DCIT, Bangalore V. M/s NCR Corporation (India) Pvt. Ltd., Bangalore

ITA 1090/BANG/2012

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 8139 (ITAT-BANGALORE)
• Duration Of Justice: 6 year(s) 10 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-07-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2002-2003
• Appeal Filed On: 30-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C H SUNDAR RAO
• Assessee Lawyers: K R VASUDEVAN
• Keywords: Depreciation; Revenue expenditure
• Section: 143(3); 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI N. V. VASUDEVAN, VICE PRESIDENTAND SHRI JASON P BOAZ, ACCOUNTANT MEMBER IT (TP) A NO. 1090 /BANG/201 2 ASSESSMENT YEAR : 20 02 - 03 DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE - 12(2), 14/3, 4 TH FLOOR, RASTROTHANA BHAVAN (OPP. RBI), NRUPATHUNGA ROAD, BANGALORE 560 001. VS. M/S. NCR CORPORATION (INDIA) PVT. LTD., NO.11, 3 RD FLOOR, NILTON BUILDING, PALACE ROAD, BANGALORE 560 052. PAN : AAACN 7149 L APPELLANT RESPONDENT REVENUE BY : SHRI. C. H. SUNDAR RAO, CIT-DR ASSESSEE BY : SHRI. K. R. VASUDEVAN, ADVOCATE DATE OF HEARING : 03 . 0 7 .201 9 DATE OF PRONOUNCEMENT : 19 . 07 .201 9 O R D E R PER JASON P BOAZ, ACCOUNTANT MEMBER THIS APPEAL BY REVENUE IS DIRECTED AGAINST THE ORDER OF THE CIT(A)-IV, BANGALORE DATED 18.06.2012 FOR ASSESSMENT YEAR 2002-03. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE AS UNDER: 2.1 THE ASSESSEE, A COMPANY ENGAGED IN PROVIDING FINANCIAL SELF SERVICE SOLUTIONS AND RETAIL STORE AUTOMATION SOLUTIONS, WHICH INCLUDES PRODUCTS LIKE ATMS, MICR DEVICES, ETC., FILED ITS RETURN OF INCOME FOR ASSESSMENT YEAR 2002-03 ON 31.03.2003 DECLARING INCOME OF RS.4,86,730/-. THE CASE WAS TAKEN UP FOR SCRUTINY FOR THIS IT(TP)A NO. 1090/BANG/2012 PAGE 2 OF 5 ASSESSMENT YEAR AND THE ASSESSMENT WAS CONCLUDED UNDER SECTION 143(3) OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT) VIDE ORDER DATED 30.03.2005 WHEREIN THE ASSESSEES INCOME WAS DETERMINED AT RS.12,59,88,200/- IN VIEW OF THE VARIOUS ADDITIONS / DISALLOWANCES; INCLUDING A TP ADJUSTMENT OF RS.9,75,97,931/-. ON APPEAL, THE CIT(A)-IV, BANGALORE, DISPOSED OFF THE ASSESSEES APPEAL VIDE ORDER DATED 18.06.2012. 3.1 AGGRIEVED BY THE ORDER OF CIT(A)-IV, BANGALORE, DATED 18.06.2012, REVENUE HAS PREFERRED THIS APPEAL WHEREIN IT HAS RAISED THE FOLLOWING GROUNDS:- IT(TP)A NO. 1090/BANG/2012 PAGE 3 OF 5 4. GROUND NOS. 1, 4 AND 5 (SUPRA), BEING GENERAL IN NATURE, NO ADJUDICATION IS CALLED FOR THEREON. 5. GROUND NOS.2 AND 3 EXPENDITURE INCURRED ON RENOVATION OF OFFICE BUILDING 5.1 IN THESE GROUNDS (SUPRA), REVENUE ASSAILS THE ACTION OF THE CIT(A) IN HOLDING THAT THE EXPENDITURE OF RS.3.51 CRORES INCURRED ON RENOVATION OF OFFICE BUILDING AS REVENUE EXPENDITURE WITHOUT APPRECIATING THAT IT IS CAPITAL IN NATURE AND THEREFORE THE ASSESSEE IS ELIGIBLE ONLY FOR DEPRECIATION THEREON. THE LEARNED DR FOR REVENUE WAS HEARD IN THE MATTER AND HE SUPPORTED THE ORDER OF ASSESSING OFFICER (AO). 5.2 PER CONTRA, THE LEARNED AR SUPPORTED THE IMPUGNED ORDER OF THE CIT(A) IN HOLDING THAT AFORESAID EXPENDITURE INCURRED ON RENOVATION OF OFFICE BUILDING WAS REVENUE IN NATURE. IN THIS REGARD, THE LEARNED AR SUBMITS THAT THIS ISSUE FOR CONSIDERATION IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE AND AGAINST REVENUE BY THE DECISION OF A CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2003-04 IN ITA NO.353(BANG)/2010 DATED 28.02.2011. 5.3.1 AFTER CONSIDERING THE RIVAL CONTENTIONS / SUBMISSIONS AND THE MATERIAL ON RECORD, WE FIND THAT THE SIMILAR ISSUE WAS BEFORE THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2003-04 AND IN ITS ORDER IN ITA NO.353(BANG)/2010 DATED 28.02.2011, AT PARAS 6 THEREOF, THE TRIBUNAL HELD AS UNDER:- 6. HAVING HEARD BOTH THE PARTIES, WE FIND THAT THE EXPENDITURE IS MAINLY ON IMPROVEMENT OF INTERIORS AND ELECTRICAL WORKS, MODELING AND NETWORKING OF COMPUTERS, OTHER MISCELLANEOUS WORKS, WORK STATION ETC. THESE MAY GIVE SOME BENEFIT TO THE ASSESSEE BUT THE PREMISES BEING LEASED PREMISES AND THAT TOO FOR A PERIOD OF THREE YEARS ONLY IT CANNOT BE SAID THAT IT IS GIVING ENDURING BENEFIT. FURTHER, THE ENDURING BENEFIT IT(TP)A NO. 1090/BANG/2012 PAGE 4 OF 5 IS NOT THE ONLY TEST FOR DETERMINING THE NATURE OF THE EXPENDITURE. AS HELD BY THE HON'BLE SUPREME COURT IN THE CASE OF MADRAS INDUSTRIAL INVESTMENT CORPORATION LTD. (CITED SUPRA) IF THE EXPENDITURE IS SO RELATED TO THE CARRYING ON OF OR THE CONDUCT OF THE BUSINESS, IT HAS TO BE TREATED AS REVENUE EXPENDITURE. UNDOUBTEDLY, THE ASSESSEE CANNOT CARRY ON THE BUSINESS IN THE LEASED PREMISES WITHOUT MAKING IMPROVEMENT TO THE INTERIORS AND ELECTRICAL WORKS, CABLING AND NETWORKING ETC. IN VIEW OF THE SAME, WE HOLD THAT THE EXPENDITURE IS TO BE ALLOWED U/S 37 AS REVENUE EXPENDITURE. THUS, GROUND NO.2 OF THE ASSESSEE'S APPEAL IS ALLOWED. 5.3.2 THE CIT(A) IN THE IMPUGNED ORDER HAS FOLLOWED THE AFORESAID DECISION OF THE CO-ORDINATE BENCH OF THIS TRIBUNAL FOR ASSESSMENT YEAR 2003-04 IN THE ASSESSEES OWN CASE (SUPRA). SINCE THE FACT SITUATION ON THIS ISSUE IS SIMILAR IN THE YEAR UNDER CONSIDERATION ALSO, WE FIND NO REASON TO INTERFERE WITH THE DECISION OF THE CIT(A) IN THE IMPUGNED ORDER IN HOLDING THAT THE EXPENDITURE OF RS.3.51 CRORES INCURRED ON RENOVATION OF OFFICE BUILDING, PERTAINING TO LEASEHOLD PREMISES, IS REVENUE IN NATURE. THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF THE CO-ORDINATE BENCH OF THIS TRIBUNAL DATED 28.02.2011 IN THE ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2003-04 (SUPRA), WE FIND NO MERIT IN THE GROUND NOS.2 AND 3 RAISED BY REVENUE AND DISMISS THEM. 6. IN THE RESULT, REVENUES APPEAL FOR ASSESSMENT YEAR 2002-03 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 19 TH DAY OF JULY, 2019. SD/ - SD/ - (N. V. VASUDEVAN) VICE PRESIDENT (JASON P BOAZ) ACCOUNTANT MEMBER BANGALORE. DATED: 19 TH JULY, 2019. /NS/* IT(TP)A NO. 1090/BANG/2012 PAGE 5 OF 5 COPY TO: 1. APPELLANTS 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE.