Income Tax Appellate Tribunal - Ahmedabad
Vinayak Cold Storage Pvt.Ltd.,, ... vs Department Of Income Tax on 17 September, 2010
IN THE INCOME TAX APPELLATE TRIBUNAL
AHMEDABAD BENCH " A "
Before Shri BHAVENESH SAINI, JUDICIAL MEMBER
and Shri A. K. GARODIA, ACCOUNTANT MEMBER
I.T.A. No.3125 / Ahd/2010
(Assessment year 2007-08)
DCIT, Gandhinagar Vs. Vinayak Cold Storage P.Ltd.,
Vill. Ahmedpura, Tel. Dehgam,
Distt. Gandhinagar-382305
PAN/GIR No. : AAACV3827D
(APPELLANT) .. (RESPONDENT)
Appellant by: Shri S K Meena, Sr. DR
Respondent by: Sri B K Patel, AR
ORDER
PER SHRI A. K. GARODIA, AM:-
This appeal by the revenue has been directed against the order of Ld. CIT(A), Gandhinagar, Ahmedabad dated 17.09.2010 for the assessment year 2007-08.
2. The grounds raised by the revenue are as under:
"1) The Ld. CIT(A) has erred in law and on facts in deleting the addition made on account of capital expenditure of Rs.10,66,744/-.
2) On the facts and circumstances of the case the Ld. CIT(A) ought to have upheld the order of the A.O.
3) It is therefore, prayed that the order of the Ld. CIT(A) may be set aside and that of the A.O. be restored to the above extent.
3. The brief facts of the case regarding this issue are noted by the Ld. CIT(A) in para 4.1 of his order which is reproduced as under:
2 I.T.A.No.3125 /Ahd/2010"4.1 The AO noticed from Sch.10 of PAL account that assessee has debited a sum of Rs.10,66,744/- on account of repairs to buildings. The assessee furnished before the AO, the details of expenses made under various heads, bills and vouchers. From the details furnished, the AO noticed that expenditure for purchase of timber etc. is at Rs.3,80,690/-, cement at Rs.76,600/-, bricks Rs.91,450/-, steel at Rs.69,500/-, bars and girders at Rs.2,52,107/- and Rs.i,94,597/- on construction of boundary wall, partitions and labour charges. The assessee in the written submission before the A.O. asserted that these expenses were made on account of new partitions in the cold storage chamber. The AO therefore held that the expenditure has enhanced the value of cold storage and when an owner incurs expenditure on additions or alteration in a building which enhances its value, the expenditure has to be held as capital in nature, as held by Hon'ble Delhi High Court in the case of Modi Spinning and Weaving Mills Co., Ltd Vs. CIT cited in (1993) 200 ITR 544. The AO held that since the expenditure was for construction of new partitions as admitted by the assessee itself, there was an advantage of enduring benefit of the business and it was not made for running day to day business of the assessee, it was capital expenditure. Therefore, the AO treated the expenditure of Rs.10,66,744/- as capital expenditure and disallowed the same."
4. Being aggrieved, the assessee carried the mater in appeal before Ld. CIT(A) who has deleted the disallowance and now, the revenue is in appeal before us.
5. Ld. D.R. of the revenue supported the assessment order whereas the Ld. counsel for the assessee supported the order of the Ld. CIT(A).
6. We have considered the rival submissions, perused the material on record and have gone through the orders of authorities below. We find that a clear finding is given by the Ld. CIT(A) that it is noted that expenses regarding part of expenditure of Rs.3,80,690/- is for replacement of wooden planks, racks, hardware & paints and miscellaneous expenses and the same are incurred every year because the wooden planks and racks are worn out and are to be changed periodically. Regarding the balance amount of expenditure of Rs.6,84,254/-, finding is given by the Ld. CIT(A) that by incurring these expenditure for making partition wall in the cold storage 3 I.T.A.No.3125 /Ahd/2010 building, there is no addition to the installed capacity and this partition is only for operating convenience so that as and when goods are to be taken out, relevant chamber can be operated keeping other chambers closed so that there is no loss of electricity as the potatoes are to be preserved at a specific temperature. On the basis of these facts, finding is given by Ld. CIT(A) that the partition has been added to increase the efficiency of cold storage and for easy operation, which lead to saving electricity to the assessee and increase efficiency of the business. Ld. CIT(A) has applied the judgement of Hon'ble Apex Court rendered in the case of Modi Spinning & Weaving Mills Co. Lt. Vs CIT 200 ITR 544 and also another judgement of Hon'ble Apex Court rendered in the case of Empire Jute Co. Vs CIT 124 ITR 01 and deleted the disallowance on the basis that the assessee has not brought into existence a new asset because the assessee has simply constructed the partition wall in the storage place, which in itself cannot be an independent asset in the nature of assessee's business. Nothing has been brought on record by the Ld. D.R. to controvert the finding of Ld. CIT(A) and hence, we decline to interfere in the order of Ld. CIT(A).
7. In the result, appeal of the revenue stands dismissed.
8. Order pronounced in the open court on 29th July 2011.
Sd./- Sd./- (BHAVNESH SAINI) (A. K. GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad; Dated :29th July, 2011 Sp Copy of the Order forwarded to: 1. The applicant 2. The Respondent 3. The CIT Concerned 4. The Ld. CIT (Appeals) 5. The DR, Ahmedabad 6. The Guard File 4 I.T.A.No.3125 /Ahd/2010 1. Date of dictation...................
2. Date on which the typed draft is placed before the Dictating Member................. Other Member ........................
3. Date on which the approved draft comes to the Sr. P.S./P.S.
4. Date on which the fair order is placed before the Dictating Member for pronouncement ............
5. Date on which the fair order comes back to the Sr. P.S./P.S.
6. Date on which the file goes to the Bench Clerk .....................
7. Date on which the file goes to the Head Clerk .......................
8. The date on which the file goes to the Assistant Registrar for signature on the order .........................
9. Date of Despatch of the order. .......................