The Income Tax Appellate Tribunal (ITAT), Delhi Bench ‘H’, adjudicated on the appeal filed by the Deputy Commissioner of Income Tax (DCIT), Circle-4(2), New Delhi against the order passed by the Commissioner of Income Tax (Appeals)-2, New Delhi. The appeal, registered as ITA No. 353/DEL/2021, pertains to the assessment year 2017-18.
Central Warehousing Corporation, located at 4/1, Siri Institutional Area, August Kranti Marg, Hauz Khas, South West Delhi, New Delhi, filed its return of income for the assessment year 2017-18 on 20.10.2017 declaring income of Rs.2,07,14,10,340/-. The case was selected for scrutiny and thereafter, assessment was framed under section 143(3) of the Income Tax Act, 1961 vide order dated 28.12.2019. The total income of the assessee company was determined at Rs.2,08,80,89,375/-. Aggrieved by the order of the A.O, the assessee carried the matter in appeal before the Commissioner of Income Tax (Appeals) [CIT(A)], who decided the issue in favour of the assessee on 14.09.2020.
The Revenue raised the following grounds of appeal:
The case was heard on 03.08.2022, and the order was pronounced on 08.08.2022. The Tribunal, comprising Shri Anil Chaturvedi, Accountant Member, and Shri N.K. Choudhary, Judicial Member, reviewed the submissions and the relevant facts of the case.
The main issue in this appeal was the disallowance of Dunnage expenses amounting to Rs.1,85,32,261/- claimed by the assessee as revenue expenditure. The Assessing Officer (AO) treated the Dunnage expenses as capital expenditure and allowed depreciation at 10%, resulting in a net disallowance of Rs.1,66,79,035/-.
During the assessment proceedings, the AO noted that the assessee company had shown the Dunnage under the head ‘Capital Asset’ and had claimed depreciation on it. Additionally, the AO observed that the assessee had debited a sum of Rs.1,85,32,261/- as revenue expenses for Dunnage consumption/purchase in the Profit & Loss Account. The AO concluded that the assessee was treating the same expenditure as both capital and revenue, which was not acceptable.
The Ld. CIT(A), while deciding the issue in favour of the assessee, noted that an identical issue arose in the assessee’s own case in appeal filed by the Revenue before the ITAT for the A.Y. 2012-2013, and the Tribunal, vide order dated 12.02.2020 in ITA.No.5449/Del./2017, deleted the addition made by the AO.
The Tribunal found that the CIT(A) had correctly applied the principles laid down in the earlier years’ decisions and judicial precedents. The Tribunal upheld the CIT(A)’s order, deleting the disallowance made by the AO, and dismissed the appeal filed by the Revenue.
The appeal filed by DCIT, Circle-4(2), New Delhi was dismissed.
Order pronounced in the open court on 08.08.2022.
Signed by:
(N.K. Choudhary) – Judicial Member
(Anil Chaturvedi) – Accountant Member
Date: 08.08.2022
*VBP/-*
Copy forwarded to:
Assistant Registrar, ITAT, Delhi Benches, Delhi
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