S.H KELKAR & CO. P. LTD, MUMBAI v. ADDL CIT RG 4(3), MUMBAI

ITA 5489/MUM/2009 | 2005-2006
Pronouncement Date: 30-09-2011 | Result: Partly Allowed

Appeal Details

RSA Number 548919914 RSA 2009
Assessee PAN AAACS9778G
Bench Mumbai
Appeal Number ITA 5489/MUM/2009
Duration Of Justice 1 year(s) 11 month(s) 24 day(s)
Appellant S.H KELKAR & CO. P. LTD, MUMBAI
Respondent ADDL CIT RG 4(3), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 30-09-2011
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted I
Tribunal Order Date 30-09-2011
Date Of Final Hearing 19-09-2011
Next Hearing Date 19-09-2011
Assessment Year 2005-2006
Appeal Filed On 06-10-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL I BENCH MUMBAI BEFORE SHRI J. SUDHAKAR REDDY ACCOUNTANT MEMBER AN D SHRI VIJAY PAL RAO JUDICIAL MEMBER ITA NO. 5489/MUM./2009 (ASSESSMENT YEAR : 2005-06 ) S.H. KELKAR & CO. PVT. LTD. DEVKARAN MANSION 36 MANGALDAS ROAD MUMBAI 400 002 .. APPELLANT V/S ADDL. COMMISSIONER OF INCOME TAX RANGE-4(3) AAYAKAR BHAVAN 101 M.K. ROAD MUMBAI 400 020 .... RESPONDENT ASSESSEE BY : MR. NISHANT THAKKAR REVENUE BY : MR. P.C. MOURYA DATE OF HEARING 19.09.2011 DATE OF ORDER 30.09.2011 O R D E R PER J. SUDHAKAR REDDY A.M. THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED AGAINST THE IMPUGNED ORDER DATED 16 TH JULY 2009 PASSED BY THE COMMISSIONER (APPEALS)-XV MUMBAI FOR ASSESSMENT YEAR 2005-06 ON THE FOLLOWING GROUNDS:- 1) ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED C.I.T.(A) ERRED IN NOT GIVING A DIRECTION TO CONSID ER THE CORRECTED OR REVISED RETURN FILED ON 18.04.2007. S.H. KELKAR & CO. PVT. LTD. ITA NO.5489/M/2009 2 2) ON THE FACTS CIRCUMSTANCES OF THE CASE THE LEAR NED C.J.T.(A) ERRED IN NOT GIVING RELIEF BY ADOPTING THE OPENING STOCK FOR THE YEAR UNDER CONSIDERATION WHICH SHOULD BE THE CLOSING STO CK OF THE PREVIOUS YEAR SINCE CLOSING STOCK OF ONE YEAR IS THE OPENING STOCK OF THE NEXT YEAR. 3) ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED C.I.T.(A) ERRED IN HOLDING THE EXPENDITURE OF RS. 8 3 9246/- OUT OF RESEARCH AND DEVELOPMENT AGRICULTURAL EXPENSES AS C APITAL EXPENDITURE. 4) ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED C.I.T. (A) ERRED IN HOLDING EXPENDITURE OF RS. 35000/- OUT OF MEMBERSHIP FEES AS THE PERSONAL EXPENDITURE THEREBY CONFIRMING THE DISALLOWANCE. 5) THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUNDS OR ADD A NEW GROUND WHICH MAY BE NECESSARY. 2. WE HAVE HEARD LEARNED COUNSEL MR. NISHANT THAKKAR ON BEHALF OF THE ASSESSEE AND LEARNED DEPARTMENTAL REPRESENTATIVE M R. P.C. MOURYA ON BEHALF OF THE REVENUE. 3. COMING TO GROUNDS NO.1 AND 2 THE ASSESSING OFFICER IN HIS ORDER HAD STATED AS FOLLOWS:- NAME & ADDRESS OF THE ASSESSEE M/S. S.H. KELKPR & CO. LTD 36 DEVKAAN MANSION MANGALDAW ROAD MUMBAI 400 002 P.A. NO. AAACS9778G STATUS COMPANY ASSESSMENT YEAR 2004-05 DATE OF ORDER 10.03.2008 ORDER UNDER SECTION 154 OF THE I.T. ACT 1961 AN INCOME IN THE CASE OF THE ASSESSEE WAS DETERMINE D AT RS.39 00 80 199/- WHILE GIVING EFFECT ON 23/3/2007 TO WE ORDER CIT(A). THE ASSESSEES COMPANY VIDE LETTER DATED 30/3/2007 SUBMITTED THEIR OWN CALCULATION OF INCOME TO BE COMPUTED WHIL E GIVING EFFECT TO THE ORDER OF THE CIT(A). THE REPRESENTATIVE MR. V.N . BHUTT WAS ASKED AS TO WHY DEMAND RAISED AS PER ORDER GIVING EFFECT TO THE ORDER OF THE CIT(A SHOULD NOT BE ADJUSTED AGAINST THE REFUND OF AY. 2O03-04. HE INVITED MY ATTENTION TO THE ABOVE REFERRED LETTER A ND THEIR COMPUTATION AND POINTED OUT THAT THE ASSESSEE COMPANY HAS BEAN GRANTED EXCESS RELIEF OF RS. 1 43 32 180. THIS MISTAKE BEING APPAR ENT FROM RECORD IS NOW RECTIFIED AS UNDER. S.H. KELKAR & CO. PVT. LTD. ITA NO.5489/M/2009 3 GROSS TOTAL INCOME AS PER ORDER DATED 3-12-2006. ` 48.19 36 551 LESS : RELIEF ALLOWED AS ABOVE ` 41 31 81 231 GROSS TOTAL INCOME ` 41 31 81 231 LESS: DEDUCTION U/S 80C AS PER ORIGINAL ORDER ` 40 50 700 DEDUCTION U/S 80HHC AS PER WORKING ` 47 18 151 ` 87 68 851 TOTAL INCOME ` 40 44 12 380 (KIRAN GAIKWAD) ASSTT. COMMISSIONER OF INCOME TAX 4(3) MUMBAI 4. THE HON'BLE SUPREME COURT IN V.K.J. BUILDERS AND CO NTRACTORS P. LTD V/S CIT (2009) 318 ITR 204 (SC) HELD AS FOLLOWS:- IT IS FUNDAMENTAL PRINCIPLE OF THE ACCOUNTANCY THAT THE FIGURES OF CLOSING STOCK OF THE EARLIER YEAR HAS TO FORM THE O PENING STOCK OF THE NEXT ACCOUNTING YEAR. 5. IN OUR OPINION THE ASSESSING OFFICER AS WELL AS TH E COMMISSIONER (APPEALS) HAVE WRONGLY REFUSED ASSESSEES CLAIM ON THE GROUND THAT THE REVISED RETURN OF INCOME HAS BEEN FILED BEYOND THE TIME PERMITTED UNDER THE ACT. THE ASSESSING OFFICER CONSEQUENT UPON PASSING OF ORDER DATED 10 TH MARCH 2008 UNDER SECTION 154 OF THE ACT OUGHT TO H AVE AUTOMATICALLY RECTIFIED THE OPENING STOCK OF THE ASSESSEE. WE TH US SET ASIDE THE IMPUGNED ORDER PASSED BY THE COMMISSIONER (APPEALS) AND RESTORE THE ISSUE BACK TO THE FILE OF ASSESSING OFFICER WITH A DIRECTION THAT THE CLOSING STOCK OF PREVIOUS YEAR BE ADOPTED AS OPENING STOCK OF THE CURRENT YEAR AND INCOME BE COMPUTED ACCORDINGLY. THESE GROUNDS ARE THUS ALLOWED FOR STATISTICAL PURPOSES. 6. COMING TO GROUND NO.3 THE ISSUE IS WHETHER THE EXP ENDITURE IN QUESTION IS IN REVENUE FIELD OR IN CAPITAL FIELD. S.H. KELKAR & CO. PVT. LTD. ITA NO.5489/M/2009 4 7. THE FIRST APPELLATE AUTHORITY HAS BROUGHT OUT THE D ETAILS OF THE EXPENDITURE AT PARA-11 WHICH IS EXTRACTED FOR READ Y REFERNCE. A ELECTRICAL WORK ` 123 792 40 B TARPAULINS MONSOON COVER ` 160 459.00 C CIVIL WORK ` 267 411.00 D TRAVELING TO FIELD AT VARIOUS LOCATIONS ` 175 340.00 E BOREWELL REPAIR AND MAINTENANCE ` 22 973.00 F PAINTING OF GREEN HOUSE AND SHEDS ` 23 588.00 G BROCHURES MADE ON PATCHOULI OIL PROCESS ` 17 687.00 H DIGGING & LEVELING OF LAND ` 26 700.00 I OTHERS ` 21 296.00 8. THE ASSESSEE IN HIS PAPER BOOK FURNISHED NOT ONLY THE DETAILS OF THESE EXPENDITURES AT PAGE-19 BUT HAS ALSO ENCLOSED COPI ES OF THE INVOICES AND BILLS FROM PAGES-20 TO 29. PERUSAL OF THESE BILLS D EMONSTRATES THAT THE EXPENDITURE IN QUESTION IS IN THE REVENUE FIELD AND THAT THERE IS NO ENDURING BENEFIT. THOUGH THE TITLE STATES THAT THESE ARE AGR ICULTURAL RESEARCH EXPENDITURE FROM THE BALANCE SHEET AND PROFIT & LOS S ACCOUNT IN SCHEDULE-X THE ACTUAL NOMENCLATURE IS (I) RESEARCH LABORATOR Y EXPENDITURE; AND (II) AGRICULTURAL DEVELOPMENT EXPENDITURE. WHATEVER MAY BE THE TITLE GIVEN THE FACT REMAINS THAT THE EXPENDITURE IN QUESTION IS IN THE REVENUE FIELD. AS IT IS A FACTUAL MATTER WE DO NOT NEED TO GO THROUGH THE CASE LAWS CITED BY THE PARTIES. CONSEQUENTLY WE SET ASIDE THE IMPUGNED OR DER PASSED BY THE COMMISSIONER (APPEALS) AND ALLOW THE GROUND RAISED BY THE ASSESSEE. 9. GROUND NO.4 IS ON THE ISSUE OF ALLOWANCE OF CLUB M EMBERSHIP RENEWAL EXPENDITURE. 10. PERUSAL OF PAGE-32 OF ASSESSEES PAPER BOOK AND COP Y OF VOUCHERS SHOW THAT THE PAYMENT IS RENEWAL FEES FOR CHAMBER M EMBERSHIP. THE ASSESSEE HAD CLAIMED SIMILAR EXPENDITURE IN THE EAR LIER YEARS AS WELL AS IN THE SUBSEQUENT YEARS AND THE SAME HAS BEEN ALLOWED. S.H. KELKAR & CO. PVT. LTD. ITA NO.5489/M/2009 5 11. THE HON'BLE JURISDICTIONAL HIGH COURT IN OTIS ELEVA TOR CO. (INDIA) LTD. V/S CIT (1992) 195 ITR 682 (BOM.) HAD HELD THAT C LUB FEES PAID ON BEHALF OF EMPLOYEES IS INCURRED IN THE INTEREST OF BUSINES S. 12. LEARNED DEPARTMENTAL REPRESENTATIVE RELIED ON THE J UDGMENT OF HONBLE KERALA HIGH COURT IN FRAMATONE CONNECTOR OE N LTD. V/S DCIT (ASSESSMENT) (2007) 294 ITR 559 (KER.). 13. LEARNED COUNSEL POINTED OUT THAT THIS CASE WAS CONS IDERED BY THE HON'BLE DELHI HIGH COURT IN CIT V/S SAMTEL COLOR LT D. (2010) 326 ITR 425 (DEL.). 14. IN ANY EVENT IN VIEW OF THE JUDGMENT OF HON'BLE JU RISDICTIONAL HIGH COURT IN OTIS ELEVATOR CO. (INDIA) LTD. (SUPRA) WH ICH IS BINDING JUDGMENT WE SET ASIDE THE IMPUGNED ORDER PASSED BY THE COMMI SSIONER (APPEALS) AND ALLOW THE GROUND RAISED BY THE ASSESSEE. 15. IN THE RESULT ASSESSEES APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH SEPTEMBER 2011 SD/- VIJAY PAL RAO JUDICIAL MEMBER SD/- J. SUDHAKAR REDDY ACCOUNTANT MEMBER MUMBAI DATED: 30 TH SEPTEMBER 2011 COPY TO : (1) THE ASSESSEE; (2) THE RESPONDENT; (3) THE CIT(A) MUMBAI CONCERNED; (4) THE CIT MUMBAI CITY CONCERNED; (5) THE DR I BENCH ITAT MUMBAI. TRUE COPY BY ORDER PRADEEP J. CHOWDHURY ASSISTANT REGISTRAR SR. PRIVATE SECRETARY ITAT MUMBAI BENCHES MUMBAI