SACHDEV GETAWAYS & GETAWAYS P. LTD, MUMBAI V. ACIT 9(3), MUMBAI

ITA 117/MUM/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 84210 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 10 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-11-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 11-11-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 06-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LOVE KUMAR
• Assessee Lawyers: S C TIWARI
• Keywords: Capital asset; Depreciation; Revenue expenditure; Capital expenditure

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, M UMBAI BEFORE HONBLE S/SHRI VIJAY PAL RAO (JM) , AND B.R.BASKARAN (AM) , . . , ./I.T.A. NO.117/MUM/2011 ( / ASSESSMENT YEAR : 2007-08) SACHDEV GATEWAYS AND GETAWAYS PVT LTD., 801, EVERGLADES, 21 ST ROAD, OFF DR AMBEDKAR ROAD, BANDRA (W), MUMBAI-400050 / VS. ASSTT. COMMISSIONER OF INCOME TAX CIRCLE 9(3), MUMBAI. ( / APPELLANT) .. ( / RESPONDENT) ./ ./ PAN/GIRNO.:AAECS5888D ! / APPELLANT BY : SHRI S C TIWARI ' ! /RESPONDENT BY SHRI LOVE KUMAR # ' $% / DATE OF HEARING : 10.11.2014 &' ' $% /DATE OF PRONOUNCEMENT : 14.11.2014. / O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 21.10.2010 PASSED BY LD CIT(A)-20, MUMBAI AND IT RE LATES TO THE ASSESSMENT YEAR 2007-08. THE ASSESSEE IS AGGRIEVED BY THE DEC ISION OF LD CIT(A) IN CONFIRMING THE DISALLOWANCE OF REPAIR EXPENSES MADE BY THE ASSESSING OFFICER TREATING THE SAME AS CAPITAL IN NATURE. 2. THE LD A.R SUBMITTED THAT THE ASSESSEE IS ENG AGED IN THE BUSINESS OF RUNNING A HOTEL HAVING 48 ROOMS. THE HOTEL BUILDIN G WAS CONSTRUCTED IN 1980 AND HENCE IT REQUIRED FREQUENT RENOVATION. ACCORDI NGLY, THE ASSESSEE INCURRED RENOVATION EXPENSES EVERY YEAR AND DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE INCURRED A SUM OF RS.44,76,247/- AND CLAIM ED THE SAME AS REVENUE EXPENDITURE. HOWEVER, THE ASSESSING OFFICER NOTICE D THAT THE ASSESSEE HAS ITA NO.117/M/2011 2 CARRIED ON HEAVY RENOVATION WORK AND THE SAME HAS C ONTINUED FOR MORE THAN 2 YEARS. CONSIDERING THE LONG SPAN OF TIME, THE AO T REATED THE SAME AS CAPITAL EXPENDITURE AND ACCORDINGLY DISALLOWED THE CLAIM OF REPAIR EXPENSES. THE AO, HOWEVER, ALLOWED DEPRECIATION ON THE DISALLOWED AMO UNT. IN THE APPELLATE PROCEEDINGS, THE LD CIT(A) CONFIRMED THE ORDER OF T HE AO, AGAIN CONSIDERING THE QUANTUM OF REPAIR EXPENSES INCURRED BY THE ASSESSEE . THE LD COUNSEL SUBMITTED THAT THE ASSESSEE, IN ORDER TO MAINTAIN T HE REPUTATION OF THE HOTEL AND TO LIVE UPTO THE EXPECTATION OF THE CUSTOMERS, WAS CONSTRAINED TO MODERNIZE THE ROOMS AND OTHER FACILITIES AND HENCE IT HAD TO INCU R THE EXPENSES ON REPAIRS AND RENOVATION. THE LD COUNSEL SUBMITTED THAT THE ASSE SSEE HAS NOT INCREASED THE CAPACITY OF THE HOTEL BY INCURRING THESE EXPENSES. THE LD COUNSEL ALSO SUBMITTED THAT THE IDENTICAL DISALLOWANCE MADE IN THE ASSESSE ES HAND IN AY 2005-06 WAS DELETED BY THE CO-ORDINATE BENCH OF TRIBUNAL IN ITA NO.5637/MUM/2008 RELATING TO AY 2005-06, VIDE ITS ORDER DATED 15.12.2010. AC CORDINGLY HE SUBMITTED THAT THE IMPUGNED DISALLOWANCE NEEDS TO BE SET ASIDE. 3. WE HEARD LD D.R, WHO STRONGLY SUPPORTED THE ORDERS OF THE LD CIT(A). 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUS ED THE RECORD. AS SUBMITTED BY LD A.R, THERE IS NO FINDING ON THE PAR T OF THE TAX AUTHORITIES TO THE EFFECT THAT THE ASSESSEE HAS INCREASED ITS CAPACITY BY INCREASING THE IMPUGNED REPAIR EXPENSES. FROM THE DETAILS OF REPAIRS EXPEN SES FURNISHED IN THE STATEMENT OF FACTS FILED BEFORE LD CIT(A), WE NOTIC E THAT THE ASSESSEE HAD INCURRED MAJOR EXPENDITURE ON RENOVATION OF ROOMS, REPAIRING PLUMBING, ELECTRICAL ITEMS, FURNITURE ETC. THERE IS NOTHING ON RECORD T O SHOW THAT THE ASSESSEE HAS BROUGHT IN ANY NEW ASSET BY INCURRING THESE EXPENSE S. THE LD A.R HAS ALSO SUBMITTED THAT THE HOTEL BUILDING HAVING BECOME OLD , THE ASSESSEE WAS CONSTRAINED TO INCUR EXPENSES TO RENOVATE THE ROOMS , BUILDING AND OTHER ACCESSORIES. THE SAID SUBMISSION HAS NOT BEEN CONT ROVERTED BY THE REVENUE ON THE BASIS OF ANY MATERIAL. WE HAVE ALREADY NOTICED THAT THE TAX AUTHORITIES HAVE BEEN INFLUENCED BY THE QUANTUM OF EXPENDITURE ONLY, WITHOUT OBJECTIVELY BRINGING ANY MATERIAL TO SHOW THAT THE ASSESSEE DID BRING IN ANY CAPITAL ASSET. UNDER THESE SET OF FACTS, WE FIND MERIT IN THE CONTENTION S OF THE ASSESSEE. ACCORDINGLY, ITA NO.117/M/2011 3 WE SET ASIDE THE ORDER OF LD CIT(A) AND DIRECT THE AO TO DELETE THE IMPUGNED ADDITION RELATING TO REPAIRS AND RENOVATION EXPENSE S. 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 14TH NOV, 2014 . &' # () * + 14TH NOV , 2014 ' ' , - SD SD ( / VIJAY PAL RAO ) ( . . ,/ B.R. BASKARAN ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER ( # MUMBAI: 14TH NOV,2014. . . ./ SRL , SR. PS !'# $#%! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. # 0$ ( ) / THE CIT(A)- CONCERNED 4. # 0$ / CIT CONCERNED 5. 6. 1, $ 2 , % 2 , ( # / DR, ITAT, MUMBAI CONCERNED ,3 4 / GUARD FILE. 5 # / BY ORDER, TRUE COPY 6 (ASSTT. REGISTRAR) % 2 , ( # /ITAT, MUMBAI