Asst. Commissioner of Income Tax, Circle- 1., Margao V. M/s Nanu Resorts Pvt. Ltd., Goa

ITA 139/PAN/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 84693 (ITAT-PANAJI)
• Duration Of Justice: 3 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-08-2014
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 05-08-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 09-04-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: B BARTHAKUR LD
• Assessee Lawyers: P Y VAIDYA
• Keywords: Revenue expenditure; Capital expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI BEFORE SHRI P.K. BANSAL, HONBLE ACCOUNTANT MEMBER AND SHRI D.T. GARASIA, HONBLE JUDICIAL MEMBER ITA NO. 124 & 139 /PNJ/2014 : (ASST. YEAR S : 2004 - 05 & 2005 - 06 ) ASST. COMMISSIONER OF INCOME TAX CIRCLE - 1, MARGAO (APPELLANT) VS. M/S. NANU RESORTS PVT. LTD. NANU HOUSE, VARDE VALAULIKER ROAD, P.O BOX NO. 125, MARGAO, SALCETE, GOA 403 601 (RESPONDENT) PAN : AAACN7114P ASSESSEE BY : P.Y. VAIDYA, ADV. REVENUE BY : B. BARTHAKUR , LD. DR DATE OF HEARING : 05 /0 8 /2014 DATE OF PRONOUNCEMENT : 08 /08/2014 O R D E R PER P.K. BANSAL 1. TH ESE APPEAL S HA VE BEEN FILED BY THE REVENUE AGAINST THE ORDER S OF CIT(A) DT. 19.12.2013 FOR A.Y 2004 - 05 & 2005 - 06 BY TAKING THE FOLLOWING EFFECTIVE GROUNDS OF APPEAL: FOR A.Y 2004 - 05 : 2 . WHETHER ON FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION AMOUNTING TO RS. 20,76,892/ - MADE BY THE AO BY DISALLOWING OF REPAIRS AND MAINTENANCE EXPENSES BY TREATING THEM AS CAPITAL EXPENDITURE. 3 . WHETHER ON FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION AMOUNTING TO RS.1,39,009/ - MADE BY AO ON ACCOUNT OF ADDING OF CAPITAL SUBSIDY OF RS.10,00,000/ - AND INTEREST SUBSIDY OF RS.19,48,455/ - RECEIVED TILL 1996 - 97 TO THE TOTAL TURNOVER FOR THE PURPOSE OF DEDUCTION U/S 80HHD WHICH RESULTED IN CLAIMING OF ADDITIONAL DEDUCTION U/S 80HHD. 2 ITA NO. 124 &139 /PNJ/2014 (ASST. YEAR : 2004 - 05 & 2005 - 06 ) FOR A.Y 200 5 - 0 6 : 2. WHETHER ON FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION AMOUNTING TO RS.19,43,975/ - MADE BY THE AO BY DISALLOWING OF REPAIRS AND MAINTENANCE EXPENSES BY TREATING THEM AS CAPITAL EXPENDITURE. ITA NO. 124/PNJ/2014 (A.Y 2004 - 05 ) : 2. GROUND NO. 1 IS GENERAL IN NATURE AND DOES NOT REQUIRE ADJUDICATION. 3 . GROUND NO. 2 RELATES TO DELETION OF ADDITION OF RS.20,76,892/ - MADE BY AO ON ACCOUNT OF REPAIRS AND MAINTENANCE EXPENSES. THE BRIEF FACTS IN RESPECT OF THIS GROUND IS THAT THE AO NOTED THAT THE ASSESSEE HAS INCURRED REPAIRS AND MAINTENANCE EXPENSES AMOUNTING TO RS.20,76,892/ - WHICH WERE OF CAPITAL NATURE IN HIS OPINION AS THE ASSESSEE GETS AN ENDURING BENEFIT FOR ITS BUSINESS FROM THE SAID EXPENDITURE. THEREFORE, HE TR EATED THE SAID EXPENDITURE , BEING 15.23% OF THE COST VALUE OF THE TOTAL ASSETS , TO BE CAPITAL EXPENDITURE. WHEN THE MATTER WENT BEFORE CIT(A), CIT(A) DELETED THE DISALLOWANCE. 3 .1 WE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY CONSIDERED THE SAME . WE NO TED THAT UNDER PARA 5.3 CIT(A) HAS DIRECTED THE AO TO ALLOW THE CLAIM OF REPAIRS AND MAINTENANCE EXPENSES AMOUNTING TO RS. 20,76,892/ - AS REVENUE EXPENDITURE SINCE THEY ARE CURRENT REPAIRS. WE NOTED THAT THE ISSUE BEFORE CIT(A) WHILE DECIDING THE ISSUE WA S WHETHER THE EXPENDITURE INCURRED BY THE ASSESSEE WAS REVENUE EXPENDITURE OR CAPITAL EXPENDITURE. IT APPEARS THAT CIT(A) HAS TREATED THIS EXPENDITURE TO BE REVENUE EXPENDITURE MERELY ON THE BASIS THAT REPAIRS AND MAINTENANCE INCURRED BY THE ASSESSEE REPR ESENTS CURRENT REPAIRS. WE MAY DRAW ATTENTION TOWARDS THE EXPLANATION TO SEC. 30 WHICH READS AS UNDER : EXPLANATION. FOR THE REMOVAL OF DOUBTS, IT IS HEREBY DECLARED THAT THE AMOUNT PAID ON ACCOUNT OF THE COST OF REPAIRS REFERRED TO IN SUB - CLAUSE (I), AND THE AMOUNT 3 ITA NO. 124 &139 /PNJ/2014 (ASST. YEAR : 2004 - 05 & 2005 - 06 ) PAID ON ACCOUNT OF CURRENT REPAIRS REFERRED TO IN SUB - CLAUSE (II), OF CLAUSE (A), SHALL NOT INCLUDE ANY EX PENDITURE IN THE NATURE OF CAPITAL EXPENDITURE. THIS EXPLANATION WAS INSERTED BY THE FINANCE ACT, 2003 W.E.F 1.4.2004. THIS EXPLANATION WAS APPLICABLE DURING THE IMPUGNED ASSESSMENT YEAR. WE, THEREFORE, SET ASIDE THE ORDER OF CIT(A) AND RESTORE THIS IS SUE TO THE FILE OF CIT(A) WITH THE DIRECTION THAT CIT(A) SHOULD RE - DECIDE WHETHER THE CURRENT REPAIRS AS INCURRED BY THE ASSESSEE ARE CAPITAL EXPENDITURE OR REVENUE EXPENDITURE. MERELY BECAUSE THE EXPENDITURE IS CURRENT REPAIRS, IN OUR OPINION, IT WILL NO T BECOME REVENUE EXPENDITURE IN VIEW OF THIS EXPLANATION. IT APPEARS THAT THIS EXPLANATION ESCAPED THE ATTENTION OF THE LD. CIT(A). CIT(A) IS FURTHER DIRECTED TO GIVE PROPER AND SUFFICIENT OPPORTUNITY TO BOTH THE PARTIES BEFORE DECIDING THE ISSUE AFRESH. THUS, GROUND NO. 2 IS ALLOWED FOR STATISTICAL PURPOSES. 4 . GROUND NO. 3 RELATES TO THE DELETION OF THE ADDITION OF RS.1,39,009/ - WHICH WAS ADDED BY THE AO BY NOT ALLOWING DEDUCTION U/S 80HHD ON SUM OF RS.10,00,000/ - AND RS.19,48,455/ - BY TREATING THESE TO BE PART OF THE TURNOVER. 4 .1 AFTER HEARING THE RIVAL SUBMISSIONS AND GOING THROUGH THE ORDER OF THE TAX AUTHORITIES BELOW WE NOTED THAT THE CIT(A) HAS GIVEN A CLEAR - CUT FINDING THAT THESE SUBSIDIES WERE RECEIVED IN THE YEAR 1996 - 97 AND THEY HAVE BEEN DECLARED BY THE ASSESSEE DURING THE IMPUGNED ASSESSMENT YEAR, THEREFORE, THESE SUBSIDIES HAVE NOTHING TO DO WITH THE CURRENT YEARS TURNOVER. THE LD. DR EVEN THOUGH VEHEMENTLY RELIED ON THE ORDER OF THE AO, BUT COULD NOT ADDUCE ANY EVIDENCE OR COGENT MAT ERIAL WHICH MAY PROVE THAT THE FINDING GIVEN BY THE CIT(A) WAS INCORRECT. IN VIEW OF THIS FACT, WE CONFIRM THE ORDER OF CIT(A) DELETING THE ADDITION OF RS. 1,39,009/ - . THUS, GROUND NO. 3 STANDS DISMISSED. ITA NO. 1 39 /PNJ/2014 (A.Y 200 5 - 0 6 ) : 5. GROUND NO. 1 IS GENERAL IN NATURE AND DOES NOT REQUIRE ADJUDICATION. 4 ITA NO. 124 &139 /PNJ/2014 (ASST. YEAR : 2004 - 05 & 2005 - 06 ) 6. GROUND NO. 2 RELATES TO DELETION OF ADDITION OF RS.19,43,975/ - MADE BY AO ON ACCOUNT OF REPAIRS AND MAINTENANCE EXPENSES. THIS GROUND IS SIMILAR TO GROUND NO. 2 IN A.Y 2004 - 05. SI NCE WE HAVE ALREADY DECIDED THIS ISSUE IN PARA 3 AND 3.1 ABOVE, RESPECTFULLY FOLLOWING OUR AFORESAID DECISION, WE SET ASIDE THE ORDER OF CIT(A) AND RESTORE THIS ISSUE TO THE FILE OF CIT(A) WITH THE DIRECTION THAT CIT(A) SHOULD RE - DECIDE WHETHER THE CURRENT REPAIRS AS INCURRED BY THE ASSESSEE ARE CAPITAL EXPENDITURE OR REVENUE EXPENDITURE AFTER GIVING PROPER AND SUFFICIENT OPPORTUNITY TO BOTH THE PARTIES BEFORE DECIDING THE ISSUE AFRESH. THUS, GROUND NO. 2 IS ALLOWED FOR STATISTICAL PURPOSES. 7 . IN THE RES ULT, REVENUE S APPEAL FOR A.Y 2004 - 05 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES WHEREAS THE APPEAL FILED FOR A.Y 2005 - 06 IS ALLOWED FOR STATISTICAL PURPOSES . 8 . ORDER PRONOUNCED IN THE OPEN COURT ON 0 8 /08/2014. S D / - (D.T.GARASIA) JUDICIAL MEMBER S D / - (P.K. BANSAL) ACCOUNTANT MEMBER PLACE : PANAJI DATED : 0 8 /08/ 201 4 *SSL* COPY TO : (1) APPELLANT (2) RESPONDENT (3) CIT CONCERNED (4) CIT(A) CONCERNED (5) D.R (6) GUARD FILE TRUE COPY, BY ORDER