Hon'ble Shashi Kant,J.
This is an appeal under section 260-A of the Income Tax Act arising from the order of the Income Tax Appellate Tribunal (which is herein after referred to as "the Tribunal") dated 23rd November 1998 relating to the assessment year 1989-90. The following substantial questions of law have been raised:
1. Whether, on the facts and in the circumstances of the case, the learned Income Tax Appellate Tribunal was justified in deleting the addition of Rs. 7,14,000/- on account of retention money without appreciating the facts inter-alia that assessee's method of accounting was admitted as Merchantile?
2. Whether, on the facts and in the circumstances of the case, the learned Income Tax Appellate Tribunal was legally correct in deleting the addition of Rs. 1,09,250/- on account of expenditure in Stamp Duty treating the same as revenue expenditure ignoring the fact that the expenditure was incurred in creating a source of income?
3. Whether, on the facts and in the circumstances of the case, the learned Income Tax Appellate Tribunal was legally correct in upholding the deletion of disallowance of Rs. 5,03,973/- made under section 32 AB of Income Tax Act?
4. Whether, in the facts and in the circumstances of the case, the learned Income Tax Appellate Tribunal was legally correct in deleting the disallowance under section 32 AB of the Act without applying the ratio of decision of Hon'ble Supreme Court in the case of Sri N.C. Buddhi Raja & Co. 204-ITR-412 and M/s Builder Associates of India v Union of India & others, 209-ITR-877?
Heard Sri RK Upadhyaya, learned Senior Standing Counsel on behalf of the appellant and Sri Suyash Agarwal, learned counsel for the respondent.
Learned counsel for both the parties submitted that so far the question no. 1 is concerned, is concluded by the decision of this Court in the Income Tax Appeal No. 117 of 2003 relating to the assessment year 1991-1992 inter party which has been followed in the case of assessee itself in Income Tax Appeal No. 191 of 2004 decided on 14.08.2007 wherein it has been held that retention money cannot be treated as the trading receipt, in as much as the amount was only for security amount retained for due performance of the contract. Following the decision of this Court, referred herein above, question no. 1 is answered against the revenue and in favour of the assessee.
So far question no. 3 is concerned, the learned counsel for the respondent very fairly submitted that the issued involved is covered by the decision of Apex Court in the case of Commissioner of Income Tax v N.C. Budharaja & Co [(1993) 204 ITR page 412 which has been followed by the Apex Court in the case of S.A. Builders Ltd v Commissioner of Income Tax (Appeals) & another [(2007) 289 ITR 26(SC)] wherein it has been held that since the assessee was engaged in the business of civil construction and was not carrying on any manufacturing activity, the deduction under section 32AB is not allowable. Respectfully following the decisions of the Apex Court in the cases of Commissioner of Income Tax v N.C. Budharaja & Co (supra) and S.A. Builders Ltd v Commissioner of Income Tax (Appeals) & another (supra) the question is answered in negative in favour of the revenue and against the assessee. The order of the Tribunal to this extent is set aside.
Now coming to the question no. 2. It appears that it is necessary to refer the few facts of the case. The assessee respondent was the civil contractor and for the execution of a contract a document has been executed on which the stamp duty amounting to Rs. 1,09,250/- has been paid. The assessee has claimed the deduction of such amount, being revenue expenditure, which has been disallowed by the assessing authority. The first appeal filed by the assessee has been rejected. The Tribunal in second appeal has allowed the deduction.
We are of the view that the expenditure incurred for the purchase of the stamp duty was relating to the carrying on the business of civil construction and, therefore, it was in the nature of revenue expenditure.
In the case of Commissioner of Income Tax v Gopal Associates reported in (2010) 326 ITR page 413, the question involved before the Court was that the expenditure incurred in the stamp duty and registration charges at the time of execution of the agreement for taking on lease the fruit processing plant for seven years, was allowable as revenue expenditure. The Division Bench of the Himachal Pradesh High Court relying upon the decisions of Madras, Kerala and Bombay High Courts in the cases of Sri Krishna Tiles & Potteries Madras (P) Ltd v Commissioner of Income Tax reported in (1988) 173 ITR 0311 (Madras), Plantation Corporation of Kerala Ltd v Commissioner of Agricultural Income Tax reported in (1994) 205 ITR 0364 (Kerala), Gujrat Machinery Mft Ltd v CIT reported in (1995) 211 ITR 110 page 413 and the decision of the Bombay High Court in Commissioner of Income Tax v Cinceita P. Ltd reported in (1982) 137 ITR 652 has held that the amount spent on registration and the stamp charges, is a revenue expenditure.
We agree with the view taken by the Himachal Pradesh High Court in the case of Commissioner of Income Tax v Gopal Associates reported in 2010 326 ITR page 413 and the view taken by the Gujrat High Court in the case of Gujrat Machinery Mft Ltd v Commissioner of Income Tax (supra), the decision of Madras High Court in the case of Sri Krishna Tiles & Potteries, Madras (P) Ltd v Commissioner of Income Tax (supra) and the decision of the Bombay High Court in the case of Commissioner of Income Tax v Cinceita P. Ltd (supra).
In view of the above, question no. 2 is answered in affirmative in favour of the assessee against the revenue. In the result the appeal is allowed in part, as stated above.
Order Date :- 30.4.2014 shailesh