The Commissioner Of Income Tax, Faridabad v. M/S.lsakhani Rubber Works, Plot

ITA No.634 of 2009 IN THE HIGH COURT OF PUNJAB AND HARYANA ATCHANDIGARH ITA No.634 of 2009 Date of decision: 30.3.2010 The Commissioner of Income Tax, Faridabad ...Appellant Versus M/s.Lsakhani Rubber Works, Plot No.131, Sector-24, Faridabad ...Respondent CORAM: HON'BLE MR.JUSTICE M.M.KUMAR HON'BLE MR.JUSTICE JITENDRA CHAUHAN HON'BLE MR.JUSTICE JITENDRA CHAUHAN Present:Ms.Urvashi Dhugga, Advocate for the appellant.for the appellant. 1.To be referred to the reporters or not?2.Whether the judgment should be reported in the Digest?2.Whether the judgment should be reported in the Digest? M.M.KUMAR, J. The instant petition filed by the Revenue under Section260-A of the Income-tax Act, 1961 is directed against order dated10.12.2008 passed by the Income Tax Appellate Tribunal, Delhi Bench`D' Delhi (for brevity `the Tribunal') in ITA No.1295(Del) of 2007 in respect of the assessment year 2003-04. The revenue has claimed the following three questions:- 1.Whether on the facts and in the circumstances of thecase, the Ld. ITAT was right in law in confirming theorder of the Ld.CIT(A) in deleting the addition ofRs.13,01,730/- made by the Assessing Officer oncase, the Ld. ITAT was right in law in confirming theorder of the Ld.CIT(A) in deleting the addition ofRs.13,01,730/- made by the Assessing Officer on 3. account of late deposit of employees' contribution toPF disregarding the fact that the payments were madebeyond the due dates and were, therefore, notallowable u/s 36(1)(va) and were to be treated asincome u/s 2(24)(x) of the Income Tax Act, 1961, incontravention of the decision in the case of CIT vs.Pamwi Tissues Limited 215 CTR 150(Bom.)? Whether, on the facts and in the circumstances of thecase, the Ld. ITAT was right in law in confirming theorder of the Ld. CIT(A) in deleting the addition ofRs.12,86,353/- made by the Assessing Officer onaccount of late deposit of employer's contribution toPF and Admn. Charges of Rs.52,584/- and Rs.240/-as Insp. charges without appreciating the fact thatpayments were not made by the assessee within theprescribed “due dates” by which the assessee wasrequired to make payments, in contravention of thedecision in the case of CIT vs. Pamwi TissuesLimited 215(CTR) 150 (Bom.)?case, the Ld. ITAT was right in law in confirming theorder of the Ld. CIT(A) in deleting the addition ofRs.12,86,353/- made by the Assessing Officer onaccount of late deposit of employer's contribution toPF and Admn. Charges of Rs.52,584/- and Rs.240/-as Insp. charges without appreciating the fact thatpayments were not made by the assessee within theprescribed “due dates” by which the assessee wasrequired to make payments, in contravention of thedecision in the case of CIT vs. Pamwi TissuesLimited 215(CTR) 150 (Bom.)? Whether, on the facts and in the circumstances of thecase, the Ld. ITAT was right in law in confirming theorder of the Ld. CIT(A) in deleting the addition ofRs.1,22,964/- made by the Assessing Officer onaccount of expenditure incurred in connection withcase, the Ld. ITAT was right in law in confirming theorder of the Ld. CIT(A) in deleting the addition ofRs.1,22,964/- made by the Assessing Officer onaccount of expenditure incurred in connection with load extension (P&E) and purchase of distributionpanel (R&M) even though the benefits flowing fromextension of load and replacement of old panel wereof enduring nature, therefore, the same werecapitalised?” Learned counsel for the revenue at the outset states that shedoes not wish to press question Nos. 1 and 2 on account of a judgmentof Hon'ble the Supreme Court rendered in CIT v. Alom ExtrusionsLtd., (2009) 319 ITR 306 (SC). Accordingly question Nos. 1 and 2are decided against revenue and in favour of the assessee-respondent. load extension (P&E) and purchase of distributionpanel (R&M) even though the benefits flowing fromextension of load and replacement of old panel wereof enduring nature, therefore, the same werecapitalised?” Learned counsel for the revenue at the outset states that shedoes not wish to press question Nos. 1 and 2 on account of a judgmentof Hon'ble the Supreme Court rendered in CIT v. Alom ExtrusionsLtd., (2009) 319 ITR 306 (SC). Accordingly question Nos. 1 and 2are decided against revenue and in favour of the assessee-respondent. However, in respect of question No.3, she has submittedthat the expenditure incurred in connection with load extension andpurchase of distribution panel should be regarded as capitalexpenditure instead of the revenue expenditure. A perusal of the orderpassed by the CIT(A) would show that the expenditure has beenincurred in the ordinary course of business and only a small part orpanel to several motors or machines was replaced and added. Theexpenditure is recurring in nature and, therefore, has been regarded bythe Assessing Officer as revenue expenditure by CIT(A). Accordingly,disallowance of Rs.1,22,964/- has been deleted by CIT(A). On furtherappeal, the aforesaid view has been upheld in para 6 of the order of theTribunal. Referring to the purchases of distribution panel on 7.10.2002and incurring of expenditure on extension of load, the Tribunal hasheld that no asset of enduring nature had come into existence by ITA No.634 of 2009 incurring such expenditure. It has further been reiterated that theexpenditure was incurred in the ordinary course of business.Accordingly, the view of the CIT(Appeals) was upheld. Having heard the learned counsel, we are of the consideredview that the question whether expenditure is of capital expenditure orrevenue expenditure is necessarily a question of fact. There are variousingredients which constitute the conclusion whether the expenditure iscapital in nature or revenue has been gone into and in that regard, wedo not find any apparent material on the face of record warrantinginterference of this Court. All the inputs constituting the revenueexpenditure stands satisfied and the findings do not suffer from anylegal infirmity. Accordingly, question No.3 is also answered againstthe revenue by upholding the order of the Tribunal. Accordingly, this appeal fails and the same is dismissed. (M.M.KUMAR) JUDGE 30.3.2010mk (JITENDRA CHAUHAN)JUDGE