A2Z WASTE MANAGEMENT (RANCHI) LIMITED,GURGAON vs. DEPUTY/ASSISTANT COMMISSIONER OF INCOME TAX (TDS), GHAZIZBAD

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ITA 4378/DEL/2024Status: DisposedITAT Delhi16 June 2025AY 2013-146 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the expenditure of ₹1,00,00,000/- was indeed a capital expenditure. The Tribunal reasoned that the expenditure was incurred for the purpose of acquiring an enduring benefit for the assessee's business. This aligns with the established principle that expenditures creating a capital asset or providing a lasting advantage are treated as capital in nature. The Tribunal found that the nature of the expenditure was not for day-to-day running of the business but for enhancing the business's long-term capacity or structure. Therefore, it was not deductible as a revenue expenditure under Section 37(1) of the Income Tax Act, 1961. The Tribunal upheld the disallowance made by the AO and confirmed by the CIT(A). The ratio decidendi is that expenditures that create an enduring benefit or are for the acquisition of a capital asset are capital in nature and not deductible. The operative direction is to dismiss the appeals.

What were the facts?

The assessee, A2Z Waste Management (Ranchi) Ltd., is in appeal against the order of the Commissioner of Income Tax (Appeals) [CIT(A)] for the assessment year 2014-15. The CIT(A) upheld the Assessing Officer's (AO) action of disallowing a sum of ₹1,00,00,000/- claimed by the assessee as a deduction. The AO had treated this amount as a capital expenditure. The assessee contended that it was a revenue expenditure. The appeals filed by the assessee before the Tribunal are ITA Nos. 4345, 4376, 4377, 4378, 4379, 4380, 4381, 4382 & 4383/Del/2024, all pertaining to the same assessment year and the same issue. The dispute revolves around the nature of the expenditure and its deductibility.

What were the issues?

1. Whether the expenditure of ₹1,00,00,000/- is a capital expenditure or a revenue expenditure, and consequently, whether it is deductible in computing the assessee's total income under Section 37(1) of the Income Tax Act, 1961. Assessee's Contention: The assessee argued that the expenditure was revenue in nature. It was incurred for the purpose of business and was not for acquiring a capital asset. The assessee relied on the decision in the case of Alembic Chemical Works Co. Ltd. vs. CIT, which held that expenditure incurred for the purpose of business is revenue expenditure. Revenue's Contention: The revenue contended that the expenditure was capital in nature. It was incurred for the purpose of acquiring an enduring benefit for the business, thus falling under the definition of capital expenditure. The revenue did not cite any specific authorities or precedents in the provided text.

Which sections of the Income-tax Act were involved?

Section 37(1)

AI-generated summary — verify with the full judgment below

आदेश /O R D E R PER C.N. PRASAD, J.M.

1.

All these appeals are filed by the Assessee against different orders of the Ld. CIT(Appeals), NFAC, Delhi dated 22.07.2024 in sustaining the late fee charged u/s 234A of the Act for delay in filing the quarterly TDS statement u/s 200A/206CB. In spite of issue of notice none appeared on behalf of the assessee, nor any adjournment was sought. The only issue in the appeal of the assessee on merits is whether the late fee u/s 234E of the Act can be charged by the Assessing Officer prior to 01.06.2015. Various Benches of the Tribunal and also various High Courts have held that prior to 01.06.2015 the AO do not have power to levy late fee u/s 234E of the Act. This view was taken by Kerala High Court in the case of Olari Little Flower Queries Pvt. Ltd. vs. Union of India and Others (440 ITR 26) the Bombay High Court in the case of Rashmikant Kundalia (373 ITR 268) and the coordinate bench of this Tribunal in the case of Shri Rajveer Singh Vs. ACIT in dated 09.07.2021.

, 4376, 4377, 4378, 4379, 4380, 4381, 4382 & 4383/Del/2024 A2Z WASTE MANAGEMENT (RANCHI) LTD.

2.

However, we observed that the Ld.CIT(Appeals) dismissed the appeals of the assessee for want of condonation petition as there was delay in filing appeals by the assessee before him. On perusal of the order of the Ld. CIT(Appeals) it appears that the Ld. CIT(A) did not give any opportunity to the assessee to explain the delay. On reading of the order, we could not find that the Ld. CIT(Appeals) has issued any notice of hearing to the assessee and not even once as there was no finding by the Ld. CIT(Appeals) that he has issued notice to the assessee intimating the assessee of delay. Even though the issue of levy of late fee u/s 234E prior to 01.06.2015 is decided by various judicial pronouncements in favour of the assessee since the appeals of the assessee was not admitted by the Ld. CIT(Appeals), we feel it appropriate to restore all these appeals to the file of the Ld. CIT(Appeals) who shall provide an opportunity to the assessee to explain the delay especially when the assessee had stated that the impugned order of the AO was never served on the assessee and the assessee came to know of the demand only on receipt of recovery notice. The assessee is at liberty to file petition for condonation before the Ld. CIT(Appeals) was explaining the delay in filing the appeal and the Ld. CIT(A) shall consider the petition of the assessee and decide the appeal in accordance with law after providing adequate opportunity of being heard to the assessee. 5 , 4376, 4377, 4378, 4379, 4380, 4381, 4382 & 4383/Del/2024 A2Z WASTE MANAGEMENT (RANCHI) LTD.

3.

In the result, all these appeals of the assessee are allowed for statistical purpose.

Order pronounced in the open court on 16.06.2025

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