TMI Blog2013 (10) TMI 1414X X X X Extracts X X X X X X X X Extracts X X X X ..... per and in accordance with the Scheme of Act 1961. In view of which we have taken in the matter, the appeal deserves to be allowed by quashing and setting aside the Order passed by the learned Commissioner of Income-Tax (Appeals) - ITA NO. 131/PNJ/2013 - - - Dated:- 25-10-2013 - SHRI P.K. BANSAL, ACCOUNTANT MEMBER AND SHRI D.T. GARASIA, JUDICIAL MEMBER For the Appellant : Nishant K., DR For the Respondent : R. Sriniwasan, Adv. O R D E R PER P.K. BANSAL : 1. This appeal has been filed by the Revenue against the order of CIT(A) dt. 15.3.2013 for A.Y. 2008-09 by raising the following effective grounds of appeal: 1) The order No. In ITA No. 223 /PNJ/10-11 dated: 15/03/2013 in the above case is opposed to law and facts of the case. 2) Learned CIT(A) has failed to appreciate the efforts of the assessing officer to consider the afforestation expenses as capital expenditure. The expenditure of ₹ 2,14,21,820/- as compensation for afforestation charges has given the assessee an enduring benefit for many years so it is Capital in nature. 3) Learned CIT (A) has failed to appreciate the efforts of the assessing officer to add back the Demurrage expenses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the nature of conversion of the land use which allows the Assessee to use the land for the purpose of mining activity. This expenditure is actually in the nature of acquiring or improving a fixed asset and benefit on this account is normally available to the Assessee for several subsequent years. In this regard, the AO relied on the decision of the Hon'ble Supreme Court in the case of R.B. Seth Moolchand Sugandhchand vs. CIT, 86 ITR 647; Enterprising Enterprises vs. CIT, 268 ITR 95 (Mad) and CIT vs. Tata Honeywell Ltd., 93 ITR 507. The Assessee went in appeal before the CIT(A). CIT(A) took the view that the case is duly covered by the decision of this Tribunal passed u/s 263 in the case of Dr. Prafulla R. Hede vs. CIT in ITA No. 135/PNJ/2011 and deleted the addition by observing as under : 6.5 Thus, the Hon ble ITAT not only set aside the order of the CIT, passed u/s 263 on the issue that the order passed by the A.O was not erroneous or prejudicial to the interests of revenue, but they also discussed the merits of the issue of Afforestation expenses at length, before deciding that the claim of expenditure in question was in the nature of revenue expenditure. 6.6 Facts o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has relied. In our opinion, that order will not be applicable in this case. The CIT(A) was bound to give a clear-cut finding whether the expenditure incurred by the Assessee is a capital expenditure or whether it is a revenue expenditure and whether the expenditure has accrued during the year or not. The order passed by the CIT(A), in our opinion, is cryptic and has not dealt with the issue involved. We, therefore, set aside the order of CIT(A) and restore this issue to the file of CIT(A) with the direction that the CIT(A) should re-decide this issue on merit whether the expenditure incurred by the Assessee is a capital expenditure or whether it is a revenue expenditure and if it is a revenue expenditure, whether the expenditure has accrued during the year or not after giving proper and sufficient opportunity to the Assessee. Thus, this ground is allowed for statistical purpose. 4. Ground no. 3 relates to non-deduction of TDS on payment of ₹ 7,096/- to a shipper based out of Hong Kong as demurrage charges. Since the Assessee failed to deduct TDS, the AO disallowed the same u/s 40(a)(i). When the matter went before the CIT(A), the CIT(A) deleted the disallowance. 4.1 Af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 6. The respondent-assessee is a company, incorporated under the provisions of Indian Companies Act, 1956, is fairly an admitted position. The assessee cannot be said to be non-resident. We have also taken notice of section 6, i.e., Residence in India . In short, respondent-assessee cannot be said to be non-resident. The present appeal pertains to the respondent-assessee. In our view, in the facts of the present case, the respondent-assessee cannot lay fingers on section 172, since we are not dealing with profits of non-residents. The other aspect is that such profits of non-residents should be from occasional shipping business. It is not the case that the respondent-assessee has earned some profit from occasional shipping and is a non-resident. In our view, section 172 does not have application in relation to the respondent-assessee and in the facts and circumstances of the present case. The company from Japan viz., Mitsui Co. Ltd., Japan, recipient of demurrage amount is not before us. In other words, we are not examining the tax liability of the foreign company, i.e., Mitsui Co. Ltd., Japan. On our query to the learned Senior Advocate Shri Usgaonkar as to material on recor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sections 172, 194C and 195 of the Act 1961. Advocate on behalf of the Revenue points out from para 4 of the Circular and submits that section 172 operates in the area of computation of profits from shipping business of non-residents and there is no overlapping in the areas of operation of these sections. Learned Senior Advocate Shri Usgaonkar, appearing on behalf of the respondent-assessee, also drew our attention to the Judgment of the Hon'ble Supreme Court in the matter of Commissioner of Sales Tax v. Indra Industries [2001] 248 ITR 338. It is a three Bench Judgment of the Hon'ble Supreme Court. It has been held by the Hon'ble Supreme Court that the circulars issued by Commissioner of Sales Tax not binding on assessee or Court, however, binding on the Department. In the case on hand, in our view, learned Commissioner of Income-tax (Appeals) and the learned appellate Tribunal have wrongly interpreted the Circular dated 19-9-1995 issued by the CBDT. This circular, in our opinion, cannot be considered in the facts and circumstances of the present case, in aid to the respondent-assessee. The learned Assessing Officer, in fact, has passed a legal, proper and reasoned order ..... X X X X Extracts X X X X X X X X Extracts X X X X
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