The Commissioner Of Income Tax v. Shri. Ivan Singh

IN THE HIGH COURT OF BOMBAY AT GOA TAX APPEAL NO. 28 OF 2013 THE COMMISSIONER OF INCOME TAX Versus SHRI. IVAN SINGH ... Appellant ... Respondent Mrs. Asha A. Desai, Advocate for the appellant. -Coram:DR. D. Y. CHANDRACHUD &F. M. REIS, JJ.-Date:18th October, 2013 P.C.:- This appeal by the Revenue is from a decision of the Income Tax Appellate Tribunal, Panaji Bench dated 17 May 2013 forAssessment Year 2009-10. The Revenue has raised the followinggrounds in appeal : (A) Whether the learned ITAT was right in holding that the expenses under the head plot/site development expenses are to be treated as revenue expenditure instead of capital expenditure ? (B) Whether the learned ITAT was right in deleting the directions of the CIT(A) with reference to the transactions of advance against supply in the year in which the transaction has taken place ? (C) Whether the ITAT was right in deleting the addition of sundry creditors made by the AO U/S 68 of the Income Tax Act being bogus sundry creditors ? 2. As regards ground (A), the Assessee had taken a piece ofland on lease for five years under an agreement dated 2 February2008. The lease agreement came to an end by efflux of time on 1February 2013, following which the land was handed back to thelessor. The Assessee had carried out its activities on the land whichwas taken on lease. The finding of fact was that the land was not inan usable condition and the Assessee had to incur expenditure forwork such as levelling of the area and making an approach road, soas to render the land workable for storage of iron ore. Thisexpenditure has been held to be of a revenue nature since no enduringbenefit had been derived by the Assessee. In our opinion, the ITATwas justified in coming to this conclusion. The Assessee was alessee for a period of five years and at the end of the term of thelease, the land was handed back to the lessor. The expenditure whichwas incurred by the Assessee was to render the land usable. TheAssessee carried on business on the land. No enduring benefit resulted from the expenditure. The Tribunal was hence correct inholding that the expenditure was of a revenue nature. 3. As regards ground (B), the CIT(A) made a deletion of theaddition. However, the CIT(A) directed the Assessing Officer totreat the addition as an income of the Assessee for the concernedAssessment Year, when the advance was received. The Tribunalcame to the conclusion that the CIT(A) had no jurisdiction to render afinding in respect of the assessment year which was not in appealbefore him, since the jurisdiction of the CIT(A) related to the year for which the appeal was filed. This finding of the Tribunal isconsistent with law and does not give any rise to substantial questionof law. 4. As regards ground (C), the Tribunal has noted that before the Tribunal, the Assessee had filed a copy of the return of the Proprietorof M/s. Peninsula Minerals & Overseas and of M/s. NatashaMinerals. The Return of income indicated that the contractor hadcarried out the work for the Assessee. The Department had acceptedthe return and taxes have been paid on the income of the contractor. In this view of the matter, the Tribunal held that Section 68 was notapplicable since the two creditors were not bogus sundry creditors,but were actual contractors to whom payments have been made bythe Assessee. This again is a finding of fact which is also borne outfrom the material on record before the Tribunal. Hence, nosubstantial question of law would arise. 5. For these reasons, we decline to entertain the appeal. Theappeal is accordingly dismissed. DR. D. Y. CHANDRACHUD, J. ssm. F. M. REIS, J.