TMI Blog2018 (5) TMI 1628X X X X Extracts X X X X X X X X Extracts X X X X ..... nue in the case of three different assessees, all relating to Assessment Year 2010-11. At the time of hearing, it was a common point between the parties that the issue involved in all the appeals stand on an identical footing and, therefore, they have been clubbed and heard together and a consolidated order is being passed for the sake of convenience and brevity. 2. Due to the aforesaid reason, appeal in ITA No. 1160/Mum/2016 is taken as the lead case. This appeal by the Revenue is directed against order of CIT(A)-14, Mumbai dated 28.12.2015 pertaining to Assessment Year 2010-11, which in turn has arisen from the order passed by the Assessing Officer, Mumbai dated 04.04.2013 u/s 143(3) of the Income Tax Act, 1961 (in short the Act ). In this appeal, Revenue has raised the following Grounds of appeal :- (i) The Ld CIT (A) has erred on facts and in law in deleting the disallowance of expenses made U/s. 37(1) of ₹ 60,79,24,773/- holding that these expenses are in the nature of revenue expenses without properly appreciating the fact that these expenses are pre-operative in nature and also without appreciating the factual and legal matrix as clearly brought out by the Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laim, against which the Revenue is in appeal before us. 4. The facts relevant to the said dispute are as follows. As noted earlier, assessee is in the business of organised retail, which is carried out through various retail stores. The said business of the assessee is stated to have commenced in the previous year relevant to Assessment Year 2008-09. The Assessing Officer noted that during the year under consideration, assessee had added some new stores/outlets in the same line of business. In the books of account, assessee had debited such expenditure under the head Project Development Expenditure which was not debited in the Profit Loss Account, but considered as a part of Capital Work-in-Progress. The expenditure under this head reflected expenditure incurred by the assessee in acquiring, adding and maintaining the new stores during the year under consideration. While filing its return of income, assessee claimed that a part of such expenditure amounting to ₹ 60,79,24,773/- debited under the head Project Development Expenditure was revenue in nature, and since it has been incurred during the year under consideration for the purposes of a business already in existe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 13. The CIT(A) has extracted the relevant portion of the order of the Tribunal in the case of Reliance Footprint Ltd. (supra). Thereafter, the CIT(A) also referred to another decision of the Mumbai Bench of the Tribunal in the case of Reliance Supply Chain Solutions Ltd. vs DCIT, ITA No. 5759/Mum/2012 dated 27.11.2013. Considering the said decisions of the Tribunal, which according to him have adjudicated similar issues, the CIT(A) directed the Assessing Officer to allow the impugned expenditure as revenue expenditure. Against such a decision of the CIT(A), Revenue is in appeal before us on the aforestated Grounds of appeal. 6. In this background, at the time of hearing, the learned representative for the respondent-assessee, at the outset, pointed out that the decision of the Tribunal in the case of Reliance Footprint Ltd. (supra) relied upon by the CIT(A) has since been affirmed by the Hon'ble Bombay High Court in ITA No. 948 of 2014 dated 05.07.2017. Thus, according to him, the order of CIT(A) deserves to be affirmed. 7. The ld. DR, on the other hand, did not dispute the factual matrix asserted by the learned representative, but relied on the order of the Assessing Off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ugh debited in the books of account as capital work-in-progress, that the same have been claimed as revenue expenditure u/s 37(1) of the Act in the return of income. In our view, so far as the objection of the Assessing Officer, based on the treatment accorded by the assessee in its books of account is concerned, the same cannot be determinative of the issue on hand inasmuch as it is the applicable legal position which would govern the allowability of expenditure and not merely the manner in which it has been treated in the account books. For this aspect, a reference can be made to the reasoning laid down by the Hon'ble Supreme Court in the case of Taparia Tools Ltd. vs JCIT, 372 ITR 605 (SC). 10. So far as the stand of the Revenue that it provides enduring benefit to the business of the assessee is concerned, the same, in our view, does not ipso facto justify the treatment of such expenditure as capital in nature having regard to the facts of the case. Notably, in the instant case, as we have inferred earlier, the business of retail is already set-up and the impugned expenditure, which is otherwise revenue in nature, relates to expansion of the existing line of business and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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