CIT, FARIDABAD vs. M/S RANDOM CONSTRUCTORS

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ITA/979/2008HC Punjab & HaryanaPHHC01081024200828 July 2009Author: MR. JUSTICE ADARSH KUMAR GOEL,MRS JUSTICE DAYA CHAUDHARY5 pages

AI SummaryDismissed

What did the High Court hold?

The High Court held that the findings recorded by the CIT(A) and the Tribunal were findings of fact. The Tribunal had observed that the expenditure in question was incurred during the previous year and was revenue in nature. The fact that the material could be used in a subsequent assessment year was not a ground to deny the claim for deduction. Regarding the scrap value, the Tribunal noted that there was no material before the AO to conclude that there was income of Rs. 50,000/- on account of scrap value, and an engineering certificate relied upon by the AO stated that wooden shuttering material had no use after its lifetime. Consequently, no substantial question of law arose from the ITAT's order. The appeal was dismissed.

What were the facts?

The Revenue, represented by the Commissioner of Income Tax, Faridabad, filed an appeal under Section 260A of the Income Tax Act against an order dated January 4, 2008, passed by the Income-tax Appellate Tribunal (ITAT), Delhi Bench. The appeal pertained to Assessment Year 1997-98 and challenged the ITAT's confirmation of the Commissioner of Income Tax (Appeals) [CIT(A)] order. The CIT(A) had deleted additions made by the Assessing Officer (AO) amounting to Rs. 2,84,885/- on account of shuttering expenses and Rs. 50,000/- on account of the scrap value of shuttering material. The AO had disallowed the deduction claimed for shuttering expenses and considered the scrap value as income.

What were the issues?

The Tribunal had to decide the following substantial questions of law: 1. Whether the ITAT was correct in law in confirming the CIT(A)'s deletion of the addition of Rs. 2,84,885/- made on account of shuttering expenses, considering that shuttering materials are durable and could be utilized in subsequent financial years? 2. Whether the ITAT was correct in law in confirming the CIT(A)'s deletion of the addition of Rs. 50,000/- made on account of the scrap value of shuttering material, despite these items having some scrap value? Assessee's Contentions: Not recorded in the judgment. Revenue's Contentions: 1. Shuttering expenses should be disallowed as the material is durable and can be used in subsequent years. 2. The shuttering material has a scrap value of Rs. 50,000/-, which should be considered income.

Which sections of the Income-tax Act were involved?

Section 260A

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH

ITA No. 979 of 2008 (O&M) Date of decision: 28.7.2009 The Commissioner of Income Tax, Faridabad. ......Appellant Vs. M/s Random Constructors Pvt. Ltd.,Gurgaon. ...Respondent CORAM:- HON'BLE MR.JUSTICE ADARSH KUMAR GOEL HON'BLE MRS.JUSTICE DAYA CHAUDHARY PRESENT: Mr.Rajesh Katoch, Advocate, for the appellant. **** ADARSH KUMAR GOEL, J. (Oral) The revenue has preferred this appeal under Section 260A of the Income Tax Act against the order dated 4.1.2008 passed by the Income-tax Appellate Tribunal, Delhi Bench “F” New Delhi in ITA No.182/Del/2004 for the Assessment Year 1997-98 proposing to raise the following substantial questions of law:- i) “Whether on the facts and in the circumstances of the case, the Hon'ble ITAT was right in law in confirming order of the learned CIT(A) who deleted the addition of Rs.2,84,885/- made on account of shuttering expenses especially when shuttering materials being a durable item, could be utilized in the subsequent financial year (s) also?”

ITA No. 979 of 2008 [2] ii) “Whether on the facts and in the circumstances of the case, the Hon'ble ITAT was right in law in confirming order of the learned CIT(A) who deleted the addition of Rs.50,000/-made on account of scrap value of shuttering material disregarding the fact that these items had some scrap value?"

The Assessing Officer disallowed the deduction claimed on account of shuttering expenses. The CIT(A) deleted the additions and upheld the claim of the assessee by holding that the said expenses represented revenue expenses. The Tribunal affirmed the said view with the following observations: “The expenditure in question had been incurred during the P.Y.and was revenue in nature. The fact that the material could be used in the subsequent A.Y. is no ground to deny the claim for deduction. Consequently, ground No.1 raised by the Revenue is dismissed.” xx xx xx xx xx xx “ There is no material before the AO to come to the conclusion that there was income of Rs.50,000/- on account of scrap value of shuttering materials. In fact the certificate of the engineering on which AO

ITA No. 979 of 2008 [3] placed reliance clearly states that the wooden shuttering material have no use after the life time.”

We have heard learned counsel for the revenue.

The findings recorded by the CIT(A) and the Tribunal are findings on fact.

No substantial question of law arises.

The appeal is dismissed. (ADARSH KUMAR GOEL) JUDGE (DAYA CHAUDHARY) July 28, 2009

JUDGE raghav Note: Whether this case is to be referred to the Reporter? ........Yes/No ITA No. 979 of 2008 [4]

ITA No. 979 of 2008 [5]

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