABLE EXPENDITURE. 9. SIMILARLY FROM THE AGREEMENT WITH TKC IT WAS NO TICED THAT THE SERVICE TO BE RENDERED BY TKC WAS PROJECT PLANNING AND MONITORING SUPPORT IN THE INITIAL PHASES OF ABG RETAIL AND THE PAYMENTS MADE IN THAT REGARD WERE FOR SMOOTH OPENING OF RETAIL BUSINESS AND HENCE IT WAS OF CAPITAL NATURE. ITA NO. 3572 &3718 /MUM/2012 M/S. ADITYA BIRLA RETAIL LTD. 4 10. SIMILAR AGREEM ENT WAS ENTERED INTO WITH M/S. A.T. KE RNEY LTD. AND THE PAYMENT WAS MADE FOR THE LAUNCH OF THE RETAIL BUSINESS AND THEREFORE IT HAS TO BE TREATED AS PRE - OPERATIVE EXPENDITURE AND IT GIVES THE ASSESSEE AN ENDURING BENEFIT IN WHICH EVENT THE EXPENDITURE HAS TO BE TREATED AS CAPITAL IN NATURE. THOUGH THE ASSESSEE F ILED A PAPER BOOK AS PER RULE 18(6) OF THE APPELLATE TRIBUNAL RULES ONLY THOSE PAPERS WHICH WERE REFERRED TO AND RELIED UPON BY THE PARTIES DURING THE COURSE OF ARGUMENTS SHALL ALONE BE TREATED AS PART OF THE RECORD OF THE TRIBUNAL WHEREAS IN THE INSTANT CASE NONE APPEARED BEFORE US AND NO MATERIAL WHATSOEVER WAS BROUGHT TO OUR NOTICE AND THEREFORE THE PAPER BOOK CANNOT BE TAKEN INTO CONSIDERATION. THUS THE ASSESSEE HAS NOT BROUGHT ANY MATERIAL T O CONTROVERT THE FINDINGS OF THE LEARNED D.R. EVEN OTHERWISE THE PAPER BOOK CONSISTS OF COPIES OF THE AGREEMENTS WITH THREE PARTIES AND THE SAME WERE ALREADY CONSIDERED BY THE CIT(A). 11. HAVING REGARD TO THE CIRCUMSTANCES OF THE CASE WE DO NOT FIND ANY INFIR MITY IN THE ORDER PASSED BY THE CIT(A) AND ACCORDINGLY W E DISMISS GROUND NO. 1 OF THE ASSESSEE. 12. AS REGARDS GROUND NO. 2 I.E. TREATING OF FOREIGN TRAVELLING EXPENDITURE AS CAPITAL IN NATURE THE LEARNED CIT(A) CONSIDERED THE ISSUE IN PARA 5.3 OF HIS ORDER WHEREIN HE OBSERVED THAT FOREIGN TRAVEL WAS FOR PROCURING CAPITAL GOODS AND HENCE THE AO WAS JUSTIFIED IN DISALLOWING AN AMOUNT PROPORTIONATE TO THE AMOUNT OF CAPITAL GOODS IMPORTED. HERE ALSO NO MATERIAL WAS BROUGHT TO OUR NOTICE TO CONTROVERT THE FINDING S OF THE CIT(A). WE THEREFORE DO NOT FIND ANY JUSTIFICATION TO INTERFERE WITH THE ORDER PASSED BY THE LEARNED CIT(A) ON THIS ASPECT. THEREFORE GROUND NO. 2 OF THE ASSESSEE IS REJECTED. 13. WITH REGARD TO GROUND NO. 3 I.E. DISALLOWANCE COMPUTED UNDER SECTION 14A READ WITH RULE 8D THE ISSUE WAS CONSIDERED BY THE LEARNED CIT(A) FROM PAGE 51 ONWARDS WHEREIN HE OBSERVED THAT SHARE APPLICATION MONEY IS ALSO AN INVESTMENT AND IT HAS TO BE CONSIDERED IN THE INVESTMENT WHILE WORKING OUT THE AVERAGE OF INVESTMENT AND ACCORDINGLY WORKED OUT THE AMOUNT DISALLOWABLE UNDER SECTION 14A READ WITH RULE 8D. HE RE ALSO NO MATERIAL WHATSOEVER WAS PLACED TO CONTROVERT THE FINDINGS OF THE LEARNED CIT(A). WE ITA NO. 3572 &3718 /MUM/2012 M/S. ADITYA BIRLA RETAIL LTD. 5 THEREFORE AFFIRM THE ORDER OF THE LEARNED CIT(A) ON THIS ASPECT ALSO A ND DISMISS GROUND NO. 3 OF THE ASSESSEE. 14. IN THE RESULT THE APPEAL FILED BY THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSE S AND THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH APRIL 2015. SD/ - SD/ - ( RAJENDRA ) (D. MANMOHAN) ACCOUNTANT MEMBER VICE PRESIDENT MUMBAI DATED: 27 TH APRIL 2015 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 5 MUMBAI 4. THE CIT 2 MUMBAI CITY 5. THE DR A BENCH ITAT MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT MUMBAI BENCHES MUMBAI N.P.