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Income Tax Appellate Tribunal, BENCH – “A”, AHMEDABAD
Before: SHRI RAJPAL YADAV & SHRI MANISH BORAD
आदेश/O R D E R
Revenue is in appeal before the Tribunal against order of ld.CIT(A)- XX, Ahmedabad dated 2.5.2013 passed for the Asstt.Year 2009-10.
Sole grievance of the Revenue is that the ld.CIT(A) has erred in treating payment of Rs.44,95,710/-made to PGVCL new connection charges as revenue expenditure as against capital expenditure treated by the AO.
Brief facts of the case are that the assessee has filed its return of income electronically declaring income at Rs.40,25,160/-. The assessee has debited an amount of Rs.44,95,710/-. under the head “PGVCL new connection
ITA No.2052/Ahd/2013 2 charges”. In other words, the assessee has applied for new connection to Electricity Board which has granted connection on the condition that the assessee will incur expenditure for laying a new transmit line. The assessee has treated the expenditure as revenue expenditure, whereas the ld.AO treated the same as capital expenditure. On appeal, the ld.CIT(A) has accepted contentions of the assessee on the ground that no new assets came into existence. No doubt the assessee has incurred expenditure for laying down a new service line, but this electric line will be under the ownership of the Electricity Board and not with the assessee. Thus, according to the ld.CIT(A), the expenditure incurred by the assessee deserves to be treated as revenue expenditure. The ld.CIT(A) has made reference to the following case laws:
i) Smt. Prabhavati S. Shah Vs. CIT, 31 ITR 1 (Bom) ii) Parekh Automobiles Vs. ITO, 68 TTJ (Rajkot) 722 iii) ITO (Exemption) Vs. Bajoria Foundation, 254 ITR (AT)
At the outset, the ld.counsel for the assessee submitted that the issue in dispute is squarely covered in favour of the assessee by the decision of the Hon’ble Bombay High Court, in the case of CIT Vs. Excel Industries Ltd., 122 ITR 0995 and Delhi High Court decision in the case of CIT Vs. Saw Pipes Ltd., 300 ITR 0035. The ld.DR was unable to controvert this contention of the assessee. He relied upon the order of the ld.AO.
On due consideration of facts and circumstances of the case, we are of the view that the issue in dispute is squarely covered in favour of the assessee by the decision of the Hon’ble Bombay High Court as well as Delhi High Court. In both decisions, the assessee has incurred expenditure for availing electricity connection, whereby they have paid for laying down overhead line. Hon’ble Courts have upheld that incurrence of such expenditure is in the nature of revenue. The ld.CIT(A) has placed reliance on these decisions, and
ITA No.2052/Ahd/2013 3 thereafter treated the expenditure as revenue in nature. In our opinion, the ld.CIT(A) has rightly construed the position of law laid down by the Hon’ble Courts, and therefore, no interference deserves to be called for in the order of the ld.CIT(A). Accordingly, appeal of the Revenue is dismissed.
In the result, the appeal of the Revenue is dismissed. Order pronounced in the Court on 24th October, 2017 at Ahmedabad.
Sd/- Sd/- (MANISH BORAD) (RAJPAL YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER