M/S VARDHMAN TEXTILES LIMITED,LUDHIANA vs. ACIT, LUDHIANA

Following grounds has been raised in this appeal:

That the Order passed by the Ld.CIT(A) is contrary to law and facts of the case.

2. That the Ld. CIT(A) erred in law and on facts in not allowing expenditure of Rs. 58.33 lacs paid to Punjab State Electricity Board as revenue expenditure. 3. That without pre-judice to above ground, the Ld. CIT(A) erred in not adjudicating the additional / alternate ground taken by the assessee regarding allowing depreciation on the amount of Rs. 58.33 lacs. From the aforesaid grounds it is gathered that the only grievance of the assessee relates to the expenditure of Rs. 58.33 lacs paid to Punjab State Electricity Board (PSEB) claimed as revenue expenditure but considered by the AO as capital in nature.

Facts of the case in brief are that the assessee filed its return of income on 29/11/1996 declarign an income of Rs. 2,68,39,520/-, later on the case was selected for scrutiny. The assessee in the year 1994 applied for extension of power load to PSEB which was approved and the cost of 66 KV circuit was equally apportioned amongst three consumers i.e; the assessee, M/s Aarti Steels and M/s Punjab Con-Cast Steels, Ludhiana. The total cost came to Rs. 175.00 Lacs out of which the assessee’s share came to Rs. 58.33 Lacs. The assessee filed additional claim before the AO for allowing Rs. 58.33 Lacs as revenue expenditure which the AO denied. Thereafter the assessee filed an appeal before the Ld. CIT(A) who directed the AO to verify the claim, however the AO did not allow on the ground that the assessee had not claimed the said expenditure in its revised return. The assessee again approached the Ld. CIT(A) who confirmed the action of the AO vide order dt. 29/03/2007.

Being aggrieved the assessee carried the matter to the ITAT wherein vide order dt. 31/03/2008 the issue was remitted back to the CIT(A) to verify the facts whether the impugned amount was revenue or capital in nature and as to whether the claim of the assessee was allowed on identical facts in the preceding and subsequent assessment years.

The assessee raised the additional ground before the Ld. CIT(A) who vide order dt. 21/08/2018 held that the expenditure incurred by the assessee was in the nature of capital expenditure and could not be allowed as revenue expenditure.

Now the assessee is in appeal.

The Ld. Counsel for the assessee at the very outset stated that this issue is squqrely covered by the order dt. 28/05/2020 in to 486/Chd/2019 for the A.Y. 2008-09, 2009-10 & 2013-14 respectively and in ITA No. 787/Chd/2015 & 483/Chd/2016 for the A.Y 2011-12 & 2012-13 vide order dt. 14/03/2019, the copies of the said orders were furnished which are placed on record.

In her rival submissions the Ld. Sr. DR supported the impugned order passed by the Ld. CIT(A).

We have considered the submissions of both the parties and perused the material available on the record. It is noticed that an identical issue having similar facts had been adjudicated vide order dt. 28/05/2020 in to 486/Chd/2019(supra) wherein the relevant findings have been given in para 28 to 33 which read as under:

The Ld. DR though fairly conceded to the above, however, relied upon the orders of the authorities below.

In view of the above since identical issue already stands decided in favour of the assessee by the ITAT in assessment year 2011-12 and 2012-13 and no distinguishing facts have been brought to our notice by the Ld. DR, the said decision will apply in the present case Assessing Officer, following which we hold that the line/bay charges to be revenue in nature. Ground of appeal NO.7 raised by the assessee is accordingly, allowed. Since the facts for the year under consideration are similar to the facts involved in to 486/Chd/2019 (supra). So respectfully following the aforesaid referred to order dt. 28/05/2020 of ITAT in assessee’s own case, we direct the AO to treat the impugned expenditure as revenue in nature.

In the result, appeal of the assessee is allowed.