This article provides an in-depth analysis of the case ITA No. 4809/DEL/2019, where the appellant, Soma Punjab Warehousing Pvt. Ltd., contested against the respondent, ACIT, Circle-24(1), New Delhi. The case pertains to the assessment year 2015-16. The appeal was filed on May 27, 2019, and the final tribunal order was pronounced on November 25, 2020.
The dispute arose when Soma Punjab Warehousing Pvt. Ltd. filed its return of income on September 30, 2015, declaring a loss of Rs. 93,35,62,704. However, the Assessing Officer (AO) assessed the loss at Rs. 75,25,66,270 in the assessment order dated December 30, 2017.
The primary issues raised in the appeal were:
The appellant argued that the receipts from using storage facilities of under-construction godowns should be considered as capital receipts, to be deducted from the construction costs of the warehouses as per applicable Accounting Standards. They contended that these should not constitute income.
The appellant also highlighted that if the receipts were considered revenue in nature, a deduction should be allowed under Section 35AD of the Income Tax Act. This would result in an enhanced loss of Rs. 1,02,40,60,920 instead of the returned loss of Rs. 93,35,62,704.
The Delhi ‘G’ Bench of the Income Tax Appellate Tribunal (ITAT) heard the appeal, with Shri R. K. Panda as the Accountant Member and Ms. Suchitra Kamble as the Judicial Member. The hearing took place on November 19, 2020, and the order was pronounced on November 25, 2020.
The ITAT noted that the CIT(A) dismissed the appeal without providing a categorical finding on the merits of the case and without giving sufficient opportunity of hearing to the appellant. The tribunal emphasized that the principles of natural justice must be followed.
The ITAT remanded the entire issue back to the file of the CIT(A) for a decision on the merits. The CIT(A) was instructed to provide a proper opportunity of hearing to the appellant and to decide the case based on its merits.
The ITAT’s final judgment is summarized as follows:
Considering the facts of the case in totality and the judicial decisions discussed hereinabove, we remand the issue back to the file of the CIT(A) to be decided on merits. The appeal is allowed for statistical purposes.
Order pronounced in the Open Court on 25th November, 2020.
Sd/- Sd/-
(R. K. PANDA) (SUCHITRA KAMBLE)
ACCOUNTANT MEMBER JUDICIAL MEMBERDated: 25/11/2020
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT (Appeals)
5. DR
Asst. Registrar, ITAT, New Delhi
Soma Punjab Warehousing Pvt. Ltd. vs ACIT: Case Analysis on Income Classification and Deductions
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