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Income Tax Appellate Tribunal, AHMEDABAD “D” BENCH AHMEDABAD
Before: SHRI PRAMOD KUMAR, & SHRI S. S. GODARA.
PER S. S. GODARA, JUDICIAL MEMBER
The instant batch comprises of nine cases. First two assessment years 2002- 03 and 2003-04 contain Revenue’s appeal ITA Nos. 3115 & 3116/Ahd/2011 arising from the CIT(A), Baroda’s separate orders dated 16.09.2011 and 19.09.2011 in case nos. CAB-I/156/09-10 & CAB-I/102/10-11; respectively, quashing Assessing Officer’s action taking recourse to Section 148 reopening vide separate notices dated 27.03.2009 and 26.06.2009 falling to be beyond four years from the end of the relevant assessment year u/s.147 first proviso thereby overruling re-assessment’s findings treating assessee’s Jetty & Trestle in question to be entitled for 25% rate of depreciation as plant and machinery than 10% in building head in the relevant block involving respective disallowance/addition of Rs.66,81,91,861/- & Rs.50,61,62,320/-, in proceedings u/s. 143(3) r.w.s. 147 of the Income Tax Act, 1961; in short “the Act”.
Next assessment year 2004-05 involves four cases. The assessee has filed its appeal ITA Nos. 3077/Ahd/2011 against the CIT(A)-I, Baroda’s order dated 20.09.2011 in case no. CAB-I/380/2006-07 inter alia upholding Assessing Officer’s action disallowing / adding deferred revenue expenditure of Rs.180,18,223/-, expenditure on right to use land of Rs.1,74,032/- and Rs.17,33,458/- being treated as capital in nature, disallowance of lease amortization charges of Rs.21,42,722/- and prior period expenses of Rs.2,79,29,239/-; respectively in proceedings u/s.143(3) of the Act.
Next come assessee’s and Revenue’s cross appeal ITA Nos. 3078 & 3117/Ahd/2011 against the CIT(A)-I, Baroda’s order dated 20.09.2011 in case no. CAB-I/265/08-09 inter alia upholding Assessing Officer’s action taking recourse to
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Section 147 reopening despite the same being alleged change of opinion resulting into disallowances/additions on issues other than forming reasons of reopening under various heads of repairs and maintenance of plant and machinery of Rs.85,56,054/- by terming it as capital expenditure, minimum assured quantity disallowance of Rs.54,00,02,000/- and in not directing the Assessing Officer to delete bad debt disallowance/business loss in the year of waiver; respectively in former’s case and holding Jetty & Trestle to be plant and machinery entitled for depreciation @25% on electrical installations instead of 15% under building block involving disallowance of Rs.1,35,00,332/-, in proceedings u/s.143(3) r.w.s. 147 of the Act.
This follows Revenue’s appeal ITA No.3118/Ahd/2011 preferred against the very CIT(A)’s order dated 20.09.2011 in case no. CAB-I/103/10-11 quashing reopening in question to be beyond four years from the end of relevant assessment year thereby reversing Assessing Officer’s action disallowing an amount of Rs.39,39,65,490/- after holding that the Jetty & Trestle in question deserved to be included in building block of assets entitled for lesser rate of depreciation than the same being taken in plant and machinery block eligible for 25% depreciation, in proceedings u/s.143(3) r.w.s. 147 of the Act.
Assessment year 2005-06 contains Revenue’s appeal ITA No.3119/Ahd/2011 emanating against the very CIT(A)’s order dated 20.09.2011 in case no. CAB-I/104/10-11 reversing Assessing Officer’s action disallowing assessee’s depreciation claim of Rs.30,17,66,328/- on account of its Jetty & Trestle taken as building block entitled for 10% rate of depreciation than plant and machinery involving 25% depreciation in proceedings u/s.143(3) r.w.s. 147 of the Act.
Last assessment year 2006-07 involves assessee’s and Revenue’s cross appeals ITA Nos.3079 & 3120/Ahd/2011 arising against the very CIT(A)’s order dated 23.09.2011 in case no. CAB-I/263/08-09, disallowing/adding
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repairs/maintenance expenditure of Rs.67,50,588/- as capital in nature, lease amortization charges of Rs.21,42,722/-, prior period expenses of Rs.10,89,135/-, depreciation of Rs.2,28,282/- on foreign exchange loss, restructuring expenses of Rs.35lacs followed by alternative pleadings qua the above grounds no. 2 to 3 and 5 to 6 in former’s case and in deleting bad debts disallowance of Rs.26,14,88,525/- pertaining to various public sector undertakings as well as in reversing depreciation disallowance of Rs.7,55,64,034/- made after treating the Jetty & Trestle in question as part of building block entitled for 10% rate of depreciation than 25% applicable in plant and machinery block; respectively in proceedings u/s.143(3) of the Act. Heard both the parties. Case files perused.
A combined perusal of the above pleadings makes it clear that some of the issues involved in the instant batch of nine appeals are identical. Take for instance Revenue’s sole grievance of depreciation disallowance in case of assessee’s Jetty & Trestle wherein the Assessing Officer has consistently treated the same to be a building qua its port terminal entitled for 10% rate of depreciation as against the tax payers stand that the same is rather a part of its plant and machinery eligible for 25% rate of depreciation. Its other grievance in assessment years 2002-03, 2003-04 & 2004-05 seeks to revive Assessing Officer’s action reopening assessments vide Section 148 notices dated 27.03.2009, 26.06.2009 & 20.06.2009; respectively falling to be beyond four years from the end of the relevant assessment years hereinabove. The Revenue’s third grievance seeks to raise bad debts disallowance issue in last assessment year.
We proceed in this backdrop of Revenue’s appeal to deem it appropriate that a combined adjudication of all of its appeals would meet ends of justice. We first come to the above legal issue of reopening quashed in assessment years 2002-03 to 2004-05 (supra). There is hardly any dispute that the Assessing Officer had framed regular assessments therein on 31.01.2005, 24.03.2006 and 26.12.2006. He thereafter issued Section 148 notices hereinabove for the reason that its Jetty & Trestle were entitled for lesser rate of depreciation @ 10% than 25% allowable for
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plant and machinery. He accordingly treated it as a case of escapement of taxable income from being assessed. This followed the impugned re-assessments being framed resulting in the disallowance(s) of depreciation claims (supra) in the said two assessment years. The CIT(A) reverses Assessing Officer’s action reopening the above assessment on merits as there had been no failure on assessee’s part in disclosing fully and truly all necessary particulars regarding its depreciation claim by applying Section 147 (first proviso). He therefore quashes the impugned reopening in both assessment years.
Learned Departmental Representative fails to dispute the crucial fact that the assessee had in fact disclosed all its depreciation details in Form 3CD Annexure 1A. Her case however is that Section 149(1)(b) envisages time limit for issuing Section 148 notice to be between four years to six years squarely applies in facts of the instant case. We find no merit in the instant argument as the above statutory provision does not operate as an exception to Section 147 (first proviso). It is not a proviso to proviso in other words. Learned Departmental Representative further fails to dispute that the question whether or not a port terminals Jetty / Trestle is to be treated as plant and machinery is no more res integra since this tribunal’s co- ordiante bench decision in Kandla Port Trust case (2007) 104 ITD 1 (Rjt) has held such assets to be plant and machinery entitled for 25% rate of depreciation. Hon’ble jurisdictional high court has upheld the said view in Revenue’s tax appeal no.1942 of 2006 decided on 05.07.2016. We therefore find no reason to accept in Revenue’s arguments seeking to treat assessee’s Jetty & Trestle as building block of assets instead of plant and machinery in all cases on merits as well. Its appeal ITA No.3115, 3116, 3117, 3118 & 3119/Ahd/2011 are accordingly declined.
This leaves us with Revenue’s appeal ITA Nos. 3120/Ahd/2011 involving the remaining issue of bad debts disallowance of Rs.26,14,88,525/- made by the Assessing Officer on the ground that the debtors in question were in fact public sector undertakings in whose cases it could not be held that the sums in question had become actually bad. He therefore invoked the impugned disallowance in
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assessment order dated 19.12.2008. The CIT(A) quotes hon’ble apex court’s judgment in TRF Limited case 323 ITR 397 (SC) holding that it was nowhere incumbent for an assessee to prove that the debts in question had actually become bad w.e.f. 01.04.1989. There is no dispute that the assessee had been duly including the said amounts as its income in preceding assessment years or that it has actually written off the same in the impugned assessment year. We therefore hold that the CIT (A) has rightly accepted assessee’s claim of bad debts. The Revenue’s instant remaining ground as well as main appeal ITA No.3120/Ahd/2011 fails.
We now start with assessee’s appeals. It has filed ITA Nos. 3077/Ahd/2011 in assessment year 2004-05. Its first substantive ground challenges both the lower authorities’ action disallowing deferred revenue expenditure claim of Rs.1,80,18,223/-. It emerges from the CIT(A)’s operative portion in para 2.2 page 5 that he has followed his orders in assessment year 2002-03 in confirming Assessing Officer’s action. We sought to know the final status of the issue in the said assessment year. Learned Departmental Representative invites our attention to the case records containing a co-ordinate bench’s order in assessee’s case for the said earlier assessment year involving appeal ITA No.3075/Ahd/2011 decided on 19.07.2016 has decided the very issue in Revenue’s favour. Mr. Mehta however seeks to draw a fine line of distinction on the ground that the relevant head of deferred revenue expenditure was not the same. He fails to indicate the relevant distinction of allowability of deferred revenue expenses in question in principle as adjudicated in Revenue’s favour. We therefore see no reason to adopt a different approach in the impugned assessment year. This issue is therefore decided against the assessee. The impugned disallowance of deferred revenue expenditure is accordingly confirmed.
Both the learned representative are ad idem in informing us that assessee’s next two substantive grounds of disallowance of right to use land and amortization of lease charges of Rs.19,07,484/- and Rs.21,42,722/- (supra) also stands decided in
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Revenue’s favour as per the above co-ordinate bench decision in assessment year 2002-03 hereinabove. We appreciate such a fair stand. Both the impugned disallowances forming subject matter of challenge in assessee’s second and third substantive grounds are accordingly rejected.
The assessee’s forth substantive ground seeks to delete prior period expenditure disallowance of Rs.2,79,29,229/- as made by both the lower authorities in assessment and in lower appellate proceedings. The Assessing Officer as well as the CIT(A) reject assessee’s claim that the impugned expenditure stood crystallized in relevant previous year only although it pertained to earlier assessment years. Mr. Mehta fairly informs us at this stage that the CIT(A) has accepted its impugned claim in assessment year 2006-07. We therefore are of the view that the very grievance raised in the impugned assessment year stands rendered infructuous. The assessee’s appeal ITA No.3077/Ahd/2011 fails accordingly.
Next assessee’s appeal is ITA No.3078/Ahd/2011. Its first substantive grievance seeks to challenge validity of reopening taken recourse to by the Assessing Officer as mere change of opinion. We proceed to adjudicate the instant legal ground. It is evident that the Assessing Officer had framed a regular assessment in assessee’s case on 26.12.2006 inter alia making various disallowances/additions. He thereafter formed reasons to believe that its taxable income liable to be assessed had escaped assessment. He therefore issued Section 148 notice dated 04.04.2007. The assessee in turn stated that its earlier regular return be taken as the one filed in furtherance to the above reopening notice. It also showed a copy of reopening reasons. The Assessing Officer furnished the same reading as under:
"It is noticed from the case records that the amount of Rs.128042/- paid as income tax was capitalized on 31:3.2001 by the assessee and consequently, during the assessment year 2004-05 depreciation Rs.18006/- has been claimed in that respect. Since the same cannot be capitalized and depreciation cannot be claimed in that respect by the assessee, the depreciation of Rs.18006/- claimed on this account was to be disallowed It is also noticed from schedule 16 (significant account policies) form.ng part of the account that vide item No.5 the assessee has mentioned that the revenue for the minimum guaranteed quantities agreed upon by the user promoters have been recognized in which there is
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reasonable certainty of realization. The assessee is following mercantile system of accounting and the income hast to be accounted for when it is accrued to it Under the mercantile system of accounting the question of recognition of revenue upon certainty of realization does not arise. It has to be accounted for on the basis of accrual. The assessee has not accounted for the income on the basis of accrual. Therefore the revenue for the minimum guaranteed quantities agreed upon by the user promoters 'have to be accounted for on accrual basis. It is important to mention that in the earlier previous year addition was made to the total income of the assessee on the same issue. The fall in GP ratio as compared to the last previous year also remained to be explained by the assessee."
The assessee chose to file its written objections dated 06.10.2008 before the Assessing Officer as per hon’ble apex court’s judgment in GKN Driveshaft (India) Ltd. vs. ITO 259 ITR 19 (SC). The same stood rejected from assessing authority’s end as devoid of merit. It thereafter framed consequential re-assessment on 22.12.2008 inter alia disallowing / adding the above depreciation on income tax, depreciation on electrical installation, repair/maintenance expenses held capital in nature and minimum quantity shortfall amounts of Rs.18,006/-, Rs.13518338/-, Rs.1,10,80,747/- & Rs.54,00,02,000/-; respectively.
The assessee preferred appeal. It challenged validity of the above reopening first of all by calling it as mere change of opinion. It thereafter raised four substantive grounds on merits challenging correctness of the above as many disallowances/addition. The CIT(A)’s order upholds validity of the impugned reopening as under:
“2.2 I have considered the matter. In appellant's case, even though assessment had been completed u/s 143(3) earlier, notice u/s 148 was issued on 4.4.2007 i.e. within four years from the end of the assessment year and hence proviso below sec. 147 is not applicable. As held by the Hon. Supreme Court in the case of Rajesh Jhaveri Stock Brokers Pvt. Ltd. (2007) 291 ITR 500 (SC), under section 147 substituted w.e.f. 1,4.1989, only condition required to be fulfilled for reopening within four years is that the AO must have reason to believe that income, profits or gains chargeable to tax escaped assessment. The Supreme Court held that if the reopening is within four years from the end of the assessment year, i.e. in cases not falling under proviso to sec. 147; after 1.4.1989, if the AO for whatever reason has reason to believe that income had escaped assessment, it confers jurisdiction to reopen the assessment. Regarding 'change of opinion', Hon. High Court of Madras in the case of Shri Shakthi Textiles Ltd. (2010) 193 Taxman 216 (Mad) after considering Supreme Court's decision in the case of Kelvinator of India Ltd., held that there is no legal necessity that the material referred to in sec. 147 of the Act should be fresh material collected subsequent to the original assessment order and
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even from the materials already available on record, if subsequently AO has reason to believe that there was escapement of assessment, surely he can issue notice u/s 148, Decision referred to by the appellant in the case of Garden Silk Mills 237 ITR 668 (Guj) is in respect of notice u/s 148 issued under law of section 147 as it stood prior to its amendment w.e.f. 1.4.89. This decision is therefore not applicable in appellant's case. As held by the Supreme Court in the case of Rajesh Jhaveri Stock Brokers Pvt. Ltd, and other cases, sufficiency of reasons recorded by the AO cannot be questioned for assessments reopened within four years from the end of the assessment year. It is held that reopening of assessment u/s 147 was validly done in appellant's case.”
The CIT(A) thereafter declined assessee’s another legal argument that the Assessing Officer ought not to have disallowed / added items other than forming subject matter of reopening reasons (supra). He quoted Section 147 explanation 3 inserted by the Finance Act (No.2) of 2009 with retrospective effect from 01.04.1989. The assessee does not appear to have pressed its challenge to depreciation disallowance of Rs.18,006/-. The same accordingly stood dismissed for want of challenge. The CIT(A) thereafter accepted assessee’s challenge to depreciation disallowance of Rs.1,35,00,332/- qua its Jetty & Trestle (supra). He then partly affirmed Assessing Officer’s action disallowing expenses of Rs.1,10,80,747/- to extent of Rs.85,56,054/- thereby treating the same as capital expenditure and balance of Rs.25,24,693/- incurred on painting work as revenue expenditure. Last and final disallowance of shortage in quantity also stands upheld in lower appellate order as per corresponding findings in assessment year 2003-04. This leaves both the parties aggrieved to the extent of their grievance pleaded in their respective grounds.
We first advert to assessee’s challenge to validity of reopening by terming it as a case of mere change of opinion. There is no dispute that the Assessing Officer initiated the above reopening within four years from the end of relevant assessment year. It has further come on record that the assessee itself has accepted disallowance of depreciation of Rs.18,006/- (supra). Section 147 explanation 2 of the Act envisages that escapement of assessment of taxable income would arise in case of excessive depreciation computation. It is therefore a case wherein there has been a claim of non allowable depreciation claim having gone accepted during
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assessment. Hon’ble apex court’s judgment in Raymond Woolen Mill vs. ITO (1999) 236 ITR 34 (SC) holds that sufficient prima facie material available with an Assessing Officer pointing towards escapement of taxable income from being assessed is enough in setting into motion the reopening in question. We therefore find no merit in assessee’s instant argument. Its first substantive two substantive grounds are accordingly rejected.
The assessee’s third substantive ground pleads that the CIT(A) has erred in law as well as on facts in confirming Assessing Officer’s action making disallowances/additions on issues other than those forming reasons of the reopening. We do not find any substance in the instant argument since it has already come on record that the one of the addition of depreciation of Rs.18,006/- (supra) itself has attained finality which formed first reason of reopening. The assessee’s instant third substantive ground is accordingly rejected.
The assessee’s forth substantive ground seeks to reverse both the lower authorities’ action holding its repair and maintenance expenditure of Rs.85,56,054/- out of Rs.1,10,80,747/- as capital expenditure (supra). We find that the CIT(A) follows his order passed in assessment year 2006-07 forming subject matter of appeal in ITA No.3079/Ahd/2011 affirming identical disallowance as under:
“3.2. 1 have considered the submissions. Items categorized as "(A) Stores & Spares" of Rs.24,77,536/- are spare parts and I am in agreement with appellant that replacement of parts, which are not independent machines by themselves were 'current repairs' allowable u/s.31. Expenses of Rs.35,40,533/- under the head "(B) painting work" are also accepted to be in the nature of current repairs, being incurred to preserve and maintain tanks storing chemicals. Regarding expenses of Rs.31,04,241/- classified as "(C) Fabrication of FRO tank", the expenses were towards 'fabrication' and 'erection' of tanks and not 'repairs', Appellant's contention that expenses were towards repairs of existing tanks is not supported with any evidence. Such expense was therefore rightly held to be of capital nature. Lastly, expense of Rs.36,46,346/-under the head "(D) Replacement of pipeline" was incurred for laying down new pipeline from jetty to tank resulting in enduring benefit to the appellant. Such expenses were rightly classified as capital expenditure. The decisions relied upon by the appellant cannot be applied as it is to appellant's case; however, the principles laid down in the cases of Saravana Spinning Mills Pvt. Ltd. 293 ITR 201 (SC), New Shorrock Spinning & Manufacturing Co. Ltd., 30 ITR 338 (Bom) etc. have been applied while deciding the matter. To sum up, out of total expenditure of Rs.1,27,63,657/-, expenditure to the extent of Rs.60,18,069/- is held to be revenue
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expenditure and the balance amount, i.e. Rs.67,50,588/- is held to be capital expenditure. Depreciation allowed by the Assessing Officer may accordingly be modified.”
We invited both parties’ attention towards assessment year 2006-07 appeal hereinabove. The assessee had moved its FRO tanks from one place to another by way of cranes and shafts in order to collect chemical from incoming cargo and for having replaced existing Naptha pipeline from Jetty to tank. There is no material on record indicating any increase in assessee’s already installed capacity in both the above instances. Or that the repair and maintenance expenditure in question pertains to replacement of assets concerned. We therefore observe that the assessee’s arguments claiming both the above items as revenue expenditure deserve to be accepted in the impugned assessment year 2004-05 as well as in 2006-07. The corresponding grounds in these assessment years challenging the impugned identical disallowance are accepted.
The assessee’s next substantive ground assails correctness of both the lower authorities findings disallowing/adding minimum assured quantity expenditure of Rs.54,00,02,000/- (supra) is found to be covered in its case appeal ITA No.3076/Ahd/2011 for assessment year 2003-04 decided on 19.07.2016 wherein the issue stands accepted against the Revenue. Learned Departmental Representative is fair enough in not pointing out any distinction in the impugned assessment year. This disallowance therefore stands deleted. The assessee’s next substantive ground raised without prejudice to the instant one stands rendered infructuous. Its appeal ITA No.3078/Ahd/2011 is partly accepted.
This leaves us with assessee’s last appeal ITA No.3079/Ahd/2011. Its first substantive ground seeking to delete disallowance of repair and maintenance expenses of Rs.67,50,588/- as capital expenditure already stands accepted in preceding paragraphs.
The assessee’s second substantive ground seeking to delete amortization of lease charges of Rs.21,42,722/- is admittedly decided in Revenue’s favour as per
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the above co-ordinate bench’s order in assessment year 2002-03 (supra). We therefore follow consistency herein as well to affirm the disallowance in question. 24. The assessee’s third substantive ground seeks to delete prior period expenditure disallowance of Rs.10,89,135/-. Both the lower authorities have rejected its explanation that same has in fact crystallized in the impugned assessment year. They further are of the view that there is no such evidence of crystallization of the said expenses in the case file. The assessee seeks to quote hon’ble jurisdictional high court’s decision in CIT vs. Indian Petrochemical Corporation Ltd. (2016) 74 Taxman.com 163 (Guj) and hon’ble Bombay high court’s judgment in CIT vs. Nagri Mills Ltd. 681 (Bom.). There can hardly be any dispute about the relevant law settled in above two judicial precedents. The issue however is that of evidence of crystallization. Learned counsel has filed a lengthy paper book to this effect. The same nowhere proves as to how and in what circumstances the expenditure in question got crystallized. The fact however also remains that neither the Assessing Officer nor the CIT(A) doubt genuineness of the expenditure in question in principle. We therefore direct the Assessing Officer to allow the said expenditure in the corresponding assessment year instead of the impugned assessment year after calling for necessary records as per law. This issue is taken as accepted for statistical purposes.
The assessee’s next substantive ground challenges both the lower authorities’ action disallowing depreciation on foreign exchange loss on payment basis amounting to Rs.2,28,282/-. Both of them invoke Section 43A of the Act against the assessee. A perusal of the said statutory provision makes it apparent that the same is applicable only an assessee acquires the capital asset in question from a country outside India. The CIT(A) upholds Assessing Officer’s action as follows:
“3.2. 1 have considered the matter. Appellant’s contention is that section 43A is not applicable due to assets being self constructed. Appellant submitted before the Assessing Officer through letter dated 14.11.2008 that the capitalization of foreign exchange loss in question pertained to plant, and machinery and jetty & trestle, which were constructed in India. Thus, the foreign exchange loss in question pertained to various machines and parts imported from outside India which were used for constructing the jetty etc. in India.
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Section 43A is applicable in respect of increase or reduction due to foreign exchange rate in respect of any assets acquired from outside India and machines and parts used for constructing the jetty etc. were 'assets' by themselves and exchange rate loss/gain in their respect would also be governed by section 43A. Further, Supreme Court in the case of ONGC (2010 189 Taxman 292 (SC) held that "actual payment" is a condition under amended section 43A w.e.f. 1.4.2003 and such payment of decreased/enhanced liability on account of fluctuation in foreign exchange rate has been made a condition precedent for making adjustment in the carrying amount of fixed assets. Since in appellant's case, the period involved is F.Y.2005-06,i.e. after amendment in section 43A w.e.f. 1.4.2003, decrease or increase in liability on notional basis as per AS-11 cannot be added to cost of underlying assets in violation of section 43A. Regarding appellant's request to allow the claim of depreciation in the year of actual payment, appellant is to make the claim before the Assessing Officer as per law in the concerned year. Disallowance of depreciation of Rs.2,28,282/- is confirmed.”
Learned counsel representing assessee strongly argues that both the lower authorities have erred in making the impugned disallowance. He has also filed elaborate written submission that the assets in question had in fact been acquired from within India only. There is however no rebuttal to the CIT(A)’s findings that the assessee had in fact imported machines, parts from outside India for the purpose of constructing its Jetty. Lower appellate authorities’ further conclusion on actual payment aspect (supra) has also not been controverted. We therefore find no merit in assessee’s instant substantive ground. The same stands rejected.
The assessee’s next substantive ground pleads that both the lower authorities have erred in treating its loan restructuring expenses of Rs.35lacs as capital in nature. The assessee has admittedly made the said payment to M/s. Brescon Corporate Advisor for the purpose of loan restructuring. Pages 100 to 104 inter alia demonstrate that assessee had been paying interest at average rate @12.89% stated to have come down to 7.85% further reducing its average interest outgo from Rs.55.29crores to Rs.47.17crores on year to year basis. There is further no quarrel that the interest in question is otherwise allowable as Revenue expenditure. Hon’ble jurisdictional high court’s decision in DCIT vs. Gujarat Narmda Valley Fertilizers Co. Ltd. 33 taxmann.com 117 (Guj) and CIT vs. Gujarat State Fertilizers & Chemicals Ltd. 358 ITR 323 (Guj) hold that restructuring expenses are admissible as revenue expenditure. We therefore direct the Assessing Officer to delete the impugned disallowance.
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The assessee’s last substantive ground seeks to delete disallowance pertaining to minimum guaranty payment in assessment years 2003-04 & 2004-05 as an alternative submission to its corresponding pleadings in said assessment years. We have already deleted the above disallowance in preceding paragraphs. This substantive ground is accordingly rendered infructuous. Assessee’s appeal ITA No.3079/Ahd/2011 is therefore partly accepted.
We quote our above discussion to dismiss Revenue’s all six appeals ITA Nos. 3115 to 3120/Ahd/2011 pertaining to assessment years 2002-03 to 2006-07. Assessee’s appeal ITA Nos. 3077/Ahd/2011 is dismissed whereas ITA Nos.3078/Ahd/2011 and 3079/Ahd/2011 are partly allowed.
[Pronounced in the open Court on the 13th day of November, 2017.]
Sd/- Sd/- (PRAMOD KUMAR) (S. S. GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad: Dated 13/11/2017