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Before: Shri Duvvuru RL Reddy & Shri S. Jayaraman
आयकर अपीलीय अिधकरण, ‘‘सी” �ायपीठ, चे�ई IN THE INCOME-TAX APPELLATE TRIBUNAL ‘C’ BENCH, CHENNAI �ी धु�ु� आर.एल रे�ी, �ाियक सद� एवं �ी एस जयरामन, लेखा सद� के सम� Before Shri Duvvuru RL Reddy, Judicial Member & Shri S. Jayaraman, Accountant Member आयकर अपील सं./ Year:2014-15 M/s. Sundram Precision Components The Deputy Commissioner of Ltd., 98-A, 7th Floor, Auras Corporate Vs. Income Tax, Centre, Dr. Radhakrishnan Salai, Corporate Circle 6(2), Mylapure, Chennai 600 004. Chennai 600 034. [PAN:AAICS5471J] (अपीलाथ�/Appellant) (��थ�/Respondent) अपीलाथ� की ओर से / Appellant by : Shri Saroj Kumar Parida, Advocate ��थ� की ओर से/Respondent by : Shri J. Pavitran Kumar, JCIT सुनवाई की तारीख/ Date of hearing : 12.09.2019 घोषणा की तारीख /Date of Pronouncement : 04.10.2019 आदेश /O R D E R PER DUVVURU RL REDDY, JUDICIAL MEMBER:
This appeal filed by the assessee is directed against the order of the ld. Commissioner of Income Tax (Appeals) 15, Chennai, dated 29.10.2018 relevant to the assessment year 2014-15. The grounds raised in the appeal of the assessee is that the ld. CIT(A) has erred in confirming the disallowance of write off of capital assets amounting to ₹.35,30,458/-.
2. Brief facts of the case are that the assessee filed his return of income for the assessment year 2014-15 on 29.11.2014 declaring income of ₹.1,46,99,070/- and revised the return of income on 31.03.2016 in which the assessee had admitted income of ₹.1,11,68,610/-. The case was selected for scrutiny. After verification of details submitted by the assessee as well as considering the submissions, the assessment under section 143(3) of the Income Tax Act, 1961 [“Act” in short] was completed by determining the assessed income of the assessee at ₹.1,46,99,068/- after making disallowance of write off of capital assets amounting to ₹.35,30,458/-. On appeal, the ld. CIT(A) confirmed the disallowance.
On being aggrieved, the assessee is in appeal before the Tribunal.
We have heard both the sides, perused the materials available on record and gone through the orders of authorities below. The assessee filed original return as well as revised return. The Assessing Officer asked the assessee to submit the reconciliation between the two. The assessee submitted that in the original return the assessee had disallowed an amount of ₹.35,30,458/- being capital asset written off. But, subsequently, the same has been considered as an allowable business loss based on the decision in the case of CIT v. Binani Cement Ltd. [2016] 67 taxmann.com 281 (Calcutta) and also filed a Note on capital work in progress. After considering the submission of the assessee, the Assessing Officer has observed that the loss suffered on profit earning apparatus shall not be allowed as revenue expenditure by following the decision in the case of Kwality Fun Foods and Restaurants (P.) Ltd. v. DCIT [2013] 38 taxmann.com 39 (Madras), in which the decision of the Tribunal has been held. In line with the decision of the ITAT/Hon’ble Madras High Court (supra), the written off of capital asset amounting to ₹.35,30,458/- was disallowed and brought to tax. On appeal, during the course of appellate proceedings, with regard to the claim of the assessee, the ld. CIT(A) has called for the details of technical description of the apparatus, purpose and utility for which the apparatus was purchased, proof of arrival of the apparatus in the assessee’s business premises and technical reason for not putting it to use, copy of corresponding bill, confirmation letter from the supplier to collaborate the assessee’s claim and how the said advance towards the capital asset was treated in the balance sheet and depreciation chart?. Since the assessee could not submit any information and the queries raised, the ld. CIT(A) confirmed the disallowance of write off of capital assets amounting to ₹.35,30,458/-. We find no infirmity in the order passed by the ld. CIT(A) and the same stands confirmed. The case law relied on by the assessee has no application to the facts of the present case.
4.1 However, consequent to the confirmation of the disallowance, by way of filing Memorandum of additional ground, the assessee has submitted following additional grounds:
“1. Without prejudice to the claim of the Appellant that the amount written off should be allowed as revenue expenditure, in case the amount written off is treated as capital in nature, the same should be assessed as capital loss and allowed to be carried forward.
When the Plant and Machinery intended to be used for the purpose of the business of the Appellant, could not be so used and hence scrapped, the expenditure incurred in relation thereto should be assessed as capital loss and allowed to be carried forward.” Since, the above additional grounds were raised for the first time before the Tribunal, we remit the matter back to the file of the ld. CIT(A) to adjudicate the same in accordance with law by affording an opportunity of being heard to the assessee.
In the result, the appeal filed by the assessee is partly allowed for statistical purposes. Order pronounced on the 4th October, 2019 in Chennai.