MANOJ KUMAR PAWANKUMAR KEDIA,MUMBAI vs. DCIT- 4(1), MUMBAI
What did the Tribunal hold?
The Tribunal held that a valid claim should not be denied merely because it was not made in the original return or was capitalized. The lower authorities had not examined the claim on its merits.
What were the facts?
The assessee paid Rs. 12,00,000/- for sublease rights and access for a windmill. This amount was capitalized in the books, but the assessee claimed it as a revenue expense in the return of income. The Assessing Officer (AO) and CIT(A) rejected the claim as it was not filed in a revised return and was capitalized.
What were the issues?
Whether a claim for revenue expenditure can be allowed even if it was capitalized in the books and not initially claimed in the return of income.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
Cases cited in this judgment(2)Show listHide list
Detected automatically from the text. Citations are also linked where they appear in the judgment. The count shows how many other judgments on BharatTax rely on the same authority.
- Goetze (India) Ltd. v. CIT1,842 citing284 ITR 323 · 2006 · SC
- CIT v. Pruthvi Brokers & Shareholders956 citing349 ITR 336 · 2012 · HC
Income Tax Appellate Tribunal, MUMBAI BENCHES “B”, MUMBAI
Before: Shri Mahavir Singh, & Shri Ashwani Taneja
18/05/2016 सुनवाई क" तार"ख / Date of Hearing : 03/06 /2016 आदेश क" तार"ख /Date of Order: आदेश / O R D E R Per Ashwani Taneja (Accountant Member): This appeal has been filed by the assessee against the order of Ld. Commissioner of Income Tax (Appeals), Mumbai-8 {(in short ‘CIT(A)’}, dated 03.10.2013 passed against assessment order u/s 143(3) dated 19.12.2012 for the Assessment Year 2010-11 on the following grounds:
2 Manoj Kumar Pawan Kumar Kedia “1. On the facts and in the circumstances of the case and in law the CIT(A) erred in confirming the disallowance of revenue expenses of Rs. 12,00,000/- as claimed by the Appellant before the A.O. which was paid towards the grant of sublease rights and the rights of suitable access of surroundings for windmill without appreciating the facts of the case and further erred in holding that the appellant has claimed the depreciation on such payments towards sub-lease rights.
2. On the facts and in the circumstances of the case and in law the CIT(A) failed to appreciate that the claim for deduction of the said amount paid was an admissible claim as revenue expenditure and could be claimed before the CIT(A) without filing the revised return of income before the Assessing Officer.
3. On the facts and in the circumstances of the case and in law the CIT(A) ought to have appreciated that it is a settled principal that if the claim of expenses is allowable as revenue expenditure as per Income Tax Act the same ought to be allowed to the Appellant in spite of the fact that the same is capitalized in the books of accounts and ought to have allowed the claim of the Appellant.
4. The Appellant craves leave to add/alter/modify any/all grounds of appeal.”
During the course of hearing, arguments were made by Shri J.P. Bairagra, Authorised Representative (AR) on behalf of the Assessee and by Smt. Bharti Singh, Departmental Representative (DR) on behalf of the Revenue.
The solitary issue raised in this appeal is with regard to deduction of claim of the assessee towards the payment of Rs.12,00,000/- being the payment towards sub-lease rights and rights of suitable access of surroundings for windmill, 3 Manoj Kumar Pawan Kumar Kedia u/s 37(1) of the Act, on the ground that said amount was not claimed in the return filed by the assessee.
3.1. The facts of the case as noted by the lower authorities are the during the year under consideration, a payment of Rs.12 lakhs was made to one M/s Suzlon Gujarat Wind Park Ltd. by the assessee towards the grant of sub-lease rights and the rights of suitable access of surroundings for windmill located in the state of Rajasthan, and the same was capitalized in its books of accounts by the assessee. But, said amount of Rs.12 lacs was claimed in the return of income in AY 2010-11, as allowable u/s 37 of the Act. This contention of the assessee was not accepted by the AO in view of The Hon’ble Supreme Court of India in the case of Goetz (India) Ltd. vs. CIT reported in 284 ITR 323. Therefore, the claim of the assessee that payment of Rs.12 lakhs be allowed u/s 37 of the Act was not accepted and rejected on the ground that the assessee has not filed revised return to claim the same.
3.2. Being aggrieved, the assessee filed an appeal before the Ld. CIT(A) and reiterated its stand that the claim of the assessee was valid therefore, ought to have been allowed by the AO. The assessee submitted documentary evidences in support of its claim but Ld. CIT(A) has rejected the claim of the assessee on the preliminary ground itself as was accepted by the AO, but without findings anything wrong in the claim of the assessee on merits, with following observations:
4 Manoj Kumar Pawan Kumar Kedia “I have carefully considered the facts of the case, observation of the Assessing Officer and the contention of the appellant. I am in agreement with the observation of the Assessing Officer that the appellant had not filed any revised return to rectify the mistakes. The case law relied upon by the appellant to show that new claims can be admitted during appellate proceedings are of no help to the appellant as it is not a new claim and the appellant has capitalised the sub-lease expenses as capital in its books of account and claimed depreciation thereon, therefore, the same cannot be allow as revenue expenditure at the appellate stage. This ground of appeal is thus dismissed.”
3.3. Being aggrieved, the assessee filed an appeal before the Tribunal. During the course of hearing, it has been demonstrated by the Ld. Counsel that no depreciation was claimed on the said payment as was clear from the perusal of depreciation chart filed along with the balance sheet in the return of income. It was shown from the profit and loss account that no lease rent was claimed. In facts, amount of lease rent was included in the fixed asset schedule but neither the depreciation was claimed on this amount nor this amount was claimed in the profit and loss account as an expense. It was submitted that the claim of the assessee was allowable on merits, but only for the reason that a claim was not made in the return, it has been rejected by the lower authorities. In support of his claim, Ld. Counsel relied upon the judgment of Hon’ble Bombay High Court in the case of CIT v. Pruthvi Brokers & Shareholders 349 ITR 336 (Bom).
3.4. Per contra, Ld. DR relied upon the order of the lower authorities.
5 Manoj Kumar Pawan Kumar Kedia 3.5. We have gone through the facts of this case and judgments relied upon by the Ld. Counsel. In our considered view, valid claim of the assessee should not be denied. The AO is obliged to make fair assessment as per law; no tax should be collected except with the authority of law. The judgment of Hon’ble Bombay High Court in the case of CIT vs. Pruthvi Brokers & Shareholders 349 ITR 336 (Bom) is clear on this issue. Thus, we admit the claim of the assessee and send it back to the file of the AO to be examined on its merits, since none of the lower authorities had examined the claim on its merits. The assessee is free to submit details and documents as may be considered appropriate by him as per law for which AO shall give adequate opportunity of hearing and shall decide the this issue after objectively taking into account all details and documentary evidences.
In the result, appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open court on 3rd June, 2016. (Mahavir Singh) (Ashwani Taneja) "या"यक सद"य / JUDICIAL MEMBER लेखा सद"य / ACCOUNTANT MEMBER मुंबई Mumbai; "दनांक Dated: 03/06/2016 ctàxÄ? P.S/."न.स.
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