IN THE INCOME TAX APPELLATE TRIBUNAL
`E' : NEW DELHI
DELHI BENCH `E
BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND
GARG, JUDICIAL MEMBER
SHRI CHANDRA MOHAN GARG,
No.5247/Del/2010
ITA No.
2002-03
Assessment Year : 2002-
Assistant Commissioner of Vs. M/s Millennium Plaza Limited,
Income Tax, 6, Community Centre,
Circle-
le-2,
Central Circle Saket,
New Delhi. New Delhi.
PAN : AACCM9795M.
(Appellant) (Respondent)
No.42/Del/2011
Cross Objection No.42/Del/2011
2002-03
Assessment Year : 2002-
M/s Millennium Plaza Limited, Vs. Assistant Commissioner of
6, Community Centre, Income Tax,
Saket, Circle-2,
Central Circle-
New Delhi. New Delhi.
PAN : AACCM9795M.
(Appellant) (Respondent)
Revenue by : Shri Gunjan Prashad, CIT-DR.
Assessee by : Shri Gautam Jain, Advocate.
ORDER
PER G.D. AGRAWAL, VP :
PER
The appeal by the Revenue is directed against the order of
learned CIT(A)-III, New Delhi dated 7th September, 2010 for the AY
2002-03.
2. The grounds raised by the Revenue read as under:-
2 ITA-5247/Del/2010 &
C.O.-42/Del/2011
"1. On the facts and in the circumstances of the case,
the CIT(A) has erred in law and on facts in deleting the
disallowance of Rs.37,67,394/- by holding it as revenue
expenditure.
2. On the facts and in the circumstances of the case,
the CIT(A) has erred in law and on facts in relying upon
the decision of ITAT in case of ONGC Videsh Ltd. without
appreciating that facts of that case are different from
the present case.
3. The appellant craves leave to add, alter or amend
any/all of the grounds of appeal before or during the
course of the hearing of the appeal."
3. We have heard the arguments of both the sides and perused
relevant material placed before us. It was pointed out by the learned
counsel that the Assessing Officer has disallowed the sum of
`37,67,394/- in respect of abandonment of theme amusement park
treating as a capital expenditure. He submitted that the nature of the
expenditure was travelling, designing, consultancy fees, legal fees etc.
Thus, the entire expenditure was of revenue nature. The assessee who
is in the business of construction and development of real estate had
applied for allotment of land from Noida authorities for the theme
amusement and entertainment park project. He had also given the
deposit of `50 lakhs with the Noida authorities for the allotment of
land. However, the Noida authorities did not allot the land for the
amusement park and refunded `50 lakhs of security deposit given by
the assessee. Therefore, the assessee claimed the revenue
expenditure incurred in respect of such project by the assessee which
was in the nature of travelling, designing, consultancy fees, legal fees
etc. He submitted that the issue under consideration is squarely
covered in favour of the assessee by the decision of Hon'ble
3 ITA-5247/Del/2010 &
C.O.-42/Del/2011
Jurisdictional High Court in the case of Indo Rama Synthetics India Ltd.
Vs. CIT [2011] 333 ITR 18 (Delhi), wherein their Lordships held :-
"allowing the appeal, (i) that the expenditure incurred
was in the nature of salary, wages, repairs,
maintenance, design and engineering fee, travelling
and other expenses of administrative nature.
Indubitably, in the normal course, these expenses
would be treated as revenue expenditure. The unit,
which the assessee proposed to set up had inextricable
linkage with the existing business of the assessee. The
proposed business was not an individual business but
vertical expansion of the existing business. Thus, the
test of existing business with common administration
and common fund was met. Since the project was
abandoned, no new asset also came to be created. The
expenditure was deductible."
4. After considering the arguments of both the sides and the facts
of the case, we are of the opinion that the ratio of the above decision
of Hon'ble Jurisdictional High Court would be squarely applicable to the
facts under appeal. The assessee is in the business of construction
and development of real estate. The net sales during the year under
consideration from the real estate business was `49.44 crores.
Therefore, the development of theme amusement and entertainment
park was in the line of business of development of real estate. The
expenditure incurred by the assessee was in the nature of revenue
expenditure viz., on travelling, designing, consultancy fee, legal fee
etc. The project was abandoned because the Noida authorities refused
to allot the land. Therefore, the ratio of the above decision of Hon'ble
Jurisdictional High Court would be squarely applicable. Respectfully
following the same, we uphold the order of learned CIT(A) and dismiss
the appeal filed by the Revenue.
4 ITA-5247/Del/2010 &
C.O.-42/Del/2011
5. In the cross-objection, the assessee has challenged the validity of
issue of notice under Section 153A. However, at the time of hearing
before us, the learned counsel for the assessee did not press the cross-
objection. Accordingly, the same is rejected as not pressed.
6. In the result, the appeal of the Revenue and the cross-objection
of the assessee are dismissed.
Decision pronounced in the open Court on 28th January, 2015.
Sd/- Sd/-
GARG)
(CHANDRA MOHAN GARG) AGRAWAL)
(G.D. AGRAWAL)
JUDICIAL MEMBER VICE PRESIDENT
Dated : 28.01.2015
VK.
Copy forwarded to: -
1. Revenue : Assistant Commissioner of Income Tax,
Circle-2, New Delhi.
Central Circle-
2. Assessee : M/s Millennium Plaza Limited,
6, Community Centre, Saket, New Delhi.
3. CIT
4. CIT(A)
5. DR, ITAT
Assistant Registrar
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