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2015 (10) TMI 2500 - ITAT CHANDIGARH

2015 (10) TMI 2500 - ITAT CHANDIGARH - TMI - Disallowance of earnest money given for acquisition of land - Held that:- If any asset is acquired and if it is a benefit of enduring nature, then, of course, assessee cannot get deduction of the amount for acquisition of land as Revenue expenditure. When land was not acquired, no capital asset has been acquired and therefore, the payment of ₹ 7,46,088/- is to be allowed as business loss. In our view, the CIT(A) has correctly held that the claim .....

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he scope of the study relates to the promotion of products of company in order to sustain market pressure and to maintain its market position. It is also explained that the scope further included employee restructuring also so as to save the manpower cost and to achieve best utilization of human effort. , Thus it is clear that there was no creation of capital asset in the case of assessee company. In view of the above, we do not find any merit in the ground raised by the Revenue - Decided agains .....

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ue - ITA No. 474/Chd/2014 - Dated:- 29-10-2015 - SHRI H.L.KARWA, VICE PRESIDENT & MS. ANNAPURNA MEHROTRA, ACCOUNTANT MEMBER For the Appellant : Sh. S.K. Mittal For the Respondent : Sh. Subhash Aggarwal ORDER PER H.L.KARWA, VP This appeal filed by the Revenue is directed against the order of CIT(A)-II, Ludhiana dated 14.2.2014 relating to assessment year 2007-08. Ground No.1 of the appeal reads as under;- 1. Whether on the facts and circumstances of the case and in law, the Ld CIT(A) erred in .....

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) on 6.2.2009 at a loss of ₹ 63,52,253/-. Subsequently, the case was selected for scrutiny and statutory notices u/s 143(2) and 142(1) along with questionnaire were issued and served upon the assessee. The Assessing officer noticed that assessee had debited an amount of ₹ 7,46,088/- to the profit and loss account. In this regard, the assessee submitted that amount was forfeited by SIPCOT and pertained to advance given for purchase of immoveable property. The assessee also submitted t .....

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and no new asset of enduring benefit / profit making apparatus had been acquired out of it. The assessee claimed that expenditure was Revenue expenditure as it had suffered loss in the normal course of business. The Assessing officer disallowed the claim of the assessee stating that the expenditure was a capital expenditure and accordingly added the same to the total income of the assessee. 3. On appeal, the CIT(A) deleted the addition by relying on the order of the ITAT Ahmedabad Bench in the c .....

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set is acquired and if it is a benefit of enduring nature, then, of course, assessee cannot get deduction of the amount for acquisition of land as Revenue expenditure. When land was not acquired, no capital asset has been acquired and therefore, the payment of ₹ 7,46,088/- is to be allowed as business loss. In our view, the CIT(A) has correctly held that the claim of the assessee as business loss and deserves to be allowed. Accordingly, we uphold the order of the Ld. CIT(A) and dismiss gro .....

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0/- amounting to ₹ 1,41,500/- as deferred Revenue expenditure. The assessee claimed that it had engaged a professional agency to carry out extensive research for re-engineering of the business processing and organization structure for system improvement and system building at various outlets of the company. The study was carried out in the year 2004-05 and total payment was made during the same year to the company. This expenditure was accounted for in the books of account as deferred Reve .....

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-. 7. On appeal, the CIT(A) deleted the addition for the reasons stated in para 5.3 of the order. The Ld. CIT(A) observed that there was no creation of capital asset in this case. He further observed that merely because the benefits accruing from the study were enduring does not by itself make the expenditure a capital expenditure. He relied on the judgement of the Hon'ble Supreme Court in the case of Empire Jute vs CIT [1980] 124 ITR 1 wherein the Hon'ble Supreme Court held that it is n .....

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onduct of the assessee s business to be carried on more effectively or profitably while leaving the fixed capital untouched, the expenditure would be on Revenue account, even though the advantage may endure for an indefinite future. Relying on the above judgement, the CIT(A) came to the conclusion that in this case study was conducted for the purposes of facilitating the business operation of the assessee and enabling the management and conduct of the assessee s business to be carried out more e .....

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s essentially of Revenue nature as it was incurred for improvement of business practices linked with marketing and human resource utilization. It is claimed that the scope of the study relates to the promotion of products of company in order to sustain market pressure and to maintain its market position. It is also explained that the scope further included employee restructuring also so as to save the manpower cost and to achieve best utilization of human effort. , Thus it is clear that there wa .....

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4 ITR 323 (SC), in which it was held that claim of deduction by way of application to the AO cannot be entertained. 10. The facts noted by the authorities below are that during the year under consideration the assessee had purchased a new machinery worth of ₹ 17,28,295/-. In the return of income the assessee claimed depreciation at enhanced rates (additional depreciation). The Assessing officer did not consider this claim. No reasons were given by the Assessing officer for rejecting this c .....

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.12.2009 the appellant had filed its claim for additional depreciation pertaining to the addition to fixed assets amounting to ₹ 17,28.295. Although this issue has not been discussed in the assessment order, reference to the discussion with the AO on this issue has been made in appellant's submission dated 10.12.2009 before the AO. As per this letter dated 10.12.2009 the AO apparently rejected the appellant's request for claim of additional depreciation on the grounds that no fresh .....

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this claim. The claim had been made during the assessment proceedings through the letter filed before the AO. The disallowance made by the AO was confirmed by me vide order dated 24.08.2012 in Appeal No. 44/ROT/IT/CIT(A)-II/Ldh relying on the case of Goetze India Ltd. Hon'ble ITAT Chandigarh Bench, vide its decision dated 24.5.2013, in the case of Budhewal Co- operative Society Ltd., in ITA No. 1077/Chd/2012, reversed my order and held that an assessee can raise additional grounds and make c .....

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uction, there was no requirement of filing any revised return. Therefore, eplea of the Revenue before the Hon'ble High Court that the judgment of Hon'ble Supreme Court in Goetze (India) Ltd., vs. CIT (supra) was applicable and deduction was not allowable, was not accepted by the Hon'ble Court. In view of the above said ratio laid down by the Hon'ble Punjab & Haryana High Court in CIT vs. Ramco International (supra), we are of the view that the claim of deduction made by the a .....

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