ACIT, CENTRAL CIRCLE-2(2), HYDERABAD vs. RITHWIK PROJECTS PRIVATE LIMITED, HYDERABAD
Income Tax Appellate Tribunal, HYDERABAD “A” BENCH: HYDERABAD
Before: SHRI MANJUNATHA G & SHRI RAVISH SOOD
PER MANJUNATHA G. A.M. :
The assessee has filed appeal ITA.No.443/ Hyd/2022
against the Order dated 13.07.2022 of the learned CIT(A)-12,
Hyderabad, relating to the assessment year 2020-2021. The Revenue has filed appeals ITA.Nos.516, 517 & 518/Hyd/2022, against the separate Orders dated 13.07.2022 of the learned
CIT(A)-12, Hyderabad, relating to the assessment years 2016-
2017, 2017-2018 and 2019-2020, respectively. The assessee has also filed Cross Objection Nos.19, 20 & 21/Hyd/2025 in Revenue’s appeals ITA.Nos.516, 517 & 518/Hyd/2022, for the assessment years 2016-2017, 2017-2018 and 2019-2020, respectively. Since common issues are involved in all these appeals, these appeals were heard together and are being disposed of by this single consolidated order for the sake of convenience and brevity.
First, we take-up assessee’s appeal ITA.No.443/ Hyd/2022 for the assessment year 2020-21 appeal, in which, the assessee has raised the following grounds :
“1. The order of the Ld. CIT(A) is erroneous both on facts and in law to the extent the order is prejudicial to the interest of the appellant.
The Ld.CIT(A) ought to have considered that the AO has erred in disallowance of expenditure amount of Rs. 9,38,000/- for ROC fee paid towards increase in authorized share capital.
3
ITA.Nos.443, 516, 517 & 518 /Hyd./2022
And C.O.Nos.19, 20 & 21/Hyd./2025
The Ld.CIT(A) ought to have appreciated the fact that the expenditure is in the nature of expenditure laid down for facilitating assessee's operations and to enable it to carry on its business more efficiently and profitably.
The Ld.CIT(A) ought to have appreciated that the filing fee has been paid to enhance the business operation of assessee, therefore it is fully revenue in nature.
The Ld.CIT(A) ought to have appreciated that increase in authorised share capital of the company and is used for meeting the need for more working capital requirement and hence, therefore it is to be allowed as revenue expenditure.
The Ld.CIT(A) ought to have appreciated that the ROC expenditure is allowable u/s 37(1) of the Act since it is incurred exclusively for the purpose of business which is directly proportional to the business needs of the company.
Without prejudice to the above, the Ld. CIT(A) erred in not giving relief to assessee in accordance with the provisions of section 35D of the Act. The appellant may, add or alter or amend or modify or substitute or delete and/or rescind all or any of the grounds of appeal at any time before or at the time of hearing of the appeal.”
Brief facts of the case are that, the assesse viz., “M/s. Rithwik Projects Pvt Ltd.,” engaged in the business of construction contracts and infrastructure developments and a regular filer of return of income. The appellant filed it’s return of income for the assessment year 2020-2021 on 03.02.2021, declaring a total income of Rs.22,92,29,940/-. The case of the assessee company was selected for scrutiny under CASS and notice u/sec.143(2) of the Income Tax Act, 1961 [in short “the Act”] was issued on 29.06.2021. A search and seizure operation was conducted u/sec.132 of the Income Tax Act, 1961 on 12.10.2018 on Rithwik Group of cases. As part of search operation, warrant was issued in the name of assessee and search was conducted u/s 132 of the Act. Subsequently, the Assessing Officer issued notices u/sec.142(1) of the Act from 4 ITA.Nos.443, 516, 517 & 518 /Hyd./2022 And C.O.Nos.19, 20 & 21/Hyd./2025
time to time calling for information. In response, the assessee has furnished information/details. The Assessing Officer after considering the details/information filed by the assessee company, completed the assessment by disallowing ROC fee amounting to Rs.9,38,000/- and assessed the income of the assessee company at Rs.23,01,67,940/- as against the returned income of Rs.22,92,29,940/- vide order dated 29.03.2022
passed u/sec.143(3) of the Income Tax Act, 1961. 4. Aggrieved by the assessment order, the assessee preferred appeal before the learned CIT(A). Before the learned
CIT(A), the assessee challenged the disallowance of ROC fee made by the Assessing Officer contending, inter alia, that, the said ROC fee paid to the