Income Tax Appellate Tribunal - Chandigarh
Haryana State Warehousing ... vs Acit Cir Panchkula, Panchkula on 3 October, 2019
1 आयकर अपील य अ धकरण,च डीगढ़ यायपीठ "ए" , च डीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH "A", CHANDIGARH ी एन.के.सैनी, उपा य एवं ी संजय गग$, या%यक सद'य BEFORE: SHRI. N.K.SAINI, VP & SHRI , SANJAY GARG, JM आयकर अपील सं./ ITA NO. 351/Chd/2019 नधा रण वष / Assessment Year : 2015-16 Haryana State Warehousing बनाम Assistant Commissioner of Income Corporation Bay No. 15-18 Sector-2 Tax, Circle-Panchkula Panchkula-134112 Sector-2, Panchkula-134112 थायी लेखा सं./PAN NO: AAACH3948K अपीलाथ /Appellant यथ /Respondent नधा रती क! ओर से/Assessee by : Shri B.K. Nohria, CA राज व क! ओर से/ Revenue by : Shri Chandrajit Singh, CIT(DR) सन ु वाई क! तार&ख/Date of Hearing : 30/09/2019 उदघोषणा क! तार&ख/Date of Pronouncement : 03/10/2019 आदे श/Order PER N.K. SAINI, VICE PRESIDENT This is an appeal by the Assessee against the order of the Ld. CIT(A), Panchkula dt. 17/01/2019.
2. In the present appeal Assessee has raised the following grounds:
1. That on the facts and in the circumstances of the case the Ld. CIT(A) Panchkula has erred in law and facts in upholding the contention of the learned A.O. in adding Rs. 44,57,98,668/- under section 35AD of the Income Tax Act, 1961 inspite of complete documents alongwith reason and not rebutting the deduction except stating that no plausible explanation submitted.
2. That the appellant reserves the right to add, amend or delete one or more of the grounds of appeal before the appeal is disposed off.2
3. The only grievance of the assessee in this appeal relates to the sustenance of addition of Rs. 44,57,98,668/- made by the A.O. under section 35AD of the Income Tax Act, 1961 (hereinafter referred to as 'Act'). During the course of hearing the Ld. Counsel for the Assessee at the very outset stated that the issue under consideration is squarely covered in favour of the assessee vide order dt. 19/03/2019 in assessee's own case in ITA No. 239/Chd/2016 and others for the A.Y. 2012-13 and others, copy of the said order was furnished which is placed on record.
4. The Ld. Sr. DR although supported the orders of the authorities below but could not controvert the aforesaid contention of the Ld. Counsel of the Assessee.
5. We have considered the submissions of both the parties and perused the material available on the record. In the present case it is noticed that a similar issue having identical fact was a subject matter of the assessee's appeal for the A.Y. 2011-12 to 2014-15 in ITA No. 239/Chd/2016 & others, wherein the issue has been decided in favour of the assessee and the relevant findings have been given in para 10 to 14 which read as under:
10. Now coming to the issue on merits taken by the assessee vide ground Nos. 4 and 5 of the appeal. The brief facts relating to the issue are that the assessee has claimed deduction u/s 35AD of the Act from its profits on account of construction of warehouses in different Districts of Haryana, however, the AO has disallowed the deduction observing that as per the proviso to Section 35AD of the Act, the expenditure incurred wholly and exclusively for the purpose of any specified business shall be allowed as deduction during the previous year in which the assessee commences operations of his specified business. The AO observed that though the assessee had taken up the construction of warehousing facility during the year which is covered under the specified business, however, in view of the proviso to Section 35AD, the deduction was available to the assessee whose date of commencement of business is on or after 01.04.2009 and since in this case the assessee has existing business of warehousing and hence, it cannot be said that the assessee had commenced the business of warehousing during the year under consideration. He, therefore, disallowed the deduction claimed by the assessee u/s 35AD of the Act. The ld. CIT(A) upheld the above finding of the AO.3
11. We have heard the rival contentions. To better understand the case, we deem it fit to first reproduce the provisions of Section 35AD of the Act :
"Deduction in respect of expenditure on specified business.
[35AD. (1) An assessee shall be allowed a deduction in respect of the whole of any expenditure of capital nature incurred, wholly and exclusively, for the purposes of any specified business carried on by him during the previous year in which such expenditure is incurred by him:
Provided that the expenditure incurred, wholly and exclusively, for the purposes of any specified business, shall be allowed as deduction during the previous year in which he commences operations of his specified business, if-
(a) the expenditure is incurred prior to the commencement of its operations;
and
(b) the amount is capitalized in the books of account of the assessee on the date of commencement of its operations.
12. A perusal of the above provisions of Section 35AD of the Act reveals that assessee is eligible to claim deduction in respect of capital expenditure if the same is incurred wholly and exclusively for the purpose of any specified business carried out by him during the previous year in which such expenditure is incurred. However, in cases where such expenditure is incurred prior to the commencement of its operations by the assessee and amount is capitalized in the books of account of the assessee on the date of commencement of operations, then such expenditure is allowable as deduction in the previous year in which the assessee commences operations of his specified business.
13. In our view, the lower authorities have wrongly interpreted the relevant provisions of the Act. There are two parts of the abovesaid provisions. In the first part, it has been mentioned that an assessee is eligible to claim deduction of the capital expenditure if such an expenditure has been incurred wholly and exclusively in a specified business. There is no condition of any date or year of commencement of specified business. However, in the second part, it has been provided that if such an expenditure has been incurred prior to the commencement of business and has been duly capitalized in the books of account, the claim will be allowed in the year in which the assessee commences operations of his specified business. There is neither any overlapping nor any contradiction in the aforesaid provision. The assessee is covered in the first part i.e. the assessee has incurred the expenditure on the specified business during the year in which operations of his business of warehousing were already going on. In view of this, we do not find any justification on the part of the lower authorities in denying the deduction to the assessee u/s 35AD of the Act. This ground is, accordingly, allowed in favour of the assessee.
14. In view of this, the legal grounds relating to the reassessment are decided against the assessee whereas the grounds taken on merits regarding the allowability of the claim of deduction u/s 35AD are allowed in favour of the assessee.
4So respectfully following the aforesaid referred to order dt. 19/03/2019 in assessee's own case for the A.Y. 2012-13 in ITA No. 239/Chd/2016, the present case is remanded back to the file of the A.O. to be decided as per the directions given in the aforesaid referred to order dt. 19/03/2019.
6. In the result, appeal of the Assessee is allowed for statistical purposes.
(Order pronounced in the open Court on 03/10/2019 ) Sd/- Sd/-
संजय गग$ एन.के.सैनी,
(SANJAY GARG ) ( N.K. SAINI)
या%यक सद'य/ Judicial Member उपा य / VICE PRESIDENT
AG
Date: 03/10/2019
आदे श क! त,ल-प अ.े-षत/ Copy of the order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent
3. आयकर आय/ ु त/ CIT
4. आयकर आय/ ु त (अपील)/ The CIT(A)
5. -वभागीय त न4ध, आयकर अपील&य आ4धकरण, च7डीगढ़/ DR, ITAT, CHANDIGARH
6. गाड फाईल/ Guard File आदे शानस ु ार/ By order, सहायक पंजीकार/ Assistant Registrar