Commissioner Of Income Tax (Central)Ludhiana v. M/S. Liberty Shoes Ltd

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. --- Income Tax Appeal No. 140 of 2007Date of decision: 28.2.2011 Commissioner of Income Tax (Central)Ludhiana --- Appellant Versus M/s. Liberty Shoes Ltd. --- Respondent CORAM:HON’BLE MR. JUSTICE ADARSH KUMAR GOELHON’BLE MR. JUSTICE AJAY KUMAR MITTAL --- Present:Ms. Urvashi Dhugga, Senior Standing Counselfor the appellant-Revenue. Mr. S.K. Mukhi and Ms. Jyoti, Advocatesfor the respondent. --- AJAY KUMAR MITTAL, J. The paper-book of this case has not been received from theconcerned Branch as the same is said to have burnt in the fire incidentthat took place in the premises of this Court on the night of 30[th] ofJanuary, 2011. Learned counsel for the appellant has made available twocopies of paper-book to the Court for reconstruction of the file. The saidcopies are taken on record and the file of the appeal is treated as havingbeen re-constructed. 2. This appeal under Section 260A of the Income-Tax Act, 1961(for short “the Act”) has been filed by the Revenue against the order dated 14.7.2006, passed by the Income Tax Appellate Tribunal Delhi Bench ‘D’,Delhi (in short “the Tribunal”) in ITA No. 2368(Del)2002, relating to theassessment year 1997-98. 3.The following substantial question of law has been claimed fordetermination by this Court: “Whether on the facts and in the circumstances of the case,the Tribunal was correct in law in confirming the order of theCIT(A) that expenses of Rs. 1,28,280/- incurred on glow signswere of revenue nature? 4.The facts, in brief, necessary for adjudication as narrated inthe appeal, are that the respondent-assessee is manufacturer of leatherand non-leather shoes. The assessee filed return for the assessmentyear in question declaring income of Rs. 3,03,15,470/- on 28.11.1997.The assessing officer made disallowances and additions and treated theinvestment of Rs. 1,28,280/- on Neon Sign Boards as expenditure ofcapital nature. The assessment under Section 143(3) of the Act wascompleted at an income of Rs. 3,11,22,740/- vide order dated 29.2.2000.The Commissioner of Income-tax (Appeals) {in short “the CIT(A)”}, in theappeal preferred by the assesses following the orders under Section 250(6) for the assessment years 1995-96 and 1996-97 and of the Tribunal forthe assessment years 1996-97 and 1997-98, passed in the case of sisterconcern of the assessee, M/s. Liberty Group Marketing Division, allowedthe deductions claimed by the assessee, vide order dated 5.3.2002. Theappeal carried by the Revenue against the order of the CIT(A) wasdismissed by the Tribunal vide order dated 14.7.2006 and this is how theRevenue is in appeal before this Court now. 5.We have heard learned counsel for the parties and have perused the record. 6.The only issue in this appeal that calls for adjudication is regarding nature of the expenses incurred by the assessee on the glowsign boards. According to the revenue, the expenses incurred on thataccount are capital in nature whereas the assessee has claimed it to berevenue expenditure. 7.The issue is no longer res integra This Court in Commissioner of Income Tax vs. Liberty Group Marketing Division,(2009) 315 ITR 125 considered the similar question and held that glowsign board is not an asset of permanent nature but requires frequentreplacement. It was further held that expenditure incurred on glow signboards is to facilitate business operation and is allowable as revenueexpenditure. 8.In view of the above, the substantial question of law isanswered against the Revenue and finding no merit in the appeal thesame is accordingly dismissed. (AJAY KUMAR MITTAL) JUDGE February 28, 2011*rkmalik* (ADARSH KUMAR GOEL) JUDGE