TMI Blog2020 (6) TMI 46X X X X Extracts X X X X X X X X Extracts X X X X ..... to change of law with retrospective effect like bonus or till finalization of sales tax case or settlement with trade union with retrospective effect in respect to fee, allowance etc. or receipt of final bill after the cut-off date of the assessment years. The Ld. CIT(A) has duly considered the magnitude and the scale of operations of the assessee company and observed that many of the expenses could not be correctly estimated and there could arise exigencies which require calibration/correction and, therefore, taking note of the fact that these expenses are crystallized in this assessment year under consideration, the Ld. CIT(A) has given relief which according to us, does not require any interference Disallowance on account of Cold Weather Expenses - HELD THAT:- At the time of hearing before the Tribunal, the ld. Representatives of both the sides have submitted that the appellate orders of the ld. CIT(Appeals) giving relief to the assessee on a similar issue were challenged by the Revenue in the appeals filed before the ld. CIT(Appeals) and while disposing the said appeals, the Tribunal has restored this issue to the file of the AO for deciding the same afresh with certain di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion and the increase of authorised capital did not lead to increase of issued capital or acquisition of fixed assets. Keeping in view all these facts of the present case as well as the decision in the case of Hindustan Machine Tools Ltd. vs CIT [ 1988 (3) TMI 14 - KARNATAKA HIGH COURT] we find no infirmity in the impugned order of the Ld. CIT(A) allowing the deduction claimed by the assessee on account of fees paid to ROC for capitalisation of depleted net worth by treating the same as revenue expenditure. - I.T.A. No. 525/KOL/2019 - - - Dated:- 22-5-2020 - Shri P.M. Jagtap, Vice-President And Shri S.S. Viswanethra Ravi, Judicial Member For the Appellant : Shri Imokaba Tamir, CIT For the Respondent : Shri Anjan Kr. Bandyopadhyay, A.R. ORDER PER SHRI P.M. JAGTAP, VICE-PRESIDENT: This appeal is preferred by the Revenue against the order of ld. Commissioner of Income Tax (Appeals)-20, Kolkata dated 08.08.2018. 2. As noted at the outset, there is a delay of 137 days on the part of the Revenue in filing this appeal before the Tribunal. In this regard, an application is moved by the Revenue seeking condonation of the said delay and keeping in view the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stantiate the claim of the assessee was not filed before him. The Ld. CIT(A) has noted that on this issue the AO has not given proper opportunity to the assessee to produce the details to substantiate the claim. The Ld. CIT(A), therefore, called for the details of the expenses incurred under the head 'liquidated damages' along with the copies of the contract entered into by the assessee. It was brought to the notice of the Ld. CIT(A) that the liquidated damages arose out of the contractual obligation towards the customers in relation to timely execution of the job work and terms and conditions of orders placed by the customers which include enforcement of the liquidated damages clause in the contract. It was brought to the notice of the Ld. CIT(A) that whenever there is a late delivery of goods, the customers suo-motu deduct certain amount at a percentage of consideration as per the terms and conditions of the order/contract agreed upon by both parties at the time of contract. Before the Ld. CIT(A), the list of the liquidated damages incurred by the assessee company was enclosed which is brought to our notice and placed in the paper book at page 5. It was brought to ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntractual terms and so, it is an allowable deduction and we confirm the order of the Ld. CIT(A) and dismiss this ground of appeal of the revenue . As the issue involved in the year under consideration as well as all the material facts relevant thereto are similar to A.Ys. 2008-09 to 2011-12, we respectfully follow the order of the Coordinate Bench of this Tribunal for the said years and uphold the impugned order of the ld. CIT(Appeals) deleting the disallowance made by the Assessing Officer on account of liquidated damages. Ground No. 1 of the Revenue s appeal is accordingly dismissed. 6. In Ground No. 2, the Revenue has challenged the action of the ld. CIT(Appeals) in deleting the disallowance of ₹ 4,63,49,404/- made by the Assessing Officer on account of prior period expenses. 7. In the Profit Loss Account filed along with the return of income, a sum of ₹ 4,63,49,404/- was debited by the assessee on account of prior period expenses. According to the Assessing Officer, these expenses related to the earlier years were not allowable for the year under consideration. He accordingly disallowed the same. On appeal, the ld. CIT(Appeals) deleted the said disallowa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot require any interference from our part and we 13 ITA Nos.676/Kol/2014, 1737/Kol/2016, 1882 1883/Kol/2016 Andrew Yule Co. Ltd., AYs- 2008- 09, to 2011-12 confirm the same. Therefore, this ground of appeal of the revenue for the assessment years under consideration is dismissed . As the issue involved in the year under consideration as well as all the material facts relevant thereto are similar to A.Y. 2008-09 to 2011-12, we respectfully follow the order of the Coordinate Bench of this Tribunal for the said years and uphold the impugned order of the ld. CIT(Appeals) deleting the disallowance made by the Assessing Officer on account of prior period expenses. Ground No. 2 of the Revenue s appeal is accordingly dismissed. 9. In Ground No. 3, the Revenue has challenged the action of the ld. CIT(Appeals) in deleting the disallowance of ₹ 5,93,03,435/- made by the Assessing Officer on account of Cold Weather Expenses. 10. We have heard the arguments of both the sides on this issue and also perused the relevant material available on record. It is observed that the disallowance made by the Assessing Officer on account of cold weather expenses was deleted by the ld. CIT(A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wed the expenditure on the ground that Rule 8(2) allows only for replanting and there is no provision for allowance of expenses in relation to young tea bushes, therefore, he has treated the entire expenditure as capital expenditure and added back the same with the total income. On appeal, it was brought to the notice of the Ld. CIT(A) that the entire expenditure relates to maintenance of young tea bushes for the purpose of re-plantation only in area already under plantation and it is clearly allowable expenses under Rule 8(2) of the Rules. It was brought to the notice of the Ld. CIT(A) that the company has been claiming the expenditure consistently and this issue cropped up in AY 1998-99 in the case of assessee's own case in ITA No. 2030/Kol/1996, the Tribunal by order dated 30.08.2004 has decided the case in favour of the assessee. The Ld. CIT(A) took note of the Tribunal's order in assessee's own case wherein the Tribunal has held that the expenses incurred for maintenance in respect of immature tea bushes in the existing garden is to be allowed as revenue expenditure and it was further held that since the expenses were incurred by the assessee company for maintenanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erefore, the expenses are of revenue nature. The cases cited by the learned Counsel for the assessee support the case of the assessee. Since the expenses were incurred by the assessee company for maintenance of and replacement of tea bushes in its existing garden only, the same cannot be said to be that of an enduring benefit of capital nature and accordingly we hold that the expenses claimed by the assessee company are allowable as revenue expenditure. Accordingly, the issue is decided in favour of the assessee and the ground of appeal no. 7 is allowed. Respectfully following the decision of the Tribunal of this issue, cited supra, and since there is no change in facts or law we confirm the order of the Ld. CIT(A) and hence, this ground of appeal of revenue is dismissed . As the issue involved in the year under consideration as well as all the material facts relevant thereto are similar to that of A.Y. 2008-09 to 2011-12, we respectfully follow the order of the Coordinate Bench of this Tribunal for the said years and uphold the impugned order of the ld. CIT(Appeals) deleting the disallowance made by the Assessing Officer on account of expenses incurred on maintenance of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e by the assessee. According to the AO, any expenditure for enhancement of share capital after commencement of business was in the nature of capital expenditure. He accordingly disallowed the claim of the assessee for deduction on account of fees paid to ROC. On appeal, the Ld. CIT(A) deleted the said disallowance made by the AO on the ground that the assessee was a seek company referred to BIFR and the expenditure incurred to re-capitalise its net worth was revenue in nature. 19. We have heard the arguments of both the sides on this issue and also perused the relevant material available on record. The Ld. DR has relied on the decision of Hon ble Supreme Court in the case of Pubjab State Industrial Development Corporation Ltd. vs CIT 225 ITR 792 in support of the revenue s case on this issue. As rightly contended by the learned counsel for the assessee, the said decision however is distinguishable on facts in as much as, the expenditure incurred by the assessee company in the said case for fees paid to ROC for enhancement of capital was not only made once and for all but with a view to bringing into existence an asset or an advantage for the enduring benefit of a trade. In the p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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