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2017 (7) TMI 1306 - AT - Income TaxCooperative Development Expenses allowability - Disallowance being assistance given to JKMPC Ltd. - whether such expenditures are wholly and exclusively for the purpose of business, it does not give any enduring benefit? - HELD THAT:- Expenditure incurred by way of assistance to Jammu & Kashmir Milk Producers' Co-operative Limited are not at all of capital in nature or of any benefit enduring nature. The same are incurred in the normal course of business activities and in furtherance of milk and Amul products. The expenditures are incurred wholly and exclusively for the purpose of business. The decision cited above in case of Valsad District Co.op. Society [2011 (1) TMI 1526 - ITAT AHMEDABAD] in the ratio decided therein is fully applicable to Appellant's case, we therefore, hold that the expenditure incurred of ₹ 150 lakhs being the expenditure incurred as assistance to Jammu & Kashmir Milk Producers' Co-operative Limited are of revenue in nature and same be allowed. - Decided in favour of assessee Depreciation of Amul Parlour at 10% as against 100% depreciation claimed by the Appellant - HELD THAT:- Matter was decided in favour of assessee by the Hon'ble ITAT in assessee's own case for A.Y.2002-03 [2010 (3) TMI 1246 - ITAT AHMEDABAD] and now the same has been confirmed by the Hon'ble Gujarat High Court in assesses own case [2014 (2) TMI 31 - GUJARAT HIGH COURT] as held hats milk dairy procure land on lease basis and constructed temporary sheds for sale of milk products and Hon'ble High Court has also cited similar decision in the case of CIT vs. TVS Lean Logistics Ltd. [2007 (6) TMI 44 - HIGH COURT, MADRAS] and held that construction of building on a leasehold land resulted into assessee only a business advantage and the assessee cannot be stated to have acquired any capital asset. Disallowance of expenditure of Director's visit to various Dairy plants - AO disallowed the expenditure being incurred by the Directors of this co-operative society on the ground that they are not incurred for the purpose of business - CIT (A) confirmed the disallowance in his order holding that Directors visited the plant at Jammu & Kashmir from which the Appellant is getting the Pouch Milk and held that assessee could not explain how the visit of Directors at Plant of Jammu & Kashmir was manifested to the assessee and how it is concerned that the standard of Plant of Federation, which is situated in different States - HELD THAT:- Once we have held that the expenditure incurred by the Assessee for dairy development incurred to assist JKMPC Ltd. is revenue expenditure, then the expenditure incurred by the Directors of the cooperative society are also akin to the business of the society. There is no element of any capital expenditure incurred therein. The expenditure incurred accordingly are allowed as revenue expenditure. This ground of Appeal is accordingly allowed. Addition on account of reimbursement of member unions against Co-op. Development Expenses - HELD THAT:- A.O. heavily relied on his argument that these are part of the dairy development expenditure and reiterated that the expenditure are fully covered by the decision of Ahmedabad ITAT in the case of Valsad District Co-Op. Society [2011 (1) TMI 1526 - ITAT AHMEDABAD] . In view of this, we held that the expenditure of ₹ 124.60 lakh incurred on account of emoluments of member unions are allowed as revenue expenditure. The Appeal of the Revenue is dismissed accordingly. Disallowance of Amul Yatra Expenses - business expenditure - HELD THAT:- We hold that the expenditure incurred on Amul Yatra is incurred by the appellant for business purpose, the same is part and parcel of the dairy development expenditure incurred in normal course of business. In view of this, the expenditure incurred by the appellant are allowable expenditure. This ground of Appeal of Revenue is dismissed. Nature of expenses - expenditure claimed as repair to the damage caused to the plant - revenue or capital expenditure - HELD THAT:- Expenditure incurred is to restore and repair the existing plant and commissioning the same which was stopped due to heavy damage. The fact that in subsequent year insurance receipt has been taxed as revenue income is also confirmed in the statement of income filed for A.Y.2008-09. Once the assessee and department have taken a view that insurance claim received on the damage of one big plant is a revenue income, the corresponding expenditure incurred towards such insurance claim for replacement and repair, expenditure incurred of ₹ 87 lakh has to be treated as revenue in nature. Particularly relying on the decision of CIT vs. Saravana Spinning Mills Limited [2007 (8) TMI 16 - SUPREME COURT] . The Assessee's appeal, accordingly allowed considering the expenditure of ₹ 87 lakhs as revenue Allowable revenue expenditure - Expenditure on Dairy Development are wholly and exclusively for the purpose of business and therefore are allowable as revenue expenditure - various expenditures incurred in form of Co. Op. Development expenses are not at all of capital in nature or of any benefit enduring nature. The same are incurred in the normal course of business activities and in furtherance of milk and Amul products. The expenditures are incurred wholly and exclusively for the purpose of business - Assessee appeal allowed.
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