Bombay High Court
The Pr. Commissioner Of Income Tax-4 vs Reliance Wellness Ltd on 10 December, 2018
Bench: Akil Kureshi, M.S. Sanklecha
8. os itxa 842-883-16.doc
R.M. AMBERKAR
(Private Secretary)
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
O.O.C.J.
INCOME TAX APPEAL (IT) NO. 842 OF 2016
WITH
INCOME TAX APPEAL (IT) NO. 883 OF 2016
Pr. Commissioner of Income Tax -4 .. Appellant
Vs
M/s. Reliance Wellness Ltd .. Respondent
...................
Mr. A.R. Malhotra a/w Mr. N.A. Kazi for the Appellant
Mr. Madhur Agrawal a/w Mr. P.C. Tripathi i/by Raj Darak for the
Respondent
...................
CORAM : AKIL KURESHI &
M.S. SANKLECHA, JJ.
DATE : DECEMBER 10, 2018.
P.C.:
1. Income Tax Appeal No. 883 of 2016 is not on board. As the said appeal involves the same assessee and identical question of law as in Income Tax Appeal No. 842 of 2016 which is on board today, by consent of both the learned counsel, we have taken Income Tax Appeal No. 883 of 2016 on board along with Income Tax Appeal No. 842 of 2016.
2. Facts being similar, we may refer from Income Tax Appeal No. 842 of 2016.
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8. os itxa 842-883-16.doc This appeal is filed by the Revenue to challenge the judgment of the Income Tax Appellate Tribunal, Mumbai dated 9.9.2015. Following question is presented for our consideration:-
"(i) Whether on the facts and in the circumstances of the case and in law, the Tribunal was correct in its interpretation that pre-operative expenditure is revenue in nature without appreciating the fact that the assessee itself has treated the same as 'capital work-in-progress' in the balance sheet?"
3. The issue pertains to the assessment year 2008-09. The Revenue's objection to the Tribunal allowing the deduction on expenditure incurred by the assessee as revenue expenditure is two fold. Firstly, as per the Revenue, the assessee had in its books of accounts treated the expenditure as "capital work-in-progress" and secondly, according to the Revenue, the expenditure was in the nature of 'pre-operative expenditure' and therefore, should have been capitalized.
4. The Tribunal, by the impugned order, overruled both the objections of the Revenue. With respect to the accounting entries, the Tribunal referred to and relied upon 2 of 4 ::: Uploaded on - 11/12/2018 ::: Downloaded on - 26/12/2018 23:05:18 :::
8. os itxa 842-883-16.doc the decisions of the Supreme Court in the cases of Kedarnath Jute Manufacturing Co. Ltd reported in 82 ITR 363 (SC) and Taporia Tools Ltd Vs. JCIT reported in (2015)(55 taxmann.com
361) which essentially held that the accounting entries made by the assessee in the books of accounts would not govern the taxability of particular item.
5. The Tribunal thereafter examined the nature of the expenditure and came to the conclusion that the expenditure was not incurred for a new business but was for the expansion of the existing business. The Tribunal relied upon its own decision in the case of Ms. Reliance Footprint Ltd. We noticed that the Revenue had challenged the judgment of the Tribunal in the case of Reliance Foot Print Limited in Income Tax Appeal No. 948 of 2014. The said appeal came to be dismissed by this Court by judgment dated 5.7.2017.
6. In our opinion, therefore, the Tribunal correctly held both the issues in favour of the respondent - assessee. Mere accounting entires in the books of accounts would not decide the taxability of the amount in question. The Tribunal also 3 of 4 ::: Uploaded on - 11/12/2018 ::: Downloaded on - 26/12/2018 23:05:18 :::
8. os itxa 842-883-16.doc noted that the expenditure was incurred for expansion of existing business. Thus, this is a mere question of fact. No question of law, therefore, arises. Income Tax Appeals are dismissed.
[ M.S. SANKLECHA, J. ] [ AKIL KURESHI, J ] 4 of 4 ::: Uploaded on - 11/12/2018 ::: Downloaded on - 26/12/2018 23:05:18 :::