CHEMIDA ENTERPRISE, MUMBAI V. ACIT 13(2), MUMBAI

CO 201/MUM/2013

• Counselvise Citation: [2014] 122 COUNSELVISE.COM (IT) 9291 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 11 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 22-01-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2007-2008
• Appeal Filed On: 10-09-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: A M SHAH
• Keywords: Depreciation; Revenue expenditure; Capital expenditure
• Section: 37

Judgement Text

, LH LHLH LH IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL C CC C BENCH, BENCH, BENCH, BENCH, MUMBAI MUMBAI MUMBAI MUMBAI , . !' !' !' !' BEFORE BEFORE BEFORE BEFORE SHRI SHRI SHRI SHRI VIJAY PAL RAO, JM VIJAY PAL RAO, JM VIJAY PAL RAO, JM VIJAY PAL RAO, JM & & & & SHRI SHRI SHRI SHRI RAJENDRA RAJENDRA RAJENDRA RAJENDRA, AM , AM , AM , AM ./ I.T.A. NO. I.T.A. NO. I.T.A. NO. I.T.A. NO.11 1111 1150/M/2011 50/M/2011 50/M/2011 50/M/2011 ( #$ #$ #$ #$ % % % % / ASSESSMENT YEAR :2007-08) ACIT-13(2), R. NO. 421, 4 TH FLOOR, AAYAKAR BHAVAN, MUMBAI-400020 $ $ $ $ / VS. M/S CHEMIDA ENTERPRISES 26 & 31A, DEVKARNA NIVAS, 283, SAMUEL STREET, VADGADI, MUMBAI-400003 '& ./ ' ./ PAN/GIR NO. : ( &( / APPELLANT APPELLANT APPELLANT APPELLANT) .. ( )*&( / RESPONDENT RESPONDENT RESPONDENT RESPONDENT) )*+ )*+ )*+ )*+ / CO COCO CO NO. NO. NO. NO.201 201 201 201/M/201 /M/201 /M/201 /M/2013 33 3 ( #$ #$ #$ #$ % % % % / ASSESSMENT YEAR :2007-08) M/S CHEMIDA ENTERPRISES 26 & 31A, DEVKARNA NIVAS, 283, SAMUEL STREET, VADGADI, MUMBAI-400003 $ $ $ $ / VS. ACIT-13(2), R. NO. 421, 4 TH FLOOR, AAYAKAR BHAVAN, MUMBAI-400020 '& ./ ' ./ PAN/GIR NO. :AAAFC0235B ( &( / APPELLANT APPELLANT APPELLANT APPELLANT) .. ( )*&( / RESPONDENT RESPONDENT RESPONDENT RESPONDENT) #$ #$#$ #$ ,- ,- ,- ,- . / . / . / . / /ASSESSEE BY : SHRI A. M. SHAH ' ' ' ' . / . / . / . / / REVENUE BY : SHRI RAVI PRAKASH $ $ $ $ . .. . - - - - / DATE OF HEARING : 8 TH JANUARY 2014 01% 01% 01% 01% . .. .- - - - /DATE OF PRONOUNCEMENT: 22 ND JANUARY 2014 !2 / O R D E R PER : , . . / VIJAY PAL RAO, JM THIS APPEAL BY THE REVENUE AND CROSS OBJECTION BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER DATED 18.11.2010 OF COMMISSIONER OF INCOME TAX(APPEALS) FOR THE ASSESSMENT YEAR 2007-08 . ITA NO.1150/M/2011 & CO NO. 201/M/2013 CHEMIDA ENTERPRISES 2 2. THE ONLY EFFECTIVE GROUND RAISED BY THE REVENUE IN THIS APPEAL AS UNDER: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE DISALLOWAN CE OF ` 13,35,111/- MADE ON ACCOUNT OF CAPITAL EXPENDITURE. 3. WE HAVE HEARD THE LD. D.R AS WELL AS LD. A.R AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. THE ASSESSEE DEBITED A SUM OF ` 13,35,111/- TO PROFIT AND LOSS ACCOUNT UNDER THE HEAD STRUCTURE AND REPAIR WORK. THE A.O NOTED THAT THE NATURE OF WORK UNDERTAKEN INCLUD ES PLASTERING, P&F AC ROOF, FLOORING TILES, GRANITE PLATFORM, RECONSTRUCT ION OF WALL AND EXISTING FLOORING AND OTHER MACHINERY WORK. ACCORDINGLY, THE A.O DISALLOWED THE CLAIM BY TREATING THE EXPENDITURE AS CAPITAL IN NAT URE AND ALLOWED THE DEPRECIATION AT THE RATE OF 10%. ON APPEAL, THE CIT (A) HAS DELETED THE ADDITION MADE BY THE A.O. 4. WE FIND THAT THE PREMISES IN QUESTION WAS PURCHA SED BY THE ASSESSEE AND BEFORE IT WAS PUT TO USE AS OFFICE PRE MISES THE EXPENDITURE IN QUESTION WAS INCURRED FOR MAKING THE OFFICE PREM ISES FIT FOR USE. THUS, IT IS CLEAR THAT THE EXPENDITURE IN QUESTION DOES NOT FALL UNDER THE CATEGORY OF CURRENT REPAIRS AS THE SAME WAS INCURRED BEFORE THE ASSET WAS PUT TO USE FOR THE PURPOSE OF BUSINESS. HOWEVER, THE ISSUE HAS TO BE EXAMINED U/S 37 OF THE INCOME TAX ACT WHETHER THE EXPENDITUR E IS ALLOWABLE REVENUE EXPENDITURE OR CAPITAL IN NATURE. THE A.O A S WELL AS THE CIT(A) HAS NOT EXAMINED THE NATURE AND DETAILS OF THE EXPENDIT URE PROPERLY. ACCORDINGLY, IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN THE INTEREST OF JUSTICE WE SET ASIDE THE IMPUGNED ORDER OF THE C IT(A) AND REMITTED THE ITA NO.1150/M/2011 & CO NO. 201/M/2013 CHEMIDA ENTERPRISES 3 SAME TO THE RECORD OF THE CIT(A) TO DECIDE THE ISSU E AFTER PROPER EXAMINATION OF THE FACTS AND ALLOWABILITY OF THE EX PENDITURE U/S 37 OF THE INCOME TAX ACT. CO NO. 201/M/2013 CO NO. 201/M/2013 CO NO. 201/M/2013 CO NO. 201/M/2013 5. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS I N THE CROSS OBJECTION: 1. THE LEARNED CIT(A) ALREADY RIGHTLY DELETED THE DISALLOWANCES OF ` 13,35,111/- AND TREATED AS CURRENT REPAIRS AS THE SAID EXPENSES INCLUDES COMPUTER MAINTENANCE, PEST CONTRO L, MOTOR CAR REPAIRS, ELECTRIC REPAIRS ETC. 2. THE LEARNED ASSESSING OFFICER HAS OBSERVED THAT NATURE OF WORK INCLUDES PLASTERING, P & F AC SHEET ROOF, P & F FLOORING TILES, P & F GRANITE SERVICE PLATFORM, BREAKING OF EXISTIN G FLOORING WALL, P & F CONSTRUCTING BRICK MASONRY WORK ETC. 3. THE RESPONDENT HIMSELF HAS CAPITALIZED ` 3,41,00 0/- AS THEY ARE OF CAPITAL NATURE AND NO ENDURING BENEFIT IS DE RIVED OR ANY ASSET IS CREATED. 6. AS IT IS APPARENT FROM THE GROUND RAISED IN THE CO THAT THE ASSESSEE IS SUPPORTING THE ORDER OF THE CIT(A) AND NO NEW IS SUE HAS BEEN RAISED. IN VIEW OF OUR FINDING ON THIS ISSUE IN THE APPEAL OF THE REVENUE THE CROSS OBJECTION OF THE ASSESSEE ARE DISMISSED. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLO WED FOR STATISTICAL PURPOSES AND CROSS OBJECTION OF THE ASSESSEE IS DIS MISSED. ITA NO.1150/M/2011 & CO NO. 201/M/2013 CHEMIDA ENTERPRISES 4 ORDER PRONOUNCED IN THE OPEN COURT ON THIS 22 ND DAY OF JANUARY 2014 SD/- SD/- ( ) !' (RAJENDRA) ACCOUNTANT MEMBER ( ) # !' (VIJAY PAL RAO) JUDICIAL MEMBER PLACE: MUMBAI : DATED: 22 ND JANUARY 2014 SUBODH COPY FORWARDED TO: 1 APPELLANT 2 RESPONDENT 3 CIT 4 CIT(A) 5 DR /TRUE COPY/ BY ORDER DY /AR, ITAT, MUMBAI