M/s. Numeric Power Systems Ltd., Now known as, CHENNAI V. ITO (OSD), CHENNAI

ITA 1344/CHNY/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 96479 (ITAT-CHENNAI)
• Duration Of Justice: 3 year(s) 5 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-11-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 12-10-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 15-06-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P RADHAKRISHNAN IRS
• Keywords: Business income; Depreciation; Wholly owned subsidiary; Competent authority; Revenue expenditure
• Section: 142(1); 14A; 194C; 10B

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI . , . , ! ' BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER ./ I.T.A.NO.1344/MDS/2012 ! # $# / ASSESSMENT YEAR : 2008-09 M/S. NUMERIC POWER SYSTEMS LIMITED, NOW KNOWN AS M/S. SWELECT ENERGY SYSTEMS LTD, NUMERIC HOUSE NO.5, P.S. SIVASWAMY SALAI, MYLAPORE, CHENNAI 600 004. VS. THE INCOME TAX OFFICER, (OSD) COMPANY CIRCLE IV(4) CHENNAI 600 034. [PAN AAACN 2366F ] ( / APPELLANT) ( /RESPONDENT) %& ' ( / APPELLANT BY : SHRI. PHILIP GEORGE, ADVOCATE )* %& ' ( /RESPONDENT BY : SHRI. P. RADHAKRISHNAN, IRS, JCIT. ' + / DATE OF HEARING : 12.10.2015 ,$ ' + / DATE OF PRONOUNCEMENT : 20.11.2015 / O R D E R PER G. PAVAN KUMAR, JUDICIAL MEMBER : THE APPEAL IS FILED BY THE ASSESSEE AGAINST THE O RDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-V, CHENNAI DAT ED 14.03.2012 IN ITA NO.1344/MDS/2012 :- 2 -: ITA NO.399/2010-11 FOR THE ASSESSMENT YEAR 2010-201 1 PASSED U/SS.143(3) AND 250 OF INCOME TAX ACT (IN SHORT THE ACT). 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S A LIMITED COMPANY AND IN THE BUSINESS OF MANUFACTURING OF UPS SYSTEMS AND FILED RETURN OF INCOME ON 30.09.2008 DISCLOSING TOT AL INCOME OF >21,98,17,563/- AND RETURN OF INCOME WAS PROCESSED U/S.143(1) OF THE ACT ON 22.02.2010. NOTICE U/SEC 142(1) WAS ISSUED AND THE ASSESSEE FILED DETAILED INFORMATION AND SUBMITTED EXPLANATIO NS DULY SUPPORTING THE RETURN OF INCOME. THE ASSESSING OFFICER COMPLE TED THE ASSESSMENT U/S.143(3) OF THE ACT BY MAKING ADDITIONS AND ASSE SSED INCOME AT >22,52,35,607/-. 3. THE FIRST GROUND RAISED BY THE ASSESSEE IN APPEAL O N DENIAL OF EXEMPTION CLAIMED U/S.10B OF THE ACT IN RESPECT OF EXPORT PROCEEDS RECEIVED AFTER STIPULATED PERIOD AND ALSO FOREIGN E XCHANGE GAINS FROM THE CALCULATION OF EXEMPTION U/S.10B OF THE ACT. 3.1 THE ASSESSEE COMPANY IS MANUFACTURER OF ELECTRO NIC COMPONENTS AND FILED AUDIT REPORT UNDER SECTION 44 AB AND ALSO CLAIMED EXEMPTION U/S.10B IN RESPECT OF EHTP DIVISI ON (ELECTRONIC HARDWARE TECHNOLOGY PARK DIVISION) ENGAGED IN MANU FACTURE OF UPS AND POWER CONDITION SYSTEM. OUT OF THE TOTAL TURNO VER OF ITA NO.1344/MDS/2012 :- 3 -: >3,91,72,095/-, NET PROFIT ON EXPORT TURNOVER HAS W ORKED OUT TO >15,09,803/- AFTER CONSIDERING THE OVERHEADS. THE ASSESSEE HAS FILED ALL STATUTORY FORMS FOR CLAIMING DEDUCTION U/S.10B AND ALSO COPIES OF FOREIGN INWARD REMITTANCES UNDERTAKEN BY THE EOU DI VISION. AGAINST THE TOTAL TURNOVER OF >3,91,72,095/-, THE FOREIGN E XCHANGE RECEIVED WITHIN STIPULATED TIME OF SIX MONTHS FROM THE END OF FINANCIAL YEAR INTO COUNTRY IS >3,42,66,477/- AND THE BALANCE SUM OF >48,23,426/- WAS RECEIVED FROM SUBSIDIARY COMPANY AFTER THE DUE DATE. THE LD. ASSESSING OFFICER HAS RESTRICTED THE DEDUCTION U/SE C 10B TO THE EXTENT OF >42,64,057/- AS AGAINST CLAIMED BY THE ASSESSEE >52,16,537/-. AGGRIEVED BY THE ORDER, THE ASSESSEE PREFERRED AN A PPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). 3.2 IN THE APPELLATE PROCEEDINGS, THE LD.AR ARGUED THAT THE RESTRICTION ON REMITTANCES CANNOT BE APPLIED TO 1 00% OWNED SUBSIDIARY COMPANY. THE DISALLOWANCE UNDER SECTION 10(B)(3) IS AGAINST LAW AND FILED COPY OF RBI CIRCULAR NO. RBI/ 2010-11/457 AP(DIR SERIO) CIRCULAR 47 DATED 31.03.2011 IN EXTENDING I NWARD REMITTANCES PERTAINING TO ASSESSMENT YEAR 2011-2012 AND AFTER H EARING THE SUBMISSIONS, THE LD COMMISSIONER OF INCOME TAX (AP PEALS) HAS CONFIRMED THE ASSESSING OFFICER DISALLOWANCE BY OBS ERVING AT PAGE 7 OF THE ORDER AS UNDER:- ITA NO.1344/MDS/2012 :- 4 -: AS REGARDS THE CIRCULAR OF THE RBI, A PHOTOCOPY OF WHICH HAS BEEN FURNISHED BY THE APPELLANT AS ANNEXURE II, IT WAS POINTED OUT TO THE AO OF THE APPELLANT TO SHOW AS TO HOW THE SAID CIRCULAR WAS APPLICABLE TO THE PERIOD UNDER CONSIDERATION IN THE APPELLANT'S CASE AS THE SAID CIRCULAR APPARENTLY APPLIED TO THE SUBSEQUENT PERIODS SINCE IT WAS EXTENDING THE RELAXATION ALLOWED UP TO MARCH 31, 2011 VIDE CIRCULAR NUMBER 57 DATED JUNE 29,2010, UP TO SEPTEMBER 30,2011. IN RESPONSE, APART FROM PLACING RELIANCE ON THE SAID CIRCULAR, NOTHING HAS BEEN SUBMITTED OR BROUGHT ON RECORD TO SHOW THAT THE SAID CIRCULAR WAS ALSO APPLICABLE TO THE APPELLANT'S CASE FOR THE EXPORTS EFFECTED WITHIN THE ASSESSMENT YEAR 2008-09. FURTHER AS REGARDS FOREIGN EXCHANGE GAIN, NOTHING HAS BEEN SAID OR SUBMITTED DURING THE APPEAL PROCEEDINGS ON THIS COUNT . IN VIEW OF THE ABOVE, I DO NOT FIND ANY INFIRMITY IN THE ACTION OF THE AO IN RESTRICTING DEDUCTION UNDER SECTION 10B TO THE EXPORTS, THE SALE PROCEEDS OF WHICH HAVE BEEN RECEIVED BY THE APPELLANT IN CONVERTIBLE FOREIGN EXCHANGE WITHIN THE STIPULATED TIME. THE GROUNDS OF APPEAL, THEREFORE, ARE DISMISSED. AGGRIEVED BY THE ORDER OF CIT(A), ASSESSEE PREFERRE D AN APPEAL BEFORE THE TRIBUNAL. THE LD. AUTHORISED REPRESENTATIVE SU BMITTED TO TREAT THE REMITTANCES OF SUBSIDIARY COMPANY RECEIVED AFTER DU E DATE BY APPLYING THE RBI CIRCULAR. WE AFTER HEARING THE SUBMISSIONS OF BOTH THE PARTIES AND LAW APPLICABLE FOR 100% EOU FOUND AS PER EXPLAN ATION 3 OF SECTION 10B READS AS UNDER:- ITA NO.1344/MDS/2012 :- 5 -: THIS SECTION APPLIES TO THE UNDERTAKING, IF THE SA LE PROCEEDS OF ARTICLES OR THINGS OR COMPUTER SOFTWARE EXPORTED OU T OF INDIA ARE RECEIVED IN, OR BROUGHT INTO, INDIA BY THE ASSESSEE INCONVERTIBLE FOREIGN EXCHANGE, WITHIN A PERIOD OF SIX MONTHS FRO M THE END OF THE PREVIOUS YEAR OR, WITHIN SUCH FURTHER PERIOD AS THE COMPETENT AUTHORITY MAY ALLOW IN THIS BEHALF . AT THE OUTSET, RBI IS THE COMPETENT AUTHORITY TO G IVE SPECIAL PERMISSION IN WRITING TO THE ASSESSEE TO RECEIVE SA LE PROCEEDS AFTER THE SAID DATE. IN THE PRESENT CASE >48,23,426/- WAS RECEIVED IN OCTOBER, 2008 AND FEBRUARY 2009, AFTER A PERIOD OF SIX MONTHS FROM THE END OF THE PREVIOUS YEAR AND THE CIRCULAR OF T HE RBI IS EFFECTIVE FROM 2011 ONWARDS IN RESPECT OF INWARD REMITTANCES AND NOT RETROSPECTIVELY. CONSIDERING THE ABOVE FACTS, WE ARE INCLINED TO UPHOLD THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS). THE LD. AO ALSO EXCLUDED FROM THE EXPORT TURNOVER FORE IGN EXCHANGE GAIN OF >2,98,953/- FOR THE COMPUTATION OF DEDUCTION U/ S.10B AS ASSESSEE COULD NOT EXPLAIN THE SOURCE FOR FOREIGN EXCHANGE GAINS ATTRIBUTED TO UNITS AND THE LD.CIT(A) HAS CONFIRMED THE ADDITION. BEFORE US, THE AUTHORISED REPRESENTATIVE HAS NOT SUBMITTED ANY PAR TICULARS BUT PLEADED FOR CONSIDERATION OF FOREIGN EXCHANGE GAINS FOR DEDUCTION U/S.10B AND IT IS ALSO APPARENT FROM THE FACTS OF T HE CASE THAT LD.AR COULD NOT SUBSTANTIATE HIS GROUND WITH ANY MATERIAL EVIDENCE. ITA NO.1344/MDS/2012 :- 6 -: THEREFORE, WE ARE INCLINED TO UPHOLD THE ORDER OF T HE LD. COMMISSIONER OF INCOME TAX (APPEALS) ON THIS GROUND ALSO. 4. THE SECOND GROUND RAISED BY THE ASSESSEE FOR DISAL LOWANCE U/S.14A READ WITH RULE 8D TO THE EXTENT OF >16,91, 712/-. 4.1 THE ASSESSEE COMPANY RECEIVED DIVIDEND INCOM E OF >46,75,918/- AND CLAIMED EXEMPTION U/S.10(34) OF THE ACT AND H AS NOT DISALLOWED ANY EXPENDITURE IN THE COMPUTATION OF INCOME. IN T HE ASSESSMENT PROCEEDINGS THE LD.AR SUBMITTED THAT COMPANY HAS NO T INCURRED ANY EXPENDITURE FOR EARNING DIVIDENDS AND THE ASSESSING OFFICER APPLIED THE PROVISIONS OF RULE 8D AND CALCULATED THE DISALLOWAN CE OF >16,91,712/- AND ADDED TO THE RETURNED INCOME. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). 4.2 THE LD. AUTHORISED REPRESENTATIVE SUBMITTED T HAT THE PROVISIONS OF SEC. 14A ARE NOT APPLICABLE FOR THE ASSESSMENT Y EAR 2008-09 AND THE LD.CIT(A) RELYING ON HIGH COURT AND SUPREME C OURT DECISIONS FOLLOWED JUDICIAL PRECEDENT OF JURISDICTIONAL ITAT BENCH IN SOUTHERN PETRO CHEMICAL INDUSTRIES VS. DCIT (93 TTJ 161) AND CONCLUDED THAT RULE 8D IS APPLICABLE TO THE PRESENT ASSESSMENT YEA R AND THERE IS NO DISPUTE OR MISTAKE BY ASSESSING OFFICER IN CALCULAT ING DISALLOWANCE AND ITA NO.1344/MDS/2012 :- 7 -: CONFIRMED THE ORDER OF THE ASSESSING OFFICER. AGGR IEVED BY THE ORDER OF CIT(A), THE ASSESSEE HAS ASSAILED APPEAL BEFORE THE TRIBUNAL. THE LD.AR ARGUED THAT LD.CIT(A) ERRED IN CONFIRMING TH E ORDER OF THE ASSESSING OFFICER AND THE EXPENDITURE DEBITED TO TH E PROFIT AND LOSS ACCOUNT BY WAY OF INTEREST DOES NOT ATTRIBUTE TO TH E DIVIDEND INCOME AND RELIED ON ALTERNATIVE GROUND IN RESPECT OF IN RESPECT OF NONAPPLICABILITY OF RULE 8D PRIOR TO 24.03.2008 AND IF ANY DISALLOWANCE HAS TO BE CONSIDERED, IT SHALL BE PROPORTIONATELY AND REFERRED TO PAGE 39 OF THE ANNUAL REPORT OF THE ASSESSEE COMPANY AN D EXPLAINED THAT DIVIDEND INCOME IS FROM 100% SUBSIDIARY COMPANY NUM ERIC LANKA TECHNOLOGIES (PRIVATE) LIMITED, SRI LANKA. ON THE O THER HAND LD. DEPARTMENTAL REPRESENTATIVE RELIED ON THE FINDINGS OF THE LOWER AUTHORITIES AND OBJECTED TO THE SUBMISSIONS OF INF ORMATION BEFORE THE TRIBUNAL REGARDING DIVIDEND INCOME OF SRILANKA SUBS IDIARY COMPANY AND PRAYED FOR DISMISSAL OF THE GROUND OF THE ASSESSEE. 4.3 WE HEARD BOTH THE PARTIES AND PERUSED TH E MATERIAL ON RECORD. WE FIND THAT FACTS AND CIRCUMSTANCES OF THE PRESENT CASE PERTAINING TO HOLDING AND SUBSIDIARY COMPANY OF TWO DIFFERENT COUNTRIES, AND WHICH NEEDS TO BE VERIFIED WITH TH E QUANTUM OF SHARE HOLDING AND DTA AGREEMENT FOR DIVIDEND INCOME. WE ARE OF THE ITA NO.1344/MDS/2012 :- 8 -: CONSIDERED OPINION THAT MATTER NEEDS TO BE RE-EXAMI NED AND SET ASIDE THE ISSUE IN DISPUTE TO THE FILE OF THE ASSESSING O FFICER. THE ASSESSING OFFICER IS DIRECTED TO ALLOW THE CLAIM AFTER CONSID ERING THE SATISFACTORY EXPLANATIONS AND MATERIAL EVIDENCE FOR DIVIDEND INC OME. 5. THE THIRD GROUND RAISED BY THE ASSESSEE WITH REGAR D TO DISALLOWANCE U/S.40(A) (IA) TO THE TUNE OF >11,68, 912/- 5.1. THE ASSESSEE COMPANY IS IN THE BUSINESS OF MANUFACTURING AND EXPORT OF THE UPS AND ELECTRONIC PARTS USED FOR GLOBAL NETWORKING AND HAS ENTERED INTO CONTRACTS WITH VARIOUS COMMUNI CATION CHANNELS WHICH PROVIDES INTERNET SERVICES INCLUDING M/S.SAP INDIA PVT. LTD FOR PROVIDING SOFTWARE SERVICES. THE ASSESSEE COMPANY BASED ON THE NATURE OF TRANSACTION AND WORKING CONDITIONS DEDUCT ED TDS UNDER PROVISIONS U/S.194C OF THE ACT @2% ON SUCH CONTRACT PAYMENTS. IN THE ASSESSMENT PROCEEDINGS, THE LD.AO HAS OBJECTED TO TDS DEDUCTION AT 2% AND TREATED SUCH EXPENDITURE IS COVERED U/S.1 94J OF THE ACT FOR TECHNICAL SERVICES AND MADE PROPORTIONATE DISALLOWA NCE. THE ASSESSEE HAS FURTHER SUBMITTED THAT PROVISIONS OF SEC.40(A) (IA) ARE NOT APPLICABLE AND PAYMENTS ARE CONTRACT PAYMENTS AND N OT FOR ANY PROFESSIONAL OR TECHNICAL SERVICES. AFTER HEARING T HE SUBMISSIONS, THE LD.AO NEITHER CONSIDERED PROVISIONS OF 194C OR 194J OF THE ACT BUT INVOKED DISALLOWANCE UNDER PROVISIONS U/S.40A(IA) ITA NO.1344/MDS/2012 :- 9 -: OF THE ACT FOR CONTRACT PAYMENTS. AGGRIEVED BY THE ORDER, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE COMMISSIONER OF INCO ME TAX (APPEALS). 5.2 BEFORE THE LD.CIT(A), THE ASSESSEE RAISED VARIOUS G ROUNDS ABOUT THE APPLICABILITY OF SEC 40A(IA) OF THE ACT A ND THE PROVISIONS U/SEC. 194C OF THE ACT WHICH ARE APPLICABLE FOR CON TRACT PAYMENTS TO BUSINESS MODULES OF INTERNET SERVICE PROVIDER. THE LD.CIT(A) HEARD THE SUBMISSIONS AND ALSO VERIFIED THE LOWER DEDUCTION OF TDS CERTIFICATE ISSUED BY THE ASSESSING AUTHORITY OF THE CONTRACTEE AND CONCLUDED THAT CERTIFICATE IS APPLICABLE FOR ASSESSMENT YEAR 2012 -13 AND DISMISSED THE GROUNDS OF THE ASSESSEE BY CONFIRMING THE ORDER OF ASSESSING OFFICER. 5.3 AGGRIEVED BY THE ORDER OF LD.CIT(A), THE ASSESSEE F ILED AN APPEAL BEFORE THE TRIBUNAL. BEFORE US, THE LD. COUN SEL HAS SUBMITTED THAT PROVISIONS OF SECTION 40A(IA) SHALL NOT BE APP LICABLE IN RESPECT OF SHORT DEDUCTION OF TDS AND PRIME FACIE THE ASSESSEE IS FOLLOWING GOING CONCERN PRACTICE OF DEDUCTING TDS ON CONTRACT PAYME NTS AND RELIED ON THE JUDGMENT OF CALCUTTA HIGH COURT IN THE CASE OF CIT VS. S.K. TEKRIWAL 260 CIT 0073 (CAL ) AND ALSO ON THE DECISION OF ITAT DELHI TRIBUNAL IN THE CASE OF ACIT VS. PANKAJ BHARGAVA IN ITA NO.59/DEL/2011, DATED 24 TH MAY, 2013 AND PLEADED FOR DELETION OF ITA NO.1344/MDS/2012 :- 10 -: ADDITION. ON VERIFYING THE LEGAL POSITION, WE FIND THAT THE ADDITION U/S.40A(IA) OF THE ACT CAN BE MADE IF BOTH THE CON DITIONS ARE SATISFIED IN RESPECT OF APPLICABILITY OF TDS UNDER CHAPTER X VII B AND TAX WAS NOT DEDUCTED BY THE ASSESSEE. IN THE PRESENT CASE, THE ASSESSEE HAD DEDUCTED TDS AT A LOWER RATE, ON PERUSING THE CASE LAWS AND DECISIONS RELIED BY THE LD. COUNSEL. WE FOUND THAT EXPENSES A RE NOT LIABLE TO BE DISALLOWED U/S.40(A)(IA) OF THE ACT ON ACCOUNT OF S HORT DEDUCTION OF TAX AT SOURCE. THE ASSESSEE HAS FURTHER COMPLIED WITH B OTH THE LIMBS OF APPLICABILITY OF PROVISIONS BY DEDUCTING TDS ON PA YMENTS AND DEPOSITING THE SAME WITH THE GOVERNMENT, WHICH IS N OT DISPUTED BY THE ASSESSING OFFICER. WE ARE OF THE OPINION, THAT IF ANY DIFFERENCE IN STRATEGY OF TAXABILITY OR NATURE OF PAYMENT ARISES, IN SUCH CIRCUMSTANCES ALTERNATIVELY, THE ASSESSING OFFICER CAN TREAT THE ASSESSEE AS DEFAULTER U/S.201 OF THE ACT BUT NOT BY INVOKING PROVISIONS U/S.40(A)(IA) OF THE ACT. IT IS ALSO APPARENT FROM FACTS OF THE CASE THE ASSESSEE HAS DEDUCTED TDS AND REMITTED TO THE TREA SURY AND WE DIRECT THE ASSESSING OFFICER TO DELETE THE IMPUGNE D ADDITION AND ALLOW THE GROUNDS OF THE ASSESSEE. 6 THE LAST GROUND RAISED BY THE ASSESSEE WITH REGARD TO DISALLOWANCE OF INTERIOR DECORATION WORKS >16,05,12 0/-. ITA NO.1344/MDS/2012 :- 11 -: 6.1 THE ASSESSEE IN THE FINANCIAL YEAR 2007-08 HAS INCURRED AN EXPENDITURE OF >17,83,467/- ON THE INTERIOR WORKS I N THE NATURE OF ALUMINUM GLASS PARTITIONS, TOILET REFURBISHING, GRA NITE TILES AND STRIPS DOORS ETC., THE ASSESSEE COMPANY HAS TREATED SUCH EXPENSES AS REVENUE EXPENDITURE. IN THE ASSESSMENT PROCEEDINGS , IT WAS EXPLAINED THAT TEMPORARY PARTITIONS, FIXATION OF GL ASS, GRANITE TILES ETC ON RENTED PREMISES ARE CONSIDERED AS CURRENT REPAIR S AND 100% DEDUCTION CLAIMED BUT THE ASSESSING OFFICER ALLOWE D DEPRECIATION AT THE RATE OF 10% AND DISALLOWED EXPENDITURE OF >16,0 5,120/-. AGGRIEVED BY THE ORDER, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). 6.2 BEFORE THE COMMISSIONER OF INCOME TAX (APPEA LS), THE LD.AR FILED A DETAILED SUBMISSIONS EXPLAINING SUCH EXPEND ITURE IS NECESSARY FOR CORPORATE OFFICE WHICH HAS A GLOBAL BUSINESS IN DIFFERENT COUNTRIES HAVING A INTERNATIONAL EXPOSURE AND DEALING WITH FO REIGN NATIONALS. TO IMPROVE THE FEASIBILITY AND BUSINESS BRAND IMAGE S UCH UP GRADATION IS REQUIRED AT REGULAR INTERVALS. EVEN THE PARTITIONS ARE TEMPORARY IN NATURE IF THEY ARE REMOVED THEY CANNOT BE REUSED FO R ANY OTHER PURPOSE AND ALSO TILES FLOORING DOES NOT GIVE ENDUR ING BENEFIT BUT NECESSARILY INCREASE THE IMAGE OF THE BUSINESS ASS OCIATES. THE LD.CIT(A) AFTER HEARING THE SUBMISSIONS OVERLOOKED THE INFORMATION ITA NO.1344/MDS/2012 :- 12 -: AND CONFIRMED THE ADDITION OF THE ASSESSING OFFICER . AGGRIEVED BY THE ORDER OF CIT(A), THE ASSESSEE ASSAILED AN APPEAL BE FORE THE TRIBUNAL. THE LD. AR SUBMITTED THAT THE COMPANY HAS GLOBAL P RESENCE AND THE TYPE OF REVENUE EXPENDITURE INCURRED COMPARED TO TH E TOTAL TURNOVER OF BUSINESS IS VERY SMALL. THE LD. AR REFERRED TO PAGE NOS. 97 AND 98 OF PAPER BOOK WERE THE TAX INVOICE COPIES ARE FILED WITH INFORMATION OF PAYMENTS FOR MATERIAL AND LABOUR CHARGES AND MOST O F THE EXPENDITURE INCURRED CANNOT BE RECOVERED AS THEY PERISHED DUE T O USAGE AND REMOVAL AFTER SOME PERIOD. THE LD. COUNSEL ALSO RE LIED ON THE LEGAL DECISIONS AND PRAYED FOR DELETION OF ADDITION AND T REAT SUCH REVENUE EXPENDITURE AS CURRENT REPAIRS. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESENTATIVE RELIED ON THE ORDERS O F THE LOWER AUTHORITIES. 6.3 WE HAVE HEARD BOTH THE PARTIES AND PERUSED T HE MATERIAL ON RECORD. THE EXPENDITURE INCURRED BY THE ASSESSEE I S ONLY TO UPKEEP THE BUSINESS ENTERPRISES TO MAINTAIN WEAR AND TEAR BUT NOT TO INCREASE THE PRODUCTIVITY OR MANUFACTURING ACTIVITY. THE C HANGE OF FLOORING AND OTHER CONNECTED WORKS WILL ONLY IMPROVE THE BRAND I MAGE WHICH IS INDEED REQUIRED FOR SUCH GLOBAL COMPANY. THE LEGAL POSITION OF SUCH EXPENDITURE WHEN IT IS DISMANTLED CANNOT BE REBUILD OR USED FOR ANY OTHER PURPOSE AS HELD BY JURISDICTIONAL MADRAS HIGH COURT IN THE CASE ITA NO.1344/MDS/2012 :- 13 -: OF CIT VS. AMRUTANJAN FINANCE LTD. 363 ITR 135 AND THI RU AROORAN SUGARS LTD VS. DCIT 350 ITR 324, WERE DISTINCTION HAS BEEN MADE BETWEEN CAPITAL AND REVENUE EXPENDITURE AND ALLOWED AS CURRENT REPAIRS IN THE PREVIOUS YEAR. APPLYING THE PRINCIPL ES OF LAW OF JURISDICTIONAL HIGH COURT. WE ARE OF THE OPINION THAT SUCH EXPENDITURE HAS TO TREATED AS REVENUE EXPENDITURE AND WE DIREC T THE ASSESSING OFFICER TO ALLOW THE DEDUCTION ACCORDINGLY. THE G ROUND OF THE ASSESSEE IS ALLOWED. 7 IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IN ITA NO.1344/MDS/2012 IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED ON FRIDAY, THE 20 TH DAY OF NOVEMBER, 2015, AT CHENNAI. SD/- SD/- ( . ) (A.MOHAN ALANKAMONY) /ACCOUNTANT MEMBER ( . ) (G. PAVAN KUMAR) ! /JUDICIAL MEMBER / CHENNAI - / DATED:20.11.2015 KV . ' )!+01 21$+ / COPY TO: 1 . %& / APPELLANT 3. 3+ () / CIT(A) 5. 167 )!+! / DR 2. )*%& / RESPONDENT 4. 3+ / CIT 6. 78# 9 / GF