2021 (2) TMI 420 - AT - Income Tax

Disallowance as amortization expenditure of leasehold land - assessee had incurred an expenditure for gaining control over the property which was necessary to their smooth running of its hotel business, which expenditure was amortized and claimed as revenue expenditure - HELD THAT - Expenditure was amortized and claimed as revenue expenditure; and which was allowed by AO from A.Ys. 2003-04 to AY 2008-09; and thereafter in AY 2009-10 the AO took a view that the amount was capital in nature and disallowed the same which view was reversed by the Ld. CIT(A) and the revenue's appeal against the action of the Ld. CIT(A) got dismissed and the Tribunal was pleased to uphold the action of the Ld. CIT(A) thereby allowing the claim of the assessee - This view of the Tribunal has been followed in assessee's own case by the coordinate bench for AY 2012-13 also. Even though res judicata is not applicable for income tax proceeding, however, rule of consistency as a principle has been upheld by the Hon'ble Supreme Court in the case of Radhasoami Satsang Vs. CIT ( 1991 (11) TMI 2 - SUPREME COURT ), wherein theas held that if the facts permeating in the earlier years are the same and there is no change in facts and law, then the view taken earlier should not be disturbed by applying the principle of rule of consistency. This view has also been endorsed by the Hon'ble jurisdictional High court in the case of CIT Vs. Hindustan Motors Ltd. 1990 (2) TMI 13 - CALCUTTA HIGH COURT . - Appeal of the assessee allowed.

Summary

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 ?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.