M/s. S.K.J.R. Associates, Kolkata v. ITO, Ward - 36(2), Kolkata, Kolkata

ITA 779/KOL/2010 | 2005-2006
Pronouncement Date: 21-01-2011

Appeal Details

RSA Number 77923514 RSA 2010
Bench Kolkata
Appeal Number ITA 779/KOL/2010
Duration Of Justice 9 month(s) 1 day(s)
Appellant M/s. S.K.J.R. Associates, Kolkata
Respondent ITO, Ward - 36(2), Kolkata, Kolkata
Appeal Type Income Tax Appeal
Pronouncement Date 21-01-2011
Appeal Filed By Assessee
Bench Allotted SMC
Tribunal Order Date 21-01-2011
Date Of Final Hearing 06-01-2011
Next Hearing Date 06-01-2011
Assessment Year 2005-2006
Appeal Filed On 19-04-2010
Judgment Text
SMC IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH : KOLKATA () BEFORE . . . . . . . . ) [BEFORE HONBLE SRI D. K. TYAGI JM] ! ! ! ! / I.T.A NO. 779/KOL/2010 '#$ %&' '#$ %&' '#$ %&' '#$ %&'/ // / ASSESSMENT YEAR : 2005-06 M/S. S.K.J.R ASSOCIATES -VS- INCOME-TAX OFFICER WD-36(2) KOLKATA (PA NO.AARFS 3950 J) ()* / APPELLANT ) (+)*/ RESPONDENT ) FOR THE APPELLANT: SRI M. D. SAHA FOR THE RESPONDENT : SRI S. BHADRA / ORDER THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED A GAINST THE ORDER OF THE LD. CIT(A) KOLKATA DATED 01.01.2010 FOR THE ASSESSMENT YEAR 2 005-06 ON THE FOLLOWING GROUNDS : 1. FOR THAT UNDER THE CIRCUMSTANCES OF THE CASE TH E LD. ITO WAS WRONG AND ILLEGAL ON DISALLOWING INTEREST AMOUNTING TO RS.1 61 289/-. 2. FOR THAT UNDER THE CIRCUMSTANCES OF THE CASE THE LD. ITO WAS WRONG AND ILLEGAL ON DISALLOWING ON CAR EXPENSES AMOUNTING TO RS.18 970/ -. 2. IN RESPECT OF GROUND NO. 1 THE FACTS IN BRIEF ARE THAT THE ASSESSEE HAS CLAIMED RS.3 61 730/- AS INTEREST ON UNSECURED LOANS. THE ASSESSING OFFICER FOUND THAT ONE OF THE PARTNERS HAS BEEN MAINTAINING NEGATIVE BALANCE. SE CONDLY THE ASSESSEE ADVANCED HUGE INTEREST FREE LOAN TO M/S. TECHNOPERFECT (INDIA). IN VIEW O F THE ABOVE THE ASSESSING OFFICER HELD THAT THE UNSECURED LOANS WERE NOT UTILIZED WHOLLY AND EX CLUSIVELY FOR THE PURPOSE OF BUSINESS. THE ASSESSING OFFICER THEN MADE A PROPORTIONATE DISALLO WANCE AMOUNTING TO RS.1 61 289/-. IN APPEAL THE LD. CIT(A) SUSTAINED THE ADDITION AS MA DE BY THE ASSESSING OFFICER BY OBSERVING THAT THE ASSESEE HAS PRODUCED NOTHING BEFORE HIM TO REBUT THE FINDING OF THE ASSESSING OFFICER. BEING FURTHER AGGRIEVED THE ASSESEE IS NOW IN APPE AL BEFORE US. 3. AT THE TIME OF HEARING BEFORE US THE LD. COUNSE L FOR THE ASSESSEE PLACED RELIANCE ON SOME ADDITIONAL EVIDENCE WHICH ARE AVAILABLE AT PAG ES 1 TO 7 OF THE PAPER BOOK AND REQUESTED THAT THE MATTER MAY KINDLY BE RESTORED TO THE FILE OF THE ASSESSING OFFICER TO ADJUDICATE AFRESH IN THE LIGHT OF THE ADDITIONAL EVIDENCE TO BE FILED BEFORE HIM TO SUBSTANTIATE HIS CASE. LD. DR HOWEVER DID NOT OBJECT TO THE PRAYER OF THE LD. CO UNSEL FOR THE ASSESSEE. THEREFORE IN THE INTEREST OF NATURAL JUSTICE AND FAIR PLAY I RESTOR E THE MATTER BACK TO THE FILE OF THE ASSESSING 2 OFFICER TO ADJUDICATE AFRESH AFTER TAKING INTO CONS IDERATION THE ADDITIONAL EVIDENCE TO BE FILED BEFORE HIM AND AFTER AFFORDING REASONABLE OPPORTUNI TY OF BEING HEARD TO THE ASSESEE. THIS GROUND OF APPEAL OF THE ASSESSEE IS THEREFORE ALL OWED FOR STATISTICAL PURPOSES. 4. GROUND NO. 2 RELATES TO CONFIRMATION OF DISALLOW ANCE ON CAR EXPENSES AMOUNTING TO RS.18 970/-. FACTS IN BRIEF ARE THAT THE ASSESSING OFFICER FOUND THAT THE ASSESEE CLAIMED CAR EXPENSES OF RS.21 870/- WHICH INCLUDES AN AMOUNT O F RS.18 970/- ON ACCOUNT OF PAYMENT OF ROAD TAX FOR FIVE YEARS. THE ASSESSING OFFICER DIS ALLOWED THE SAME ON THE GROUND THAT IT WAS CAPITAL IN NATURE. IN APPEAL THE LD. CIT(A) CONF IRMED THIS ACTION OF THE ASSESSING OFFICER. BEING FURTHER AGGRIEVED THE ASSESSEE IS NOW IN APP EAL BEFORE US. 5. AT THE TIME OF HEARING BEFORE US THE LD. COUNSE L FOR THE ASSESSEE SUBMITTED THAT THE AMOUNT OF RS.18 970/- HAS BEEN PAID FOR ROAD TAX OF THE CAR WHICH THE VEHICLES AUTHORITY COLLECTED AT A TIME FOR FIVE YEARS. SO THIS EXPEND ITURE HAS TO BE INCURRED FOR RUNNING THE CAR ON ROAD AND THE SAID EXPENDITURE HAS NOT BEEN INCURRED IN THE CAPITAL FIELD. HE ALSO CONTENDED THAT IF THE ADVANTAGE CONSISTS MERELY IN FACILITATING TH E ASSESSEES TRADING OPERATIONS OR ENABLING THE MANAGEMENT AND CONDUCT OF THE ASSESSEES BUSINESS T O BE CARRIED ON MORE EFFECTIVELY OR MORE PROFITABLY WHILE LEAVING THE FIXED CAPITAL UNTOUCHE D THE EXPENDITURE WOULD BE ON REVENUE ACCOUNT EVEN THOUGH THE ADVANTAGE MAY ENDURE FOR A N INDEFINITE FUTURE. IN SUPPORT OF HIS SUBMISSION HE PLACED RELIANCE ON THE DECISION OF AS SOCIATED CEMENT COMPANIES LTD. 172 ITR 257 (SC). HE THEREFORE CONCLUDED THAT THE ADDITI ON MAY BE DELETED IN FULL. 6. ON THE OTHER HAND THE LD. DR RELIED ON THE ORDE R OF THE LD. CIT(A) AND URGED BEFORE THE BENCH TO CONFIRM THE SAME. 7. AFTER HEARING THE RIVAL SUBMISSIONS AND PERUSING THE MATERIAL AVAILABLE ON RECORD AND THE CASE LAW CITED BY THE LD. COUNSEL FOR THE ASSES SEE I FIND THAT THE EXPENDITURE INCURRED BY THE ASSESSEE FOR PAYMENT OF ROAD TAX WAS TREATED BY THE ASSESSING OFFICER AS CAPITAL EXPENDITURE ONLY BECAUSE THE ASSESSEE PAID THIS AMOUNT FOR FIV E YEARS. SINCE PAYMENT OF ROAD TAX IS OF REVENUE NATURE SIMPLY BECAUSE IT HAS BEEN PAID FOR FIVE YEARS AND THAT TOO ON MANDATORY REQUIREMENT IT WILL NOT TAKE THE CHARACTER OF CAP ITAL EXPENDITURE. THIS VIEW OF MINE GETS SUPPORT BY THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF ASSOCIATED CEMENT COMPANIES LTD. 172 ITR 257 WHEREIN THE FOLLOWING WA S HELD : .. IF THIS PRINCIPLE IS APPLIED TO THE FACTS OF T HE CASE BEFORE US WHAT WE FIND IS THAT THE ADVANTAGE WHICH WAS SECURED BY THE ASSESEE BY M AKING THE EXPENDITURE IN QUESTION WAS THE SECURING OF ABSOLUTION OR IMMUNITY FROM LIA BILITY TO PAY MUNICIPAL RATES AND TAXES UNDER NORMAL CONDITIONS FOR A PERIOD OF FIFTE EN YEARS. IF THESE LIABILITIES HAD TO BE PAID THE PAYMENTS WOULD HAVE BEEN ON REVENUE ACCOU NT AND HENCE THE ADVANTAGE SECURED WAS IN THE FIELD OF REVENUE AND NOT CAPITAL . AS A RESULT OF THE EXPENDITURE 3 INCURRED THERE WAS NO ADDITION TO THE CAPITAL ASS ETS OF THE ASSESSEE COMPANY AND NO CHANGE IN ITS CAPITAL STRUCTURE. IN THIS VIEW OF THE MATTER AND FINDING NO CONTRARY MATERIAL BROUGHT ON RECORD BY THE REVENUE AUTHORITIES TO REBUT THE AFORESAID FINDING OF THE H ONBLE APEX COURT I AM OF THE CONSIDERED OPINION THAT THE EXPENDITURE INCURRED BY THE ASSESS EE TOWARDS PAYMENT OF ROAD TAX IS OF REVENUE IN NATURE AND ACCORDINGLY DELETE THE ADDITION SO SU STAINED BY THE LD. CIT(A). THIS GROUND OF APPEAL OF THE ASSESSEE IS THEREFORE ALLOWED. 8. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED AS INDICATED ABOVE. ORDER IS PRONOUNCED IN THE OPEN COURT ON 21.01.2011 SD/- . . (D. K. TYAGI) JUDI CIAL MEMBER ( - - - -) )) ) DATED : 21ST JANUARY 2011 %./ '#01 '2% JD.(SR.P.S.) 3 +''4 54&6- COPY OF THE ORDER FORWARDED TO: 1 . )* / APPELLANT M/S. S.K.J.R ASSOCIATES 11 POLLOCK STR EET 4 TH FLOOR KOLKATA-700 001. 2 +)* / RESPONDENT : ITO WARD-36(2) KOLKATA. 3 . ' # / THE CIT KOLKATA 4 . ' # ( )/ THE CIT(A) KOLKATA 5 . %=' +'# / DR KOLKATA BENCHES KOLKATA 4 +'/ TRUE COPY #>/ BY ORDER ? 1 /DEPUTY REGISTRAR .