2021 (2) TMI 420 - AT - Income Tax

Appellate authority's allowance of amortization for leasehold control costs upheld; AO recharacterization reversed for AY 2009-10

ITAT KOLKATA - AT upheld the appellate authority's allowance of amortization of expenditure incurred to secure control over leasehold land as revenue ... Rule of Consistency - Amortization of expenditure on acquiring control over leasehold land as revenue expenditure - Binding effect of coordinate bench decisions in assessee's own case - Res judicata in income tax proceedings - Judicial discipline in following precedentRule of Consistency - Amortization of expenditure on acquiring control over leasehold land as revenue expenditure - Binding effect of coordinate bench decisions in assessee's own case - Whether the amortization expenditure claimed by the assessee in respect of payment for gaining control over leasehold land (allowed in earlier assessment years) is to be disallowed as capital expenditure for AY 2011-12. - HELD THAT: - The Tribunal noted that the assessee had incurred the payment to gain control over the property, treated it as amortizable and claimed revenue expenditure from AY 2003-04 onwards; the Assessing Officer had allowed the claim in assessments under section 143(3) for AYs 2004-05 to 2008-09. There was no change in facts or law in AY 2011-12. The Tribunal relied on its earlier decisions in the assessee's own case for AY 2009-10 (where the coordinate Bench upheld allowance following the rule of consistency) and for AY 2012-13, and applied the principle that, although res judicata does not strictly apply to separate assessment years, the rule of consistency requires the tax authorities to follow an earlier view where facts and law remain unchanged. The Revenue did not contend any change in facts or law. In view of the binding effect of the coordinate bench decisions in the assessee's own case and the authority of higher judicial pronouncements upholding the rule of consistency, the Tribunal concluded that the amortization expense should be allowed for AY 2011-12. [Paras 6, 7]The disallowance of the amortization expenditure was set aside and the claimed amortization of Rs. 56,28,718/- was allowed for AY 2011-12.Final Conclusion: The appeal is allowed: the Tribunal, applying the rule of consistency and following its earlier decisions in the assessee's own case, set aside the disallowance and allowed the amortization expenditure claimed for AY 2011-12. Issues:1. Disallowance of amortization expenditure of leasehold land.Analysis:The appeal was filed against the order of the Ld. CIT(A)-21, Kolkata for the assessment year 2011-12. The only ground raised was the disallowance of Rs. 56,28,718 claimed as amortization expenditure of leasehold land. The assessee argued that the issue was covered by the Tribunal's decision in earlier assessment years. The AO had allowed the claim in previous years, but in 2009-10, the claim was disallowed as capital expenditure. However, the Ld. CIT(A) and the Tribunal upheld the claim based on the principle of consistency as there was no change in facts or law. The Tribunal's decision in the earlier years was followed, and the claim was allowed.The Ld. AR pointed out that the Tribunal had also upheld the claim in the assessee's case for the assessment year 2012-13. The Ld. DR did not contest that there was any change in facts or law in the current assessment year compared to previous years. The Tribunal noted that the expenditure was necessary for the smooth running of the hotel business and had been consistently claimed as revenue expenditure. The Tribunal emphasized the rule of consistency, citing the Supreme Court's decision in Radhasoami Satsang case and the jurisdictional High Court's ruling in CIT Vs. Hindustan Motors Ltd. The Tribunal held that since there was no change in facts or law, the view taken earlier should be maintained. Therefore, the appeal was allowed, and the disallowance of the amortization expenditure was reversed.In conclusion, the Tribunal allowed the appeal of the assessee, emphasizing the importance of consistency in tax proceedings. The decision was based on the principle that if there is no change in facts or law, the view taken in earlier years should be upheld. The Tribunal relied on previous judgments and held that the amortization expenditure claimed by the assessee should be allowed.