HINDUSTAN FOODS LTD., THR. AUT. SIGN., BHAGWANT GAONKAR., vs. THE ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE 1(1), PANAJI AND ANR.,

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TXA/39/2018HC BombayHCBM05003354201702 July 2018Author: HON'BLE SHRI JUSTICE N. M. JAMDAR,HON'BLE SHRI JUSTICE PRITHVIRAJ K. CHAVAN3 pages

AI SummaryDismissed

What did the High Court hold?

The High Court held that the question of whether expenses were capital or revenue in nature depends on the business and activity, making it a mixed question of law and fact. If such a factual question is conceded by the assessee before the Assessing Officer, the Appellate Tribunal is not in error in refusing to consider the issue in view of the concession. The Court found the Tribunal's approach to be neither illegal nor beyond jurisdiction, and concluded that no substantial question of law arises. Consequently, the appeal was dismissed.

What were the facts?

The assessee, Hindustan Foods Ltd., filed its return of income for assessment year 2008-09 declaring a loss of Rs. 63,50,518/-. A dispute arose regarding whether expenses incurred for laying cables were capital or revenue expenditure. The Assessing Officer passed an order on 12 November 2010. The assessee appealed to the Commissioner of Income Tax (Appeals), which was dismissed on 25 October 2016. Subsequently, the assessee appealed to the Income Tax Appellate Tribunal (ITAT), Panaji. The ITAT dismissed the appeal, noting that the issue regarding depreciation and whether the amounts were capital or revenue expenditure had been conceded by the assessee's representative before the Assessing Officer, and thus the issue was considered given up.

What were the issues?

1. Whether the Assessing Officer had a duty to determine the nature of expenditure (capital vs. revenue) irrespective of a concession made by the assessee's representative, particularly when the expenditure related to cement pipes and the Apex Court's law on depreciation was applicable? (Question of law and fact, turning on the interpretation of the Assessing Officer's duties and the nature of expenditure). Assessee's contention: The Assessing Officer should have determined the nature of the expenditure independently, and the law declared by the Apex Court would show that the amounts are admissible as depreciation. Revenue's contention: Not recorded in the judgment.

AI-generated summary — verify with the full judgment below

mukund 1 txa 39.18 dt -2.7.18 IN THE HIGH COURT OF BOMBAY AT GOA TAX APPEAL NO.39 OF 2018 Hindustan Foods Ltd. Thr. Aut.Sign,Bhagwant Gaonkar … Petitioner. Versus The Assistant Commissioner of Income Tax Circle (1), Panaji and Anr. …. Respondents Mr. S.R.Rivankar with Mr. Sagar Rivankar, Advocates for the Petitioner. Ms.Susan Linhares, Standing Counsel for the Respondents. Coram : N.M. Jamdar & Prithviraj K. Chavan, JJ. Date : 2 July 2018. P.C.: By this appeal, the Appellant has challenged the order passed by the Income Tax Appellate Tribunal, Panaji dated 16 June 2017. 2. The Appellant had filed his return of income for the assessment year 2008-09 on 24 September 2008 declaring a loss of Rs.63,50,518/-. The return was processed and one of the issues that arose was regarding laying of cables as to whether the expenses incurred for the said was Capital in nature or Revenue Expenditure.

mukund 2 txa 39.18 dt -2.7.18 The Assessing Officer passed an order on 12 November 2010. Thereafter the Appellant filed an appeal before the Commissioner of Income Tax (Appeals), which was dismissed by the Commissioner on 25 October 2016. Thereafter the Appellant filed the Appeal bearing No.ITA 25/PANAJI/2016 before the Income Tax Appellate Tribunal, Panaji. The Tribunal noting the fact that the issue regarding depreciation and whether the amounts in question were the Revenue or the Capital Expenditure was conceded before the Assessing Officer by the representative of the Appellant, dismissed the appeal as issue has been given up.

The learned counsel for the Appellant submits that there was an duty on the part of the Assessing Officer, to determine the question irrespective of the concession of the representative of the assessee and in case of cement pipes, the law declared by the Apex Court would show that the amounts are admissible as depreciation.

The question whether the expenses were Capital in nature or Revenue in nature would depend on the nature of the business and the nature of the activity on which the amount was spent. This cannot be considered as a pure question of law, but is based on the factual position also. Thus, if such a question which is essentially a factual question, is conceded by the assessee before the Assessment Officer, the learned Appellate Tribunal was not in error in mukund 3 txa 39.18 dt -2.7.18 refusing to consider the issue in view of the concession given by the assessee. We do not find that this approach taken by the Tribunal is illegal or beyond jurisdiction. No substantial question of law arises.

The appeal is accordingly dismissed. Prithviraj K. Chavan, J. N.M. Jamdar, J.

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