Haryana State Roads And Bridges Development Corporation v. Income Tax Tribunal, Chandigarh And Others

ITA No. 8 of 2013 -1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No. 8 of 2013 (O&M) Date of Decision : 14.09.2015 Haryana State Roads and Bridges Development Corporation Versus ..... Appellant Income Tax Tribunal, Chandigarh and others .... Respondents 1.Whether the Reporters of the local papers may be allowed to see the judgment?the judgment? 2.To be referred to the Reporters or not? 3.Whether the judgment should be reported in the Digest? CORAM: HON'BLE MR. JUSTICE AJAY KUMAR MITTALHON'BLE MR. JUSTICE RAMENDRA JAIN Present: Mr. Vinod S. Bhardwaj, Advocate for the appellant.for the appellant. Mr. Tejender K. Joshi, Advocatefor the respondents.for the respondents. RAMENDRA JAIN, J. 1.This appeal has been filed by the assessee under Section260A of the Income Tax Act, 1961 (in short “the Act”) against the ordersdated 17.2.2012 (Annexure P-3) passed by the Income Tax AppellateTribunal, Chandigarh Bench “A”, Chandigarh (hereinafter referred to as“the Tribunal”) in ITA No. 84/CHD/2010 for the assessment year 2006-07, dated 2.11.2009 (Annexure P-2) passed by the Commissioner ofIncome Tax (Appeals) [for brevity “the CIT(A)”] and dated 12.12.2008(Annexure P-1) passed by the Assessing Officer. The following ITA No. 8 of 2013 substantial questions of law have been claimed in this appeal:- (i)Whether the interest on loans is to becategorized as revenue expenditure underSection 37 of the Income Tax Act or the same isto be categorized as capital expenditure? (ii) Whether the uses of road as commercial usesfor revenue generation are different uses andthe mere non-generation of income on accountof absence of setting up of toll points woulddeprive the expenditure to be in the nature ofrevenue expenditure? (iii) Whether the expenditure incurred towardsimprovement of existing roads that are in actualuse and interest paid thereupon, amount torevenue expenditure and not capitalexpenditure? (iv) Whether the absence of generation of a newasset is sufficient to deny the expenditure oninterest as capital expenditure? (v) (vi) Whether the orders passed upon theconjectures are bad and liable to be set aside?Whether the findings based upon mis-appreciation of the facts is bad and liable to beset asideTribunal erred on facts and in law indismissing the appeal of the appellant on theground that the same is time barred and noreasonable or sufficient cause has been shown in filing the appeal? (iii) Whether the expenditure incurred towardsimprovement of existing roads that are in actualuse and interest paid thereupon, amount torevenue expenditure and not capitalexpenditure? (iv) Whether the absence of generation of a newasset is sufficient to deny the expenditure oninterest as capital expenditure? (v) (vi) Whether the orders passed upon theconjectures are bad and liable to be set aside?Whether the findings based upon mis-appreciation of the facts is bad and liable to beset asideTribunal erred on facts and in law indismissing the appeal of the appellant on theground that the same is time barred and noreasonable or sufficient cause has been shown in filing the appeal? 2.A few facts necessary for adjudication of the instant appealas narrated therein are that the return filed on 30.11.2006 for theassessment year 2006-07 declaring loss of ` 28,62,48,531/-. Therevised return was filed on 17.6.2007 declaring loss of ` 29,23,18,828/-.A notice under Section 143(2) of the Act was issued to the assessee on18.2.2008. A notice under Section 142(1) of the Act along with thequestionnaire dated 14.11.2008 was issued to the assessee. TheAssessing Officer vide assessment order dated 12.12.2008 (AnnexureP-1) reduced the net loss from `29,23,18,828/- to `13,56,74,210/- byincluding interest income of `86,40,770/- on account of Pradhan MantriGramin Sadak Yojna (PMGSY) to the income and disallowed theexpenditure of ` 80,527/-. The Assessing Officer also directedcapitalization of interest of `14,79,23,322/- while disallowing theexpenditure to the said extent. Feeling aggrieved, the assessee filed anappeal before the CIT(A) who vide order dated 2.11.2009 (Annexure P-2) partly allowed the appeal and deleted the addition of ` 86,40,770/- onaccount of interest income on PMGSY. The CIT(A) also directed theAssessing Officer to verify as to whether TDS had not been deducted of` 63,437/- and not ` 80,587/-. Still dissatisfied, the assessee filed anappeal before the Tribunal. The Tribunal vide order dated 17.2.2012dismissed the appeal upholding the order dated 02.11.2009 (AnnexureP-2) passed by the CIT(A). Hence, the present appeal by the assessee.3.During the pendency of the present appeal, the appellanthas filed an application under Order 41 Rule 27 read with Section 151CPC for leading additional evidence in the shape of documentsAnnexures A-1 to A-4 i.e. (i) order dated 22.10.2014 under Section 250 ITA No. 8 of 2013 (6) of the Act passed by the CIT (A), Panchkula; (ii) Certificate regardingownership of records of PWD (B&R) in the State of Haryana; (iii) loanagreement of the appellant with the Haryana Urban DevelopmentCorporation Limited (HUDCO), New Delhi; and (iv) its memorandum ofassociation. ITA No. 8 of 2013 (6) of the Act passed by the CIT (A), Panchkula; (ii) Certificate regardingownership of records of PWD (B&R) in the State of Haryana; (iii) loanagreement of the appellant with the Haryana Urban DevelopmentCorporation Limited (HUDCO), New Delhi; and (iv) its memorandum ofassociation. 4.Learned counsel for the appellant submitted that the mainobject of the appellant-Corporation, according to its memorandum ofassociation, is to erect, develop, improve, construct, repair,expressways, highways, roads, paths, streets, bridges etc. on behalf ofthe Haryana Public Works Department on Build-Operate and Transfer(BOT) or Build-Own-Operate and Transfer (BOOT) or Build-Operate-Lease and Transfer (BOLT) basis or any other scheme in a mannerwhich facilitates to undertake the above-mentioned work and thus,apparently, creation of assets was not its principle objective. Since theorder dated 22.10.2014 passed by the CIT (A), Panchkula (Annexure A-1) was not in existence at the time when the appeal was adjudicated bythe Tribunal, therefore, it could not have been produced. The loanagreement and memorandum of association (Annexures A-3 and A-4)could not be produced earlier before the Authorities bonafidely. All theaforesaid documents are either public documents or Governmentrecords, and thus, their authenticity and genuineness is not questionableand need no proof under the provisions of Indian Evidence Act, 1872,which would espouse the claim of the appellant. Thus, the appellantmay be permitted to adduce additional evidence by producing theaforesaid documents. 5.On the other hand, learned counsel for the respondentstrongly opposed the aforesaid application for leading additional ITA No. 8 of 2013 evidence and submits that the appeal deserves to be dismissed,inasmuch as, the authorities below have given findings on appreciationof material available on record. 6.After giving our thoughtful consideration to the submissionsmade by both the learned counsel for the parties, we find that applicationfor leading additional evidence deserves to be allowed, inasmuch as, allthe documents (Annexures A-1 to A-4) sought to be produced by way ofadditional evidence are public documents i.e. order passed by the CIT(A), Panchkula, copy of owner certificate issued by the PWD (B&R),Haryana, loan agreement and memorandum of association. Hence, theauthenticity and genuineness of the documents cannot be said to bedoubtful. Accordingly, the present application for leading additionalevidence is allowed. 7.Accordingly, in view of allowing of application for additionalevidence, in our opinion, it would be appropriate that the points raised inthis appeal are liable to be re-considered by the Tribunal in the light ofthe additional evidence sought to be produced by the appellant and thento pass a fresh speaking order in accordance with law. 8.Without touching on the merits of the appeal, the impugnedorder dated 17.02.2012 (Annexure P-3) is set aside. The matter isremitted to the Tribunal to re-decide the same and pass a fresh speakingorder in accordance with law without being influenced by its earlier order.9.With the aforesaid observations, the appeal is disposed of. ( RAMENDRA JAIN ) JUDGE 14.09.2015‘yogesh’/gbs ( AJAY KUMAR MITTAL ) JUDGE