Ritika (P)Ltd, Kolkata V. DCIT, Circle -12, Kolkata, Kolkata

ITA 1022/KOL/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 92056 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 11 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-07-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 06-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PINAKI MUKHERJEE
• Assessee Lawyers: D S DAMLE
• Keywords: Business income; Depreciation; Business expenditure; Corroborative evidences; Revenue expenditure; Capital expenditure
• Section: 143(3); 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOLKATA [BEFORE SHRI P.K.BANSAL, A M & SHRI MAHAVIR SINGH , J M ] I.T.A NO S . 1022 /KOL/20 1 2 ASSESSMENT YEAR : 200 5 - 0 6 RITIKA PRIVATE LTD. VS. DY. COMMISSIONER OF INCOME - TAX 138, BELIAGHATA ROAD CENTRAL - 12, KOLKATA KOLKATA - 700 01 5 (PAN:A A BCR 5510N ) I.T.A NO S . 867 /KOL/2012 ASSESSMENT YEAR : 2005 - 06 DCIT, C IRCLE - 12 , KOLKATA VS. M/S RITIKA PVT. LTD. ( APPELLANT ) ( RESPONDENT ) DATE OF HEARING: 29 .0 5 .2015 DATE OF PRONOUNCEMENT: 03 . 0 7 . 2015 FOR THE ASSESSEE : SHRI D.S. DAMLE , FCA FOR THE RE V EN UE : S HRI PINAKI MUKHERJEE , SR. DR ORDER PER SHRI MAHAVIR SINGH, JM: T HESE CROSS - APPEAL BY ASSESSEE AND REVENUE ARE ARISING OUT OF COMMON ORDER OF CIT (A) - XXX , KOLKATA VIDE APPEAL NO. 178 /CIT(A) - XXX/CIR - 12 / 20 1 1 - 1 2 DATED 3 1 .0 1 .20 1 2 . ASSESSMENT W AS FRAMED BY D C I T, C IRCLE - 12 , KOLKATA U/S. 143(3) OF THE INCOME - TAX ACT, 19 61 (HEREINAFTER REFERRED TO AS THE A CT ) FOR ASSESSMENT YEAR 200 5 - 0 6 VIDE ORDER DATED 31 .12.200 7 . FIRST WE TAKE UP ASSESSEE S APPEAL IN ITA NO.1022/K/2012. 2. THE ONLY ISSUE IN THE APPEAL OF ASSESSEE IS AGAINST THE ORDER OF CIT(A) CONFIRMING THE DISALLOWANCE OF FOREIGN TRAVEL EXPENSES. FOR THIS, ASSESSEE HAS RAISED FOLLOWING 3 GROUNDS: - 1. FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(APPEALS)ERRED IN DISALLOWING FOREIGN TRAVEL EXPENSES OF RS.17,79,751/ - IN COMPUTING BUSINESS INCOME OF THE APPELLANT. 2. FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(APPEALS) FAILED TO CORRECTLY APPRECIATE THAT FOREIGN TRAVEL EXPENSES WERE INCURRED FOR APPELLANT S BUSINESS PURPOSES AND HENCE ALLOWABLE AS DEDUCTION FROM THE PROFITS OF TH E BUSINESS. 2 I TA NO S . 1022 & 867 /K/20 12 RITIKA PVT. LTD. AY 200 5 - 06 3. FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE DISALLOWANCE OF FOREIGN TRAVEL EXPENSES BE DELETED AND/OR REDUCED. 3. BRIEFLY STATED FACTS ARE THAT ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF READYMA DE GARMENTS AND OUTFITS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO REQUIRED THE ASSESSEE TO FURNISH THE DETAILS OF FOREIGN TRAVEL EXPENSES AND ASSESSEE VIDE LETTER DATED 04.12.2007 FILED DETAIL S, WHICH READS AS UNDER: - DIVYA SHARMA MERCHANDISER 2,03,980 AMRISH KUMAR DIRECTOR 5,79,901 ASHVIN KUMAR DIRECTOR 2,05,337 RITU KUMAR 2,18,663 RITU KUMAR 5,17,670 DIVYA SHARMA MERCHANDISER 54,200 TOTAL 17,79,751 APART FROM THE ABOVE, ASSESSEE HAS NOT FILED ANY DETAILS AND ACCORDINGLY AO DISALLOWED THE FOREIGN TRAVEL EXPENSES OF RS.17,79,751/ - . AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A) , WHO CONFIRMED THE ACTION OF THE AO IN DISALLOWING THE FOREIGN TRAVEL EXPENSES BY OBSERVING IN PARA - 5.3, WHIC H READS AS UNDER: - 5.3 THEREFORE, FROM THE ABOVE, IT IS SEEN THAT THE FOREIGN TRAVEL EXPENSES ARE MAINLY TOWARDS TRAVELLING OF THE DIRECTORS AND CONSIDERING THE LARGE AMOUNT OF EXPENSES THE AO HAS ASKED FOR JUSTIFICATION TO ESTABLISH THE BUSINESS NATURE O F THIS FOREIGN TRAVEL MADE BY THE DIRECTORS AND ONE MERCHANDISER/EMPLOYEE OF THE COMPANY. I T IS SEEN THAT ALTHOUGH CERTAIN EVIDENCES REQUIRED TO BE SUBMITTED LIKE COPIES OF LETTERS WRITTEN TO FOREIGN EMBASSY MAY NOT BE AVAILABLE WITH THE APPELLANT AND ABSE NCE OF THE SAME WOULD NOT BE ENOUGH JUSTIFICATION FOR HOLDING THAT THESE TRAVELING EXPENSES WERE NOT FOR BUSINESS PURPOSES, HOWEVER THE APPELLANT COULD HAVE PROVIDER OTHER CORROBORATIVE EVIDENCES TO ESTABLISH THE SAME. THE AO HAD GIVEN THE APPELLANT MORE T HAN ONE OPPORTUNITY TO ESTABLISH ALONG WITH EVIDENCE THAT THE AMOUNTS IN QUESTION HAVE BEEN INCURRED FOR THE PURPOSE OF BUSINESS WHICH HE ASKED THE APPELLANT TO FILE VIDE NOTICE U/S. 142(1) DATED 15.06.2007 AND ORDER SHEET NOTING DATED 11.12.2007. HOWEVER, IT IS SEEN THAT NEITHER IN ASSESSMENT PROCEEDINGS NOR IN APPEAL PROCEEDINGS COULD THE APPELLANT PROVIDE ANY FORM OF CORROBORATIVE EVIDENCE TO ESTABLISH THE BUSINESS PURPOSE OR BUSINESS NATURE OF THESE VISITS, OTHER THAN GENERAL EXPLANATION ABOUT THE BUSIN ESS OF THE APPELLANT AND HOW THE FOREIGN TRAVELS WERE FOR MARKET DEVELOPMENT ETC. WHILE IT IS TRUE THAT THE AO SHOULD NOT STEP INTO THE SHOES OF BUSINESS MAN TO DECIDE HOW HE SHOULD RUN HIS BUSINESS. AGGRIEVED, NOW ASSESSEE IS IN SECOND APPEAL BEFORE US. 4. BEFORE US, LD COUNSEL FOR THE ASSESSEE FILED A COMPARATIVE CHART OF FOREIGN TRAVELS EXPENSES INCURRED BY ASSESSEE OVER THE YEARS WHEREIN THE AO EXACTLY ALLOWED THE FOREIGN TRAVEL EXPENSES AND THE SAID RELEVANT CHART REPRODUCED AS UNDER: - 3 I TA NO S . 1022 & 867 /K/20 12 RITIKA PVT. LTD. AY 200 5 - 06 RITIKA PVT. LT D. ASSESSMENT YEAR : 2005 - 06 COMPARATIVE CHART OF FOREIGN TRAVEL EXPENSES INCURRED OVER THE YEARS NO. ASSTT.YEAR FOREIGN TRAVEL EXPENSES ALLOWED BY AO DISALLOWED BY AO REMARKS EXPORT TURNOVER TOTAL TURNOVER 1 AY2002 - 03 6,86,598 6,86,598 0 FULLY ALLOWED BY THE AO 14,02,908 24,06,56,910 2 AY2003 - 04 17,73,357 17,73,357 0 FULLY ALLOWED BY THE AO 47,22,937 27,01,79989 3 AY2004 - 05 17,40,537 0 17,40,537 UNDER APPEAL WITH ITAT 91,03,115 30,63,84,054 4 AY2005 - 06 17,79,751 0 17,79,751 UNDER APPEAL WITH ITAT 38,28,734 33,90,56,161 5 AY2006 - 07 8,95,585 8,95,585 0 ASSESSMENT U/S 143(1) 32,57,607 32,33,75,738 6 AY2007 - 08 6,09,872 6,09,872 0 ASSESSMENT U/S 143(3) 40,16,288 41,13,82,681 7 AY2008 - 09 12,04,921 12,04,921 0 ASSESSMENT U/S 143(3) 76,16,133 41,03,03,545 8 AY2009 - 10 1,16,025 1,16,025 0 ASSESSMENT U/S143(3) 62,94,948 39,95,92,499 9 AY2010 - 11 20,93,266 20,93,266 0 ASSESSMENT U/S 143(1) 1,02,59,013 41,94,36,685 10 AY2011 - 12 19,40,372 19,40372 0 ASSESSMENT U/S 143(3) 84,90,057 43,04,61,783 IN VIEW OF THE ABOVE, LD. COUNSEL FOR THE ASSESSEE STATED THAT WHEN ALL ALONG THESE FOREIGN TRAVELS WERE ALLOWED AND ASSESSEE HAS PARTICULARLY INCURRED THESE EXPENSES FOR THE BUSINESS PURPOSE AND THERE IS NO ELEMENT OF PERSONAL IN NATURE , THE SAME SHOULD H AVE BEEN ALLOWED . ACCORDING TO LD. COUNSEL FOR THE ASSESSEE THE DIRECTORS OR MERCHANDISE R S HAVE TRAVELLED AND FOR WHICH THESE FOREIGN TRAVELS WERE INCURRED. ON THE OTHER HAND, LD. DR HEAVILY RELIED ON THE ORDER OF CIT(A) AND THAT OF AO. 5. WE HAVE HEARD R IVAL SUBMISSIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT AO HIMSELF FROM AYS 2002 - 03 TO 2011 - 12 EXCEPT IN AY 2004 - 05 AND 2005 - 06 THE FOREIGN TRAVELS HAVE BEEN ALLOWED. EVEN THE ASSESSEE IS ENGAGED IN MANUFACTURING AND EXPORT OF READY - MADE GARMENTS AND OUTFIT AND ASSESSEE HAS DISCLOSED THE TURNOVER OF ITS EXPORTS, IT IS IMPERATIVE ON THE PART OF ASSESSEE TO SEND ITS DIRECTORS OR MERCHANDISE R S TO EARN EXPORT ORDERS FROM THE OUTSIDE INDIA AND FOR THAT PURPOSE, ASSESSEE HAS TO INC UR THESE EXPENSES. ACCORDINGLY, WE ARE OF THE VIEW THAT THESE 4 I TA NO S . 1022 & 867 /K/20 12 RITIKA PVT. LTD. AY 200 5 - 06 EXPENSES ARE GENUINE BUSINESS EXPENSES AND NO PART OF IT CAN BE DISALLOWED AND ACCORDINGLY THIS ISSUE OF ASSESSEE S APPEAL IS ALLOWED. COMING TO REVENUE S APPEAL IN ITA NO. 867/KOL/2012. 6. THE O NLY ISSUE IN THIS APPEAL OF REVENUE IS AGAINST THE ORDER OF CIT(A) IN RESTRICTING THE DISALLOWANCE AT RS.2,32,092/ - AS AGAINST THE DISALLOWANCE MADE BY AO AT RS.7118,403/ - . FOR THIS, REVENUE HAS RAISED FOLLOWING GROUND NO.1: - 1. THAT ON THE FACTS AND IN T HE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN RESTRICTING THE DISALLOWANCE OF CAPITAL EXPENDITURE UNDER THE HEAD REPAIR AND MAINTENANCE FROM RS.71,18,403/ - TO RS.2,32,092/ - IGNORING THE DECISION OF ITAT, KOLKATA IN THE ASSESSEE S OWN CASE FOR T HE AY 2004 - 05. 7. BRIEFLY STATED ACTS ARE THAT AO DURING THE ASSESSMENT PROCEEDINGS REQUIRED THE ASSESSEE TO EXPLAIN THE DEBIT OF AMOUNT OF RS.1,65,01,881/ - TOWARDS MAINTENANCE & REPAIR IN THE PROFIT AND LOSS ACCOUNT. THE ASSESSEE VIDE LETTER DATED 05 - 10 - 2007 FURNISHED THE STATE - WISE EXPENDITURE UNDER THE HEAD MAINTENANCE & REPAIRS AS UNDER: - KOLKATA RS. 59,95,800/ - DELHI RS. 24,88,255/ - GURGAON RS. 25,31,478/ - MUMBAI RS. 49,07,060/ - MADRAS RS. 1,80,186/ - AMRITSAR RS. 77,949/ - CHANDIGARH RS. 1,22,970/ - LUDHIANA RS. 1,11,771/ - BANGALORE RS. 86,412/ - RS.1,65,01,881/ - THE ASSESSEE FILED COMPLETE DETAILS STATE - WISE EXPENDITURE UNDER THE HEAD MAINTENANCE AND REPAIRS AND EXPLAINED BEFORE T HE AO THAT IN EARLIER YEAR THIS EXPENDITURE WAS ALLOWED BY ITAT FOR AY 2003 - 04 PARTLY. THE ASSESSEE EXPLAINED BEFORE THE AO THAT THIS EXPENDITURE IS HOW IMPORTANT FOR THE BUSINESS OF THE ASSESSEE AND IT HELPS IN INCREASE IN BUSINESS , WHICH READS AS UNDER: - THE REPAIRS AND MAINTENANCE EXPENDITURE ARE MAINLY MADE FOR RENOVATION OF THE SHOPS SITUATED THROUGHOUT INDIA. THE LESSER PART OF IT IS EXPENDED FOR THE REPAIRS AND MAINTENANCE OF THE OFFICE PREMISES. RITU KUMAR WAS RECOGNIZED AND HELD IN RESPECT AS THE FIRST FASHION DESIGNER OF INDIA. RITU KUMAR IS THE BRAND NAME IN INDIA AND HER PRODUCTS BEARS CLASS AND ARE EXTRAORDINARY AND UNIQUE. TO MARKET THESE PRODUCTS NEEDS UNIQUE COMMERCIAL EFFORTS. HER COLLECTIONS ARE FIRST DISPLAYED THROUGH GRAND SHOWS AND THEN SOLD TO THE CUSTOMERS THROUGH RETAIL SHOPS. 5 I TA NO S . 1022 & 867 /K/20 12 RITIKA PVT. LTD. AY 200 5 - 06 THEREFORE, THESE SHOPS HAVE TO BE RENOVATED EACH TIME A NEW COLLECTION IS OFFERED FOR SALE. THE RENOVATION, THE FURNITURE, THE LIGHTING AND THE SOUND SYSTEM USED IN THESE SHOPS SHOULD BE PERFECTLY IN HARMONY TO HIGHLIGHT EACH NEW COLLECTION TO ITS MAXIMUM POTENTIAL TO THE BUYING CUSTOMERS. THIS IS A HIGHLY SENSITIVE JOB AND CAN BE EXECUTED ONLY WITH THE HELP OF EXPERTS. THE RENOVATIONS UNDER TAKEN ARE ON THE BASIS OF THE COLLECTION TO BE INTRODUCED. THIS IS THE M OST IMPORTANT FACTOR WHICH RESULTS IN HIGH EXPENDITURE IN THE REPAIRS AND MAINTENANCE ACCOUNT. BUT THE AO WAS NOT CONVINCED WITH THE FULL EXP LANATION AND ACCORDINGLY HE DISALLOWED THE EXPENDITURE OF RS.71,18,403/ - . AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A). 8. THE CIT(A) AFTER CONSIDERING THE TRIBUNAL S DECISION FOR AY 2002 - 03 RESTICTED THE DISALLOW ANCE AT RS. 2 , 32 , 092/ - BY OBSERVING IN PARA 1 .2.& 1.3 WHICH READS AS UNDER: - 1.2 THE APPELLANT S SUBMISSIONS HAVE BEEN CONSIDERED. IT IS ALSO SEEN THAT THE ISSUE WAS CONSIDERED BY THE HON'BLE ITAT IN THE APPELLANT S OWN CASE FOR ASSESSMENT YEAR 2002 - 03 VIDE ORDER DATED IN APPEAL NO. WHEREIN THE HON' BLE ITAT HAS GONE INTO THE DETAILS OF SIMILAR EXPENDITURE DISALLOWED BY THE AO ON THE SAME GROUNDS IN THAT YEAR. IT WAS AFTER CONSIDERING ALL ASPECTS, THE HON'BLE ITAT HELD IN PARA 2 O F ITS ORDER AS UNDER: THE AUTHORITIES BELOW HAD JUSTIFIED THE DISALLOWA NCE ON THE GROUND THAT EXPENDITURE INCLUDES COST OF MACHINERY & FURNITURE AND THEREFORE, NOT ALLOWABLE. FROM THE DETAILS FURNISHED WE FIND THAT SOME ITEMS INCLUDED UNDER THIS HEAD REPRESENTED COST OF FIXED ASSETS WHICH WERE INDEPENDENT OF THE LEASED PREMIS ES THEY WERE NOT EMBEDDED OR NOT INTRICATELY RELATED TO THE PREMISES. THESE EXPENSES REPRESENTED COST OF ASSETS WHICH COULD BE SEPARATELY USED. ON CAREFUL PERUSAL, WE FIND THAT THE FOLLOWING ITEMS REPRESENTED COST OF ASSETS: (A) COST OF SOFA AND LOOSE FURNITUR E RS.1,58,900 (B) COST OF CC TV MANUAL AND COLOUR TV ETC. RS.4,32,750 (C) PUBLIC ADDRESS SYSTEM, FIRE ALARM, AMPLIFIERS AND CD PLAYERS RS.1,23,149 RS.6,14,799 IN OUR OPINION, EXPENDITURE OF RS.6,14,799/ - WAS COST OF EQUIPMENTS AND FURNITURE AND, THER EFORE, WOULD NOT FALL WITHIN THE EXPRESSION REPAIRS , REPLACEMENTS , RENOVATIONS ETC. THESE ASSETS WERE BUSINESS ASSETS INSTALLED IN THE BUSINESS PREMISES AND DID NOT HAVE CHARACTER OF REVENUE EXPENDITURE. WE, THEREFORE, HOLD THAT TO THE EXTENT OF RS.6 ,14,799/ - THE AO WAS JUSTIFIED IN HOLDING THE EXPENDITURE AS CAPITAL IN NATURE AND THE REMAINING EXPENDITURE OF RS.76,08,250/ - [RS.82,23,049 RS.6,14,799] IS HELD TO BE REVENUE EXPENDITURE. WE, HOWEVER, FIND THAT IN RESPECT OF COST OF DEPRECIABLE ASSETS THE AO DID NOT ALLOW DEPRECIATION. ACCORDINGLY, THE AO IS DIRECTED TO ALLOW DEPRECIATION WITH REFERENCE TO RS.6,14,799/ - BEING THE COST OF DEPRECIABLE ASSETS AT THE APPROPRIATE RATES AND RECOMPUTED THE INCOME ACCORDINGLY. T H EREFORE FROM THE ABOVE DECISION IT IS SEEN THAT THE HON ITAT HAS HELD THAT THE EXPENDITURE TOWARDS COST OF EQUIPMENT AND FURNITURE NOT FALLING WITHIN THE EXPRESSIONS REPAIRS , REPLACEMENT , RENOVA T ION DID NOT HAVE CHARACTER OF REVENUE EXPENDITURE AN THESE ASSETS WERE BUSINESS ASSETS INSTALLED IN THE BUSINESS PREMISES. IN RESPECT OF THE REMAINING EXPENDITURE IN THAT YEAR WHICH INCLUDED EXPENDIT U R E RELATING TO REPAIR AND RENOVATI O N OF EXISTING FURNITURE AND FIXTURES, IT WAS HELD BY THE I T AT THAT THE EXPENDITURE WAS INCURRED ONLY FOR EN ABLING THE ASSESSEE TO CARRY ON ITS BUSINESS MORE EFFECTIVELY AND 6 I TA NO S . 1022 & 867 /K/20 12 RITIKA PVT. LTD. AY 200 5 - 06 PROFITABLY AND THEREFORE WAS REVENUE IN NATURE. IT IS ALSO HELD BY THEM THAT WHEREIN ASSESSEE CARRIED REPAIRS, RENOVATION, RECONSTRUCTION ETC., TO THE LEASE PREMISES WITH THE VIEW TO FACILIT ATE CARRYING OF BUS I NESS MORE EFFICIENTLY AND PROFITABLY THE EXPENDITURE IS RE V ENUE IN NATURE BECAUSE SUCH EXPENDITURE DOE NOT RESULT IN CRE A TION OF ANY ASSET BELONGING TO THE ASSESSEE. IT IS ALSO SEEN FROM THE SUBMISSION OF THE APPELLANT THAT THE DEPARTME NT S APPEAL AGAINST TRIBUNAL S ABOVE OR D ER IN ITA T NO. 41 OF 2009 BEFORE THE HON'BLE CALCUTTA HIGH COURT HAS BEEN DISMISSED ON 29.07.2009. THEREFORE, APPLYING THE RATIO AND DECISION OF HON'BLE ITA T ON THE DETAILS OF EXPENDITURE PROVIDED BY THE APPELLANT IN RESPECT OF EXPENSED HELD BY THE AO TO BE OF CAPITAL IN NATUR E HAVE BEEN EXAMINED AND CONSIDERED WITHIN THE PARAMETERS OF THE DECISION OF THE HON ITAT. 1.3 ON DETAILED EXAMINATION OF THE EXPENSES CONSIDERED BY THE AO AS CAPITAL IN NATURE, , IT IS SEEN THAT MAJOR PART OF THE EXPENSES ARE IN THE NATURE OF REPAIRS AND RENOVATION AND ARE REVENUE IN NATURE WITHIN MEANING OF THE GUIDELINES LAID DOWN BY THE HON'BLE ITAT FOR THE TEST OF THIS EXPENDITURE. OUT OF THIS EXPENDITURE OF RS.71,18,403/ - , IT IS FOUND THAT O NLY EXPENDITURE OF RS.8,000/ - AT 21, CENTRAL MARKET PUNJABI BAG, NEW DELHI FOR INSTALLATION OF CCTDV AND RS.1,89,300/ - AT 9, HIGH ST. PHOENIX, MUMBAI FOR LOOSE FURNITURE AS WELL AS RS.34,792/ - FOR PROJECTOR FOR STORE TOTALING RS.2,32,092/ - ONLY CAN BE CONS IDERED TO BE IN THE NATURE OF CAPITAL EXPENDITURE REPRESENTING COST OF ASSETS WHICH CAN BE CONSIDERED AS BUSINESS ASSETS INSTALLED IN THE BUSINESS PREMISES. THEREFORE, HE DISALLOWANCE BY THE AO IS UPHELD ONLY TO THIS EXTENT AND THE REMAINING AMOUNT OF RS.6 8,86,311/ - IS TO BE TREATED AS REVENUE EXPENDITURE. THE AO IS HOWEVER DIRECTED TO ALLOW DEPRECIATION ON THE ABOVE AMOUNT TAKEN TO BE CAPITAL EXPENDITURE. THIS GROUND OF APPEAL IS ALLOWED TO THE ABOVE EXTENT. AGGRIEVED, REVENUE IS IN APPEAL BEFORE US. 9 . WE HAVE HEARD THE RIVAL SUBMISSIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE ITAT IN ASSESSE S S OWN CASE HAS HELD THAT THE EXPENDITURE TOWARDS COST OF EQUIPMENT AND FURNITURE NOT FALLING WITHIN THE EXPRESSIONS REPAIRS , REPLACEMENT , RENOVATION DID NOT HAVE CHARACTER OF REVENUE EXPENDITURE AN D THESE ASSETS WERE BUSINESS ASSETS INSTALLED IN THE BUSINESS PREMISES . B UT I N RESPECT OF THE REMAINING EXPENDITURE IN THAT YEAR WHICH INCLUDED EXPENDITURE RELATING TO REPAIR AND RENOVATION OF EXISTING FURNITURE AND FIXTURES AND IT WAS HELD THAT THE EXPENDITURE WAS INCURRED ONLY FOR ENABLING THE ASSESSEE TO CARRY ON ITS BUSINESS MORE EFFECTIVELY AND PROFITABLY AND THEREFORE WAS REVENUE IN NATURE. IT IS FURTHER HELD BY ITAT THAT WHE REIN ASSESSEE CARRIED REPAIRS, RENOVATION, RECONSTRUCTION ETC., TO THE LEASE PREMISES WITH THE VIEW TO FACILITATE CARRYING OF BUSINESS MORE EFFICIENTLY AND PROFITABLY THE EXPENDITURE IS REVENUE IN NATURE BECAUSE SUCH EXPENDITURE DOE NOT RESULT IN CREATION OF ANY ASSET BELONGING TO THE ASSESSEE. FURTHER, HON'BLE CALCUTTA HIGH COURT HAS CONFIRMED ITAT DECISION AND THE D EPARTMENT S A PPEAL AGAINST TRIBUNAL S ABOVE ORDER IN ITAT NO. 41 OF 2009 HAS BEEN DISMISSED ON 29.07.2009. THEREFORE, APPLYING THE RATIO AND D ECISION OF HON'BLE ITAT ON THE DETAILS OF EXPENDITURE IN RESPECT OF EXPENSED HELD BY THE AO TO BE 7 I TA NO S . 1022 & 867 /K/20 12 RITIKA PVT. LTD. AY 200 5 - 06 OF CAPITAL IN NATURE HAVE BEEN EXAMINED AND CONSIDERED WITHIN THE PARAMETERS OF THE DECISION OF THE ITAT. WE FIND O N DETAILED EXAMINATION OF THE EXPENSES CONS IDERED BY THE AO AS CAPITAL IN NATURE, IT IS SEEN THAT MAJOR PART OF THE EXPENSES ARE IN THE NATURE OF REPAIRS AND RENOVATION AND ARE REVENUE IN NATURE IN THIS YEAR ALSO . OUT OF THIS EXPENDITURE OF RS.71,18,403/ - , IT WAS FOUND THAT ONLY EXPENDITURE OF RS.8 ,000/ - AT 21, CENTRAL MARKET PUNJABI BAG, NEW DELHI FOR INSTALLATION OF CCTDV AND RS.1,89,300/ - AT 9, HIGH ST. PHOENIX, MUMBAI FOR LOOSE FURNITURE AS WELL AS RS.34,792/ - FOR PROJECTOR FOR STORE TOTALING RS.2,32,092/ - ONLY CAN BE CONSIDERED TO BE IN THE NAT URE OF CAPITAL EXPENDITURE REPRESENTING COST OF ASSETS WHICH CAN BE CONSIDERED AS BUSINESS ASSETS INSTALLED IN THE BUSINESS PREMISES. THEREFORE, WE UPHELD THE ORDER OF CIT(A) RESTRICTING T HE DISALLOWANCE AT RS.2,32,092 AND THE REMAINING AMOUNT OF RS.68,86, 311/ - TREAT ING AS REVENUE EXPENDITURE. ACCORDINGLY, THE APPEAL OF REVENUE IS DISMISSED. 10 . IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED AND THAT OF REVENUE IS DISMISSED . 1 1 . ORDER IS PRONOUNCED IN THE OPEN COURT ON 0 3 .0 7 .2015 S D / - S D / - ( P. K. BANSAL ) (MAHAVIR SINGH) ACCOUNTANT MEMBER J UDICIAL MEMBER *DKP/ .P.S. DATED : 3 R D JU LY , 201 5 COPY OF THE ORDER FORWARDED TO: 1 . A SSESSEE RITIKA PRIVATE LTD , 138 BELIAGHATA ROAD, KOLKATA - 700 01 5 2 RE V EN UE DCIT, C IRCLE - 12, KOL, 3, GOVERNMENT PLACE (W), KOLKATA - 01 3 . THE C I T (A), KOLKATA 4. 5. C I T, KOLKATA . DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER, ASSTT. REGISTRAR .