COMMISSIONER OF INCOME TAX Vs. JCB INDIA LTD.

JUDGEMENT

(1.) These appeals by the Revenue pertain to the assessment year ("the AY") 2007-08 (I.T.A. No. 202 of 2014) and the assessment year 2008-09 (I.T.A. No. 195/2014) and arise of the common impugned order dated September 18, 2013, in I.T.A. Nos. 95/Del/2012 and 6051/Del/2012, respectively, of the Income-tax Appellate Tribunal ("the ITAT"). The question answered by the Income-tax Appellate Tribunal in the said impugned order in favour of the assessee was whether the addition made by the Assessing Officer ("the AO") of the "development charges" claimed by the assessee to be revenue expenditure was justified. The case of the Revenue is that the said "development charges" were in the nature of capital expenditure as the assessee was thereby deriving benefit of an enduring nature. In the impugned order, the Income-tax Appellate Tribunal has deleted the addition on the ground that in several previous assessment years the plea of the assessee that it was revenue expenditure was accepted.

(2.) Mr. Kamal Sawhney, learned senior standing counsel for the Department, submits that the assessee gave no particulars of the development charges supposed to have been incurred by it in the relevant previous years and, therefore, failed to discharge the onus placed on it. He submitted that the rule of consistency would not apply where it can be shown that even the explanation offered by the assessee in the previous years was not satisfactory. According to him, a wrong decision in the previous assessment years will not preclude the Revenue from seeking remand of the matter to the Assessing Officer for re-examining the issue afresh after giving the assessee an opportunity to provide further details.

(3.) Mr. M.S. Syali, learned senior counsel for the assessee, first referred to the order dated February 23, 2004, passed by the Income-tax Appellate Tribunal in the assessee's own case for the assessment year 1995-96 in which it was noted that for the assessment year 1993-94 also the Income-tax Appellate Tribunal had upheld the order of the Commissioner of Income-tax (Appeals) deleting the addition made by the Assessing Officer of the development expenses. Consequently, the addition made of the said head of expenses for the assessment year 1995-96 was also deleted. Mr. Syali also referred to a chart which showed that no disallowance of the development charges claimed as revenue expenditure was made from the assessment years 2001-02 to 2004-05 and the assessment years 2005-06 and 2006-07. Although in relation to the assessment years 2004-05, the issue was sought to be reopened by the Revenue, those proceedings ended in favour of the assessee with the Income-tax, Appellate Tribunal allowing the assessee's appeal (I.T.A. No. 3762/Del/2013) by an order dated March 27, 2015. Mr. Syali further pointed out that for the subsequent assessment year 2009-10, the Assessing Officer has accepted the explanation offered by the assessee and allowed the development charges as revenue expenditure.