Edlemann Packaging India Private Limited v. The ACIT, Circle-4(1), Chandigarh
[Citation -2019-LL-0912-49]

Citation 2019-LL-0912-49
Appellant Name Edlemann Packaging India Private Limited
Respondent Name The ACIT, Circle-4(1), Chandigarh
Court ITAT-Chandigarh
Relevant Act Income-tax
Date of Order 12/09/2019
Assessment Year 2014-15
Judgment View Judgment
Keyword Tags disallowance of expenditure • additional depreciation • repair and maintenance • substantial expansion • foreign exchange loss • claim of deduction • processing charges • promotion expenses • vehicle expenses • capital expenses • ad hoc basis • cost of capital asset • revenue expenditure
Bot Summary: 09.2019 Order The present appeal has been preferred by the assessee against the order dated 14.12.2018 of the Commissioner of Income Tax- 2, Chandigarh hereinafter referred to as CIT(A). Vide ground No.1 the assessee has agitated the action of the lower authorities in not allowing depreciation on the amount which was added by the Assessing Officer towards the cost of the capital assets of the assessee being the amount of loss incurred by the assessee on account of Foreign Exchange loss by disallowing the claim of the assessee towards the same as Revenue expenditure. Vide ground No.4, the assessee has agitated the action of the CIT(A) in denying the benefit of depreciation on account of disallowance and further consequential addition of loan processing charges towards the cost of the assets being treated as capital assets. Vide ground No.5 the assessee has agitated the action of the ITA No.236-Chd-2019- M/s Edelmann Packaging India Private Ltd, Chandigarh 4 lower authorities in making the disallowance of expenditure out of the repair and maintenance charges. 6 7, the Ld. Counsel for the assessee has submitted that at the instance of the assessee, he does not press ground Nos. At the outset, the Ld. Counsel for the assessee has submitted that ground Nos. 2 3 of the appeal, the assessee has furnished the required details before the lower authorities but the lower authorities without going into the specific details of expenditure, disallowed 10 of the expenditure on adhoc basis without giving any specific reasoning or pointing out any defect in the accounts of assessee in respect of expenditure booked by the assessee.


IN INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH , SMC, CHANDIGARH, BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER ITA No. 236/CHD/2019 Assessment Year : 2014-15 M/s Edlemann Packaging India Vs. ACIT, Circle 4(1), Private Limited, Plot No. 136, Chandigarh Phase II, Chandigarh PAN NO: AABCJ5979K Appellant Respondent Assessee by : Shri Neeraj Jain, CA Revenue by : Sh. Shri Rohit Mehra, Sr. DR Date of Hearing : 12.09.2019 Date of Pronouncement : 12. 09.2019 Order present appeal has been preferred by assessee against order dated 14.12.2018 of Commissioner of Income Tax (Appeals)- 2, Chandigarh [hereinafter referred to as CIT(A) ]. 2. assessee in this appeal has taken following grounds of appeal:- 1. That authorities below are not justified in not allowing depreciation and additional depreciation on Rs. 1,81,41,495/- being amount of Foreign Exchange loss on buyer's credit for acquisition of plant & Machinery as same is capital expense in ITA No.236-Chd-2019- M/s Edelmann Packaging India Private Ltd, Chandigarh 2 nature. depreciation and additional depreciation are statutory allowances. 2. (a) That Ld. CIT (A) is not justified in confirming disallowance of Rs. 3,24,556/- being 10% of Rs. 13,82,389/- & 18,63,178/- on account of Diwali Festival Expenses and Business Promotion Expenses respectively on adhoc basis by treating same as personal in nature. (b) That without prejudice to above, appellant disputes quantum of disallowance. 3. (a) That Ld. CIT (A) is not justified in confirming disallowance of Rs. 3,44,542/- being 10% of Rs. 17,23,829/- & 17,21,593/- on account of Vehicle Expenses and Depreciation on Vehicles respectively on adhoc basis by treating same as personal in nature. (b) That without prejudice to above, appellant disputes quantum of disallowance. 4. That authorities below are not justified in not allowing depreciation and additional depreciation on Rs. 3,93,260/- and Rs. 80,097/- on account of processing charges on loan paid to Indusind Bank and Siemens financial services respectively for acquisition of plant & Machinery as same is capital expense in nature. depreciation and additional depreciation are statutory allowances. 5. (a) That Ld. CIT (A) is not justified in confirming disallowance of Rs. 10,43,016/- & Rs. 7,64,629/- on account of Repair & Maintenance of building and Repair & Maintenance of Electrical respectively. (b) That without prejudice to above, appellant disputes quantum of disallowance. ITA No.236-Chd-2019- M/s Edelmann Packaging India Private Ltd, Chandigarh 3 6. (a) That authorities below are not justified in not allowing Rs. 26,53,596/- on account of Loss on Fixed Assets. (b) That without prejudice to above, appellant disputes quantum of disallowance. 7. That authorities below are not justified in not allowing deduction u/s 80 IC on other income. 8. That Ld. CIT (A) is not justified in not allowing deduction u/s 80 IC @ 100% instead of @ 30%. 9. That appellant craves leave for any addition, deletion or amendment in grounds of appeal on or before disposal of same. 3. Vide ground No.1 assessee has agitated action of lower authorities in not allowing depreciation on amount which was added by Assessing Officer towards cost of capital assets of assessee being amount of loss incurred by assessee on account of Foreign Exchange loss by disallowing claim of assessee towards same as Revenue expenditure. Vide ground Nos, 2 & 3, assessee has agitated certain disallowances made by lower authorities @ 10% of expenses claimed to have been incurred on Diwali Festival, Business Promotion expenses, car expenses, depreciation on vehicles etc. on addition hoc basis. Vide ground No.4, assessee has agitated action of CIT(A) in denying benefit of depreciation on account of disallowance and further consequential addition of loan processing charges towards cost of assets being treated as capital assets. Vide ground No.5 assessee has agitated action of ITA No.236-Chd-2019- M/s Edelmann Packaging India Private Ltd, Chandigarh 4 lower authorities in making disallowance of expenditure out of repair and maintenance charges. As regards to Ground Nos. 6 & 7, Ld. Counsel for assessee has submitted that at instance of assessee, he does not press ground Nos. 6 & 7 of appeal. Vide ground Nos.8 assessee has agitated action of lower authorities in restricting disallowance u/s 80IC of Income Tax Act, 1961 (in short 'the Act') @ 30% as against 100% claimed by assessee on account of substantial expansion of Unit. 4. At outset, Ld. Counsel for assessee has submitted that ground Nos. 1 & 4 were not taken before Ld. CIT(A). These grounds have been taken before this Tribunal for first time. Ld. counsel has further submitted that so far as disallowance made by Assessing Officer and further confirmed by Ld. CIT(A) in relation to items as pleaded in ground Nos. 2 & 3 of appeal, assessee has furnished required details before lower authorities but lower authorities without going into specific details of expenditure, disallowed 10% of expenditure on adhoc basis without giving any specific reasoning or pointing out any defect in accounts of assessee in respect of expenditure booked by assessee. Further that lower authorities have also disallowed on adhoc basis certain amounts out of repair and maintenance of building and electrical fitting etc. ITA No.236-Chd-2019- M/s Edelmann Packaging India Private Ltd, Chandigarh 5 5. So far as issue raised vide ground No.8 is concerned, Ld. Counsel for assessee has submitted that now this issue is covered by decision of Hon'ble Supreme Court in case of P r. CIT, S himla V s. M /s arham S oft ronics in Civil N o. 1784 o f 20 19 d ated 20. 2. 2019. He has further submitted that benefit of said decision was not available before Ld. CIT(A) at time of decision of appeal. 6. Ld. DR on other hand, has relied on findings of CIT(A). 7. Considering rival submissions of parties, I am of view, that matter is required to be restored to he file of CIT(A). Since ground Nos. 1 & 4 were not raised before CIT(A) and these have been raised for first time before this Tribunal, hence, issues raised vide ground Nos. 1 & 4, which are legal in nature, are required to be examined by CIT(A). So far as adhoc disallowances are concerned, Ld. CIT(A) has not given any specific findings justifying disallowance of expenditure, hence, issue needs to be decided by way of speaking order in accordance with law. 8. So far as claim of deduction u/s 80IC of Act on account of substantial expansion is concerned, Ld. CIT(A) is directed to decide this issue in accordance with recent decision of Hon'ble Supreme Court in bun ch o f cas es with lead case in case of Pr. CIT, ITA No.236-Chd-2019- M/s Edelmann Packaging India Private Ltd, Chandigarh 6 S himla V s. M /s arham S oft ronics in Civil N o. 1784 o f 20 19 d ated 20. 2. 2019. In view of this, impugned order of CIT(A) is hereby set aside and matter is restored to file of CIT(A) for decision afresh in accordance with law as per directions given above, except ground Nos. 6 & 7, which have not been pressed by assessee. appeal of assessee is treated as partly allowed for statistical purposes. Order dictated and pronounced in Open Court immediately on completion of hearing. Sd/- (SANJAY GARG) Judicial Member Dated : 12 . 09.2019 Copy of order forwarded to : 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR, ITAT, CHANDIGARH 6. Guard File By order, Assistant Registrar Edlemann Packaging India Private Limited v. ACIT, Circle-4(1), Chandigarh
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