Akash Fashion Prints Pvt. Ltd., Ahmedabad V. The Income tax Officer, Ward-1(1), Ahmedabad

ITA 1555/AHD/2005

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 9088 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 3 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-09-2009
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 03-09-2009
• Assessment Year: 2001-2002
• Appeal Filed On: 03-06-2005
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B S GAHLOT
• Keywords: Capital asset; Depreciation; Question of law; Cost of acquisition; Fair market value; Revenue expenditure; Capital expenditure; Set aside
• Section: 64

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH B BEFORE SHRI T.K.SHARMA, JUDICIAL MEMBER AND SHRI N.S. SAINI, ACCOUNTANT MEMBER DATE OF HEARING: 3.09.09 DRAFTED ON:7.09.2009 ITA NO.1555/AHD/2005 ASSESSMENT YEAR : 2001-02, 2001-02 ASHASH FASHION PRINTS PRIVATE LIMITED, 238, SAIJPUR GOPALPUR, SHAHWADI, OCTROI NAKA, AHMEDABAD. VS. THE I.T.O., WARD 1(1), AHMEDABAD. PAN/GIR NO. : AABCA 8139 C (APPELLANT) .. (RESPONDENT) N:7.09.2009 ITA NO.1683/AHD/2005 ASSESSMENT YEAR : 2001-02 THE I.T.O., WARD 1(1), AHMEDABAD VS. ASHASH FASHION PRINTS PRIVATE LIMITED, 238, SAIJPUR GOPALPUR, SHAHWADI, OCTROI NAKA, AHMEDABAD PAN/GIR NO. : AABCA 8139 C (APPELLANT) .. (RESPONDENT) APPELLANT BY : SHRI SANJAY R. SHAH RESPONDENT BY: SHRI B.S. GAHLOT CIT D.R. O R D E R PER N.S.SAINI , ACCOUNTANT MEMBER :- THESE ARE THE CROSS APPEALS FILED BY THE ASSESSEE AND REVENUE AGAINST THE ORDER OF THE CIT(A)-V AHMEDABAD DATED 2 9-3-2005 PASSED IN A.Y. 2001-02. ITA NO. 1555/AHD/2005, ITA NO.1683/AHD/2005 M/S.AKASH FASHION PRINT P VT. LTD. ASST.YEAR -2001-02 - 2 - 2. GROUND NO. 1 OF THE APPEAL OF THE ASSESSEE RELAT ES TO ALLOWING PART OF THE COMMISSION @ 2% PAID TO THE PERSONS SPE CIFIED U/S. 40A{2}{B} OF THE INCOME TAX ACT, 1961. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE A.O. IN THE ASSESSMENT ORDER HAS STATED THAT THE ASSESSEE COMPANY WAS IN V IEW, THE ROLE OF BROKERS IN RECOGNIZED ONLY IN THE BUSINESS OF PURCH ASE OF GREY CLOTH AND SALE OF FINISHED CLOTH AND THERE WAS NO NEED FOR TH E COMPANY TO PAY BROKERAGE ON THE PURCHASE OF COLOUR CHEMICALS. THE AO HAS ALSO STATED THAT IN PRECEDING YEAR THE COMPANY HAD PAID THE BRO KERAGE OF RS. 7,93,890 ONLY. ACCORDING TO THE AO THE PAYMENT OF B ROKERAGE TO PERSONS COVERED UNDER SEC 40A(2)(B) HAS TAKEN BIRT H IN THE YEAR UNDER CONSIDERATION ONLY IN SPITE OF THE FACT THAT THE SA ME TRANSACTIONS WITH THE SAME PARTIES HAD BEEN CARRIED OUT IN THE EARLIE R YEARS WITHOUT ANY PAYMENT OF BROKERAGE TO ANY PERSON WHATSOEVER. ACC ORDING TO HIM, THIS FACT ALSO MAKES CLEAR, THE MALAFIDE INTENTION OF TH E ASSESSEE COMPANY PRIMARILY DIRECTED TOWARDS DIVERSION OF PROFITS AND REDUCE ITS TAX LIABILITY. 4. IN APPEAL BEFORE THE CIT(A) THE ASSESSEE SUBMITT ED THAT:- THE APPELLANT IS ENGAGED IN THE BUSINESS OF JOB WO RK PROCESSING. DURING THE YEAR, COMMISSION WAS PAID TO THE FOLLOWING FIRM S FOR DEFINITE SERVICES RENDERED BY HIM. THE BRIEF DETAIL OF THIS PAYMENT IS GIVEN HEREUNDER:- NAME OF THE SERVICES RENDERED RATE OF AMT OF ITA NO. 1555/AHD/2005, ITA NO.1683/AHD/2005 M/S.AKASH FASHION PRINT P VT. LTD. ASST.YEAR -2001-02 - 3 - BROKER COMMISSION COMMISSION AKASHTEXTILES JOB SALES OF CLOTH 2% 2,23,510 HARDIK CORPORATION JOB SALES OF CLOTH 2% 4,66,821 SARASWATI FISCAL P. LTD. JOB SALES OF CLOTH 2% 7,84,928 CHIRAG TEXTILES JOB SALES OF CLOTH 2% 4,17,597 LAXMI TEXTILES JOB SALES OF CLOTH 2% 1,37,021 SARASWATI TEXTILES JOB SALES OF CLOTH 3% 3,00,243 NAGESHKUMAR NARENDRA KUMAR HUF JOB SALES OF CLOTH 4% 2,07,964 RINKU TEXTILES PURCHASE OF GREY CLOTH 4% 2,00,890 NARESHKUMAR RAMGOPAL HUF JOB SALES OF CLOTH 4% 1,99,715 UMA TRADING CO. JOB SALES OF CLOTH 4% 2,77,940 RAMGOPAL TEXTILES JOB SALES OF CLOTH 4% 1,59,198 POOJA FABRICS PURCHASE OF GREY CLOTH 4% 1,50,107 SHILPA FABRICS JOB SALES OF CLOTH 4% 1,93,082 SHILPA FABRICS PURCHASE OF GREY CLOTH 4% 1,703 ACCORDING TO THE LD. AUTHORIZED REP. ALL THE ABOVE FIRMS ARE NOT PERSONS COVERED U/S. 40A(2)(B) OF THE INCOME TAX ACT, 1961. HE FURNISHED A STATEMENT SHOWING WHICH OF THE FIRMS WERE COVERED U NDER SEC.40A(2)(B) AND WHICH WERE NOT. ACCORDING TO HIM, ONLY THE FOLL OWING PAYMENTS WERE MADE TO THE PERSONS COVERED UNDER SEC. 40A(2)( B). NAME OF THE BROKER SERVICES RENDERED RATE OF COMMISSION AMT OF COMMISSION AKASHTEXTILES JOB SALES OF CLOTH 2% 2,23,510 HARDIK JOB SALES OF CLOTH 2% 4,66,821 ITA NO. 1555/AHD/2005, ITA NO.1683/AHD/2005 M/S.AKASH FASHION PRINT P VT. LTD. ASST.YEAR -2001-02 - 4 - CORPORATION LAXMI TEXTILES JOB SALES OF CLOTH 2% 1,37,021 SARASWATI TEXTILES JOB SALES OF CLOTH 3% 3,00,243 RINKU TEXTILES PURCHASE OF GREY CLOTH 4% 2,00,890 NARESHKUMAR RAMGOPAL HUF JOB SALES OF CLOTH 4% 1,99,715 UMA TRADING CO. JOB SALES OF CLOTH 4% 2,77,940 RAMGOPAL TEXTILES JOB SALES OF CLOTH 4% 1,59,198 POOJA FABRICS PURCHASE OF GREY CLOTH 4% 1,50,107 SHILPA FABRICS JOB SALES OF CLOTH 4% 1,93,082 SHILPA FABRICS PURCHASE OF GREY CLOTH 4% 1,703 POOJA FABRICS SALE OF FABRICS 4% 67,911 GAYATRI TEXTILES CLOTH PURCHASES 4% 1,77,530 THE LD. AUTHORIZED REPRESENTATIVE SUBMITTED AS UNDE R:- ALL THE ABOVE GIVEN FIRMS OWNED BY THE RELATIVES O F THE DIRECTORS OF THE COMPANY WERE BROKERS OPERATING IN THE MARKET HAVING STAFF STRENGTH AND INFRASTRUCTURE. THEY ENJOYED REASONABLE GOODWIL L IN THE TEXTILE MARKET. THEY HAD RENDERED DEFINITE SERVICES TO THE COMPANY. THEIR SERVICES AS ARE ENUMERATED ABOVE RELATED TO JOB SAL ES AND GREY PURCHASED. THE LD. ITO ALSO HAS AGREED TO THE NEED OF BROKERS IN THESE AREAS. THE BROKERS, EVEN THOUGH FALLING UNDER THE C ATEGORY OF PERSONS SPECIFIED UNDER SEC. 40A(2)(B) WERE DISTINCT ENTITI ES EXISTING ON THEIR OWN STRENGTH. THEY HAD PROVIDED VALUABLE SERVICES T O THE COMPANY IN ITS ITA NO. 1555/AHD/2005, ITA NO.1683/AHD/2005 M/S.AKASH FASHION PRINT P VT. LTD. ASST.YEAR -2001-02 - 5 - REPLY TO THE SHOW CAUSE NOTICE OF THE LD. ITO DATE D 25-3-2004, THE APPELLANT HAS DELAT IN DETAIL THE NEED FOR SERVICES OF THE BROKERS AND THE JUSTIFICATION OF PAYMENTS TO THE PERSONS SPECIFIED UNDER SEC 40A(2)(B). THE APPELLANT HAD SUPPLIED TO THE LD. ASSESSING OFF ICER CONFIRMATION OF ALL THESE FIRMS, THEIR ASSESSMENT DETAILS AND COPIE S OF THE I.T. RETURNS. THE COMMISSIONS WERE GENUINELY PAID FOR VALUABLE SE RVICES RENDERED BY THE AGENTS. DETAIL OF THE CUSTOMERS WHOM THE BROKER S HAD SERVED AND THE QUANTUM OF BUSINESS WITH THEM AND THE RATE OF C OMMISSION PAID WERE ALSO SUPPLIED. IN THE REPLY THE APPELLANT HAD DEMONSTRATED HOW IMPORTANT IT WAS FOR THE COMPANY TO KEEP BROKERS. THE ASSERTION OF THE LD. ITO THAT SINCE THE APPELLA NT UNIT WAS ENJOYING GOOD REPUTATION IN THE MARKET, IT DID NOT NEED HELP OF THE BROKERS DOES NOT HOLD GOOD IN REAL LIFE. IF THE APPELLANT COMPAN Y HAD ENJOYED GOOD REPUTATION IN THE MARKET, IT WASDUE TO THE EXPERGTI SE OF THE BROKERS AND THEIR MARKET CONTACTS AND VALUJABLE SERVICES RENDER ED BY THEM. THE SERVICES RENDERED BY THEM MERITED AWARD OF REASONAB LE REMUNERATION AND THEY WERE AWARDED REASONABLE REMUNERATION ONLY. IN THE ORDER THE LD. ITO HAS MADE THE CLAIM THAT THE APPELLANT IS F IFTH LARGES PROCESS HOUSE IN AHMEDABAD. WE DO NOT KNOW ON WHAT FACTS HE HAS BASED HIS OPINION. THERE ARE MANY LARGE PROCESS HOUSES IN AHM EDABAD AND THE APPELLANT IS NO WHERE NEAR THEM. IT IS HUMBLY SUBMI TTED THAT THE APPELLANT COMPANY ENJOYED GOOD REMUNERATION BECAUSE OF THE HARD LABOUR OF THE PERSONS SPECIFIED UNDER SEC. 40A(2)(B ) WHO HAVE MADE A ITA NO. 1555/AHD/2005, ITA NO.1683/AHD/2005 M/S.AKASH FASHION PRINT P VT. LTD. ASST.YEAR -2001-02 - 6 - SMALL PROCESSING UNIT A SUCCESS. CERTAINLY, THE BRO KERAGE AND MARKETING BACKGROUND OF THE PROMOTERS HAS HELPED THE APPELLAN T COMPANY. THE CONTENTION OF THE LD. ITO IS THAT SINCE THE PAY MENT TO THE BROKERS IN THE IMMEDIATELY PRECEDING YEAR WAS LESS, THE PAYMEN T OF THE YEAR UNDER REVIEW CANNOT BE CONSIDERED AS REASONABLE. IT WAS C ONTENDED BY THE APPELLANT THAT SINCE THE APPELLANT COMPANY WAS A CL OSELY HELD COMPANY, THE RELATIVES OF THE PROMOTERS WERE NOT PAID EVEN T HEIR DUE TILL UNTIL PICKED UP REASONABLE STRENGTH. BUT THEY ARE NOT SUP POSED TO WORK FREE FOR EVER. THE SERVICES OF THE BROKERS AREA COMMON F EATURE IN THE PROCESSING INDUSTRY IN PARTICULAR AND TEXTILE INDUS TRY IN GENERAL. THERE IS NOTHING WRONG IN PAYMENT OF COMMISSION TO THE BROKE RS WHEN SAME SET OF CUSTOMERS ARE MAINTAINING IN THE BUSINESS. IN FA CT, THE ROLE OF BROKERS IS ALL PERVASIVE AND CONTINUOUS AND THEREFORE, THEI R NEED IS ALWAYS THERE. AND FOR THAT PURPOSE THE PAYMENT OF COMMISSION TO T HE BROKERS IS VERY MUCH JUSTIFIED. IN HIS ORDER THE LEARNED ITO HAS AC CEPTED THE ROLE OF BROKERS AND HAS EVEN AGREED THAT THE PAYMENT OF COM MISSION TO THE LEVEL OF IMMEDIATELY PRECEDING YEAR IS REASONABLE. HE HAS DISCUSSED IN THE BODY OF THE ORDER THAT WHILE HE DOES NOT AGREED TO PAYMENT OF COMMISSION ON PURCHASE OF COLOUR CHEMICALS, HE AGRE ES TO THE NEED FOR PAYMENT OF COMMISSION ON PURCHASE OF GREY CLOTH AND JOBS SALES. IN SPITE OF HIS AGREEING FOR THE ABOVE, HE HAS DISALLO WED THE WHOLE OF THE BROKERAGE PAID AMOUNTING TO RS. 39,83,355. THIS DIS ALLOWANCE IS NOT BASED ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND NEEDS TO BE QUASHED. ITA NO. 1555/AHD/2005, ITA NO.1683/AHD/2005 M/S.AKASH FASHION PRINT P VT. LTD. ASST.YEAR -2001-02 - 7 - SEC. 40A OF THE INCOME TAX ACT, 1961 PERMITS THE AO TO DISALLOW ONLY SO MUCH OF THE EXPENDITURE WHICH IN THE OPINION OF THE OFFICER IS EXCESSIVE OR UNREASONABLE HAVING REGARD TO FAIR MARKET VALUE OF THE GOODS, SERVICES, OR FACILITIES FOR WHICH THE PAYMENT IS MA DE OF THE LEGITIMATE NEEDS OF THE BUSINESS OR PROFESSIONS OF THE ASSESSE E OR THE BENEFIT DERIVED BY OR ACCRUING TO HIM THERE FROM IN THE INS TANT CASE THE ASSESSING OFFICER HAS NOT KEPT THESE GUIDING PRINCI PLES IN MIND AND THUS ACTED BEYOND THE LAW. IT WAS DECIDED IN THE CASE OF VOLTEMP TRANSFORMERS PVT. LTD. THAT SO FAR AS THE LEGITIMATE BUSINESS NEEDS OF AN ASSESSEE OR THE BENEFIT DERIVED BY OR ACCRUING TO THE ASSESSEE FROM GOODS, SERVICES OR FACILITIES ETC ARE CONCERNED, THESE ARE NOT TO BE JUDGED FROM THE VIEW POINT OF A REVENUE OFFICER BUT FROM THE VIEW POINT OF A BUSINESS MAN. INCASE OF TT PR. LTD. V. ITO [1980] 121 ITR 551 [KAR] IT WAS HELD THAT IF THE PAYMENT IN RESPECT OF SUCH SERVICES ETC. REPRESENT FAIR MARKET VALUE, THERE IS NO LIMITATION OR CEILING ON THE TOTAL AMOUNT PAID EVEN IF THE PAYEE IS ONE OF THE VULNERABLE PERSONS ENUMERATED IN SEC. 40A(2)(B). THE DISALLOWANCE OF THE PAYMENT OF BROKERAGE IS BAD IN LAW AS IT IS NOT BASED ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE. HE HAS EXCEEDED THE POWERS GRANTED TO HIM UNDER THE RELEVA NT SEC. OF THE ACT. THEREFORE, THIS DISALLOWANCE NEEDS TO BE QUASHED. ITA NO. 1555/AHD/2005, ITA NO.1683/AHD/2005 M/S.AKASH FASHION PRINT P VT. LTD. ASST.YEAR -2001-02 - 8 - THE ALLEGATION OF THE LD. ITO OF CONCEALMENT OF INC OME IN THIS CASE IS WITHOUT ANY JUSTIFICATION AND HIS ACTION OF IMPOSIN G PENALTY UNDER SEC 271(1) WILL BE MISUSE OF THE AUTHORITY. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE LD. CIT(A) OBSERVED AS UNDER:- I HAVE CAREFULLY CONSIDERED THE OBSERVATIONS OF TH E ASSESSING OFFICER AND THE SUBMISSIONS OF THE APPELLANT AND THE CASE L AWS REFERRED TO IN THE MATTER. IT COULD BE SEEN THAT SEC 40A(2)(B) OF THE I.T. ACT EMPOWERS THE ASSESSING OFFICER TO DISALLOW SO MUCH OF THE EX PENDITURE AS IS SO CONSIDERED TO BE EXCESSIVE OR UNREASONABLE BY THE ASSESSING OFFICER LOOKING TO THE FAIR MARKET VALUE OF THE GOODS AND S ERVICES OR FACILITIES FOR WHICH PAYMENT IS MADE OR THE LEGITIMATE NEEDS OF TH E BUSINESS OR PROFESSION OF THE ASSESSEE OR THE BENEFIT DERIVED B Y OR ACCORDING TO HIM THERE FROM. HOWEVER, IN THIS CASE, THE ASSESSING OF FICER HAS FAILED TO VERIFY THE PERSONS FALLING UNDER SEC. 40A(2)(B) BEF ORE MAKING DISALLOWANCE. AGAIN WHILE HAVING AGREED TO THE NEED OF BROKERS FOR PURCHASE OF GREY CLOTH AND SALE OF CLOTH, THE ASSES SING OFFICER HAS DISALLOWED THE WHOLE AMOUNT PAID TO THE PERSONS SPE CIFIED UNDER SEC.40A(2)(B) WHICH IS NOT JUSTIFIED. HE OUGHT TO H AVE ALLOWED THE BROKERAGE WHICH HE CONSIDERED REASONABLE LOOKING TO FAIR MARKET VALUE OF SERVICES TO THE ASSESSEE. HAVING REGARD TO THE OVER ALL FACTS AND CIRCUMSTANC ES OF THE BROKERAGE PAID IN THE APPELLANTS LINE OF BUSINESS AND COMPAR ISON OF BROKERAGE ITA NO. 1555/AHD/2005, ITA NO.1683/AHD/2005 M/S.AKASH FASHION PRINT P VT. LTD. ASST.YEAR -2001-02 - 9 - BEING PAID BY THE APPELLANT ITSELF TO SEVERAL PERSO NS, TO MY MIND, IT WOULD BE JUSTIFIED TO CONSIDER BROKERAGE RATE OF 2% AS REASONABLE. THE ASSESSING OFFICER IS THEREFORE, DIRECTED TO ALLOW F ULLY THE BROKERAGE PAID TO THE PERSONS WHO ARE NOT SPECIFIED UNDER SEC.40A( 2)(B) AND ALSO ALLOW THE BROKERAGE @ 2% TO THE PERSONS COVERED UNDER SEC .40A(2)(B). THE ASSESSING OFFICER WILL CALCULATE THE DISALLOWABLE B ROKERAGE ACCORDINGLY. 5. THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASS ESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE LEARNED COMMISSIONE R OF INCOME TAX (APPEALS), WHEREAS THE LEARNED DEPARTMENTAL REPRESE NTATIVE SUPPORTED THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS). 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE O N RECORD. IN THE INSTANT CASE, THE COMMISSION PAID BY THE ASSESSEE W AS ALLOWED BY THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) SUBJECT TO THE CONDITION THAT COMMISSION PAID TO RELATIVES WITHIN THE MEANIN G OF SECTION 40A(2)(B) SHOULD BE LIMITED TO THE AMOUNT WORKED OU T @2%. THUS, OUT OF THE TOTAL COMMISSION PAID OF RS.39,89,355/- WHIC H WAS DISALLOWED IN ITS ENTIRETY BY THE LEARNED ASSESSING OFFICER, THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) SUSTAINED DISALLOWANCE OF RS . 8,46,480/- AND DELETED THE BALANCE AMOUNT OF DISALLOWANCE OF RS. 3 1,42,875/-. BEING AGGRIEVED BY THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS), THE ASSESSEE IS IN APPEAL BEFORE US. THE MAIN CONTENTION ITA NO. 1555/AHD/2005, ITA NO.1683/AHD/2005 M/S.AKASH FASHION PRINT P VT. LTD. ASST.YEAR -2001-02 - 10 - OF THE ASSESSEE WAS THAT THE COMMISSION PAID TO THE RELATIVES WERE REASONABLE AND THEREFORE, LEARNED COMMISSIONER OF I NCOME TAX(APPEALS) WAS NOT JUSTIFIED IN SUSTAINING A PART OF THE DISALLOWANCE. WE FIND THAT COMMISSION WAS PAID @2% TO SARASWATI F ISCAL PRIVATE LIMITED AND CHIRAG TEXTILE. THUS, IT IS OBSERVED TH AT THE FAIR MARKET VALUE OF COMMISSION ADOPTED BY THE LEARNED COMMISSIONER O F INCOME TAX(APPEALS) HAD A REASONABLE BASIS. THE LEARNED AU THORISED REPRESENTATIVE OF THE ASSESSEE COULD NOT BRING ANY MATERIAL BEFORE US TO SHOW THAT SOME EXTRA BENEFIT WAS DERIVED BY THE ASSESSEE COMPANY FROM THE SERVICES RECEIVED FROM THE RELATIVES IN CO MPARE TO BENEFIT WHICH IT DERIVED FROM THE SERVICES RECEIVED FROM AF ORESAID TWO PARTIES. IN THESE ABOVE CIRCUMSTANCES, WE DO NOT FIND ANY GO OD REASON TO INTERFERE WITH THE ORDER OF THE LEARNED COMMISSIONE R OF INCOME TAX(APPEALS), WHICH IS CONFIRMED AND THE GROUND OF APPEAL OF ASSESSEE IS DISMISSED. 7. GROUND NO. 2 OF THE APPEAL OF THE ASSESSEE RELAT ES TO DISALLOWING RS. 17,67,667 BEING EXPENDITURE ON PURCHASE OF DESI GN FRAMES AS CAPITAL EXPENDITURE. 8. THE BRIEF FACTS OF THE CASE ARE THAT THE AO OBS ERVED THAT USES OF DESIGN FRAMES IS REPETITIVE AND RECURRING. CONSEQUE NTLY, THE COST OF DESIGN FRAME EXPENSES ARE NOT RECURRING IN NATURE. THEREFORE, IN THE VIEW OF THE AO, EXPENDITURE ON DESIGN FRAME IS CAPI TAL IN NATURE. THEREFORE, THE AO HELD THAT THE AMOUNT PERTAINING T O PURCHASE OF ITA NO. 1555/AHD/2005, ITA NO.1683/AHD/2005 M/S.AKASH FASHION PRINT P VT. LTD. ASST.YEAR -2001-02 - 11 - DESIGN FRAMES FOR FLAT BED PRINING MACHINE AND ROTA RY PRINTING MACHINE IS DISALLOWED AS BEING CAPITAL IN NATURE. 9. IN APPEAL BEFORE THE CIT(A), THE ASSESSEE SUBMI TTED THAT IT IS ENGAGED IN THE BUSINESS OF DYEING, PRINTING AND PRO CESSING OF COTTON AND MAN MADE FABRICS. THE COMPANY HAS TWO ROTARY SCREE N PRINTING MACHINES AND 5 FLAT BED PRINTING MACHINES FOR WHICH , DESIGN FRAMES ARE VITAL ACCESSORIES AND A MAJOR ITEM OF CONSUMABLE ST ORES AND SPARES. THE ASSESSEE SUBMITTED THAT THE EXPENSES INCURRED UNDER THE HEAD COMPRISES OF :- RS. OPENING STOCK OF UNUSED DESIGN FRAMES 29,29,300 PURCHASES DESIGNS 30,47,125 PURCHASE OF DESIGN FRAMES 17,67,667 DESIGN EXPENSES 49,252 77,93,344 IT WAS ARGUED THAT OPENING STOCK OF UNUSED DESIGN F RAMES WHICH WAS READY FOR PRINTING AMOUNTING TO RS. 29,29,300 WAS USED DURING THE YEAR AND WAS THEREFORE, A REVENUE EXPENDITURE. THE AMOUN T OF RS. 30,47,125 AND RS. 49,252 INCURRED ON ITEM NOS. (I), (II), (I II) AND (V) ARE PURELY OF REVENUE NATURE AS ADMITTED BY THE AO HIMSELF AND TH EREFORE, ARE RECURRING EXPENSES WHICH CANNOT BE TREATED AS CAPIT AL EXPENDITURE. IT WAS FURTHER SUBMITTED THAT ONLY ITEM WHICH COULD BE TREATED AS EXPENDITURE OF ENDURING NATURE IS RS. 17,67,667 SPE NT ON PURCHASE OF RAW DESIGN METAL FRAMES. BUT THIS IS ALSO NOT SO IN THE CASE OF ASSESSEE ITA NO. 1555/AHD/2005, ITA NO.1683/AHD/2005 M/S.AKASH FASHION PRINT P VT. LTD. ASST.YEAR -2001-02 - 12 - AS DESIGN FRAMES ARE CONSUMABLE ITEMS AS THEY ARE D ISCARDED WHEN USED FOR A PARTICULAR QUANTITY OF PRINTING. THEY ARE LIK E SPARE PARTS OF MACHINERY AND DEPRECIATE VERY FAST AND HAVE TO REPL ACED AFTER CERTAIN USE. IT WAS SUBMITTED THAT DESIGN FRAMES FORM PART OF THE PRINTING MACHINERY AND THAT THE FIRST SET OF DESIGN FRAMES H AD ALREADY BEEN CAPITALIZED WITH THE MACHINERY AND IS SHOWN IN THE FIXED ASSETS CHART AT COST OF RS. 7,26,644. IT WAS SUBMITTED THAT IN PARA ON PAGE NO. 64 OF THE ASSESSMENT ORDER THE AO AGREED THAT OUT OF THE TOT AL EXPENSES OF RS. 77,93,344 WHICH HAVE BEEN COLLECTIVELY SHOWN UNDER THE HEAD DESIGN FRAME EXPENSES SUCH EXPENSES PERTAIN TO DESIGN SCR EEN AND ARE TO BE REDUCED AS BEING REVENUE IN NATURE. THIS MEANS AO I NTENDED TO DISALLOW THE EXPENDITURE OF RS. 17,67,667 ONLY ON ACCOUNT OF PURCHASE OF METAL DESIGN FRAMES. THEREFORE, THE AO WAS NOT JUSTIFIED IN DISALLOWING THE ENTIRE SUM OF RS. 77,93,344. THE ASSESSEE RELIED O N THE DECISION OF HON. KERALA HIGH COURT IN THE CASE OF CIT V. COOPERATIVE SUGARS LTD. [1999] 239 ITR 908 [AER] WHERE IT WAS HELD THAT REPLACEMEN T OF PUMPS, MOTORS, CHIMNEY, CRYSTALLIZERS, ETC. FORMING PART O F THE PLANT OF SUGAR MILL WERE TREATED AS REVENUE EXPENDITURE. FURTHER, THE HON DELHI HIGH COURT IN CIT V. JAGJIT INDUSTRIESLTD. 241 ITR 556 H ELD THAT NORMAL REPLACEMENT OF THE PARTS OF THE EXISTING MACHINE IN THE COURSE OF ITS WORKING WAS REVENUE EXPENDITURE. FURTHER,THE HON.BO MBAY HIGHCOURT IN THE CASE OF NEW SHORROCK SPIINING AND MANUFACTUR ING CO. LTD.V. CIT 30 ITR 338 BOMBAY HAS HELD THAT EXPENDITURE INCURR ED FOR PRESERVING OR MAINTAINING AN EXISTING ASSET WHICH DOES NOT BRIN G A NEW ASSET IN EXISTENCE OR DOES NOT GIVE TO THE ASSESSEE, A NEW O R DIFFERENT ITA NO. 1555/AHD/2005, ITA NO.1683/AHD/2005 M/S.AKASH FASHION PRINT P VT. LTD. ASST.YEAR -2001-02 - 13 - ADVANTAGE, CANNOT BE TREATED AS CAPITAL EXPENDITURE . SO ALSO, THE HON.PUNJAB AND HARYANA HIGH COURT IN THE CASE OF CI T V. MALHOTRA INDUSTRIAL CORPORATION, 254 ITR 635 {P&H} HAS HELD THAT EXPENDITURE ON REPLACEMENT OF ROLLS IN A STEEL ROLLING MILLS IS A REVENUE EXPENDITURE. 10. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSION S OF THE ASSESSEE OBSERVED THAT THERE IS A APPARENT MISTAKE IN THE AS SESSMENT ORDER. THE ASSESSING OFFICER WANTED TO DISALLOW ONLY THE AMOUN T INCURRED FOR PURCHASE OF DESIGN FRAMES WHICH WAS RS. 17,67,667 B UT HAS DISALLOWED THE ENTIRE EXPENDITURE OF RS. 77,93,344. ACCORDING TO THE ASSESSEE, EVEN THIS AMOUNT SHOULD NOT HAVE BEEN DISALLOWED BE CAUSE THE DESIGN FRAMES ARE LIKE SPARES OF A MACHINE. THEY HAVE A LI MITED LIFE AND ARE TO BE REPLACED PERIODICALLY DEPENDING ON THE USE. THE LD. CIT(A) OBSERVED THAT THE FACT REMAINS THAT ASSESSEE HIMSELF HAS CON SIDERED THE NEW DESIGN METAL FRAMES AS FORMING PART OF THE PRINTING MACHINERY. ACCORDING TO THE ASSESSING OFFICER ALSO, OUT OF TOT AL EXPENSES OF RS. 77,93,344 SHOWN TO HAVE BEEN SPENT COLLECTIVELY UND ER THE HEAD DESIGN FRAME EXPENSES, EXCEPT EXPENDITURE TO THE EXTENT OF RS. 17,67,667 ALL OTHER EXPENDITURE WOULD BE CONSIDERED AND REDUCED B EING REVENUE IN NATURE. THEREFORE, HE DIRECTED THE ASSESSING OFFICE R TO DISALLOW RS. 17,67,667 BEING THE AMOUNT SPENT ON DESIGN METAL FR AMES AS CAPITAL EXPENDITURE AND DIRECTED TO ALLOW THE BALANCE AMOUN T OF RS. 60,25,677 AS REVENUE EXPENDITURE. ITA NO. 1555/AHD/2005, ITA NO.1683/AHD/2005 M/S.AKASH FASHION PRINT P VT. LTD. ASST.YEAR -2001-02 - 14 - 11. THE LEARNED AUTHORISED REPRESENTATIVE OF THE AS SESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE LEARNED COMMISSIONE R OF INCOME TAX(APPEALS), WHEREAS THE LEARNED DEPARTMENTAL REPR ESENTATIVE SUPPORTED THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS). 12. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE O N RECORD. THE ASSESSEE IS ENGAGED IN MANUFACTURE AND TRADING OF D YED AND PRINTED CLOTH. DURING THE YEAR, THE ASSESSEE USED METALLIC DESIGN FRAMES OF RS.17,67,667/- AND CLAIMED AS REVENUE EXPENDITURE W HICH WAS TREATED BY THE LOWER AUTHORITIES AS CAPITAL EXPENDITURE AND THEREFORE, DISALLOWED. WE FIND THAT IT IS NOT IN DISPUTE THAT THE METALLIC DESIGN FRAMES ARE NOT INDEPENDENT MACHINES. THEY ARE PART OF ROTARY SCREEN PRINTING MACHINES AND FLAT BED PRINTING MACHINES. T HE ASSESSEE EXPLAINED THAT NEW MACHINES WERE PURCHASED WHEN THE METALLIC DESIGN FRAMES WERE DULY CAPITALISED. HOWEVER, DUE TO WEAR AND TARE, THESE FRAMES ARE REQUIRED TO BE REPLACED REGULARLY AND HA VE A VERY SHORT SPAN OF LIFE. THEREFORE, THE EXPENDITURE INCURRED FOR RE PLACING THESE PARTS OF MACHINE ARE REVENUE EXPENDITURE. IT IS OBSERVED THA T THE ABOVE EXPLANATION OF THE ASSESSEE WAS NOT CONTROVERTED BY THE LOWER AUTHORITIES. THE LEARNED DEPARTMENTAL REPRESENTATIV E COULD NOT BRING ANY MATERIAL TO REBUT THE EXPLANATION OF THE ASSESS EE THAT METALLIC DESIGN FRAMES ARE NOT INDEPENDENT MACHINES BUT ARE PART OF ROTARY SCREEN PRINTING MACHINES AND FLAT BED PRINTING MACH INES AND DUE TO ITA NO. 1555/AHD/2005, ITA NO.1683/AHD/2005 M/S.AKASH FASHION PRINT P VT. LTD. ASST.YEAR -2001-02 - 15 - NORMAL WEAR AND TARE, THESE FRAMES HAVE SHORT SPAN OF LIFE AND ARE REQUIRED TO BE REPLACED REGULARLY. IN THE ABOVE CI RCUMSTANCES, IN OUR VIEW, THE EXPENDITURE INCURRED BY THE ASSESSEE ON R EPLACEMENT OF METALLIC DESIGN FRAMES ARE REVENUE EXPENDITURE. WE THEREFORE, SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES ON THIS ISSUE A ND DIRECT THE LEARNED ASSESSING OFFICER TO ALLOW THE EXPENDITURE OF RS. 1 7,67,667/- AS REVENUE EXPENDITURE. THE LEARNED ASSESSING OFFICER IS ALSO DIRECTED TO WITHDRAW THE DEPRECIATION ALLOWED, IF ANY, IN RESPECT OF THE ABOVE EXPENDITURE. THUS, THE GROUND OF APPEAL OF THE ASSESSEE IS ALLOW ED. 13. IN REVENUES APPEAL, THE FIRST GROUND OF APPEAL IS DIRECTED AGAINST DELETING THE DISALLOWANCE OF EXPENSES OF RS. 14,67, 500 BY TREATING IT AS REVENUE EXPENDITURE. 14. THE BRIEF FACTS ARE THAT THE ASSESSEE PAID RS. 14,67,500 TO AHMEDABAD MUNICIPAL CORPORATION [AMC IN SHORT] FOR DRAINAGE CHARGES THROUGH AHMEDABAD TEXTILE PROCESSORS ASSOCIATION. ACCORDING TO ASSESSING OFFICER, THE ASSOCIATION COLLECTED AND PA ID THIS AMOUNT TO AMC FOR LAYING NARODA-PIRANA MEGA PIPELINE. THE PER IOD OVER WHICH THE MEGA PIPELINE AND COLLECTION SYSTEM WOULD PROVIDE B ENEFIT TO THE ASSESSEE COMPANY WILL NOT END AT THE END OF THE YEA R UNDER CONSIDERATION. SINCE ACCORDING TO ASSESSING OFFICER , THE ASSESSEE WOULD GET THE BENEFIT OF ENDURING NATURE, HE TREATED THE SAME AS CAPITAL EXPENDITURE. ITA NO. 1555/AHD/2005, ITA NO.1683/AHD/2005 M/S.AKASH FASHION PRINT P VT. LTD. ASST.YEAR -2001-02 - 16 - 15. IN APPEAL BEFORE THE CIT(A), THE ASSESSEE RELIE D UPON THE DECISION OF HON KERALA HIGH COURT IN THE CASE OF CIT V. STEE L COMPLEX LTD. 238 ITR 1054 [KER] WHERE IT WAS HELD THAT THE COST OF INSTA LLATION OF WATER TREATMENT PLANT AND FUME EXTRACTION PLANT WAS REVEN UE EXPENDITURE. FURTHER, IT WAS SUBMITTED THAT THOUGH SUCH INSTALLA TION RESULTED IN IMPROVEMENT OF OPERATION OF EXISTING SYSTEM WITH GR EATER EFFICIENCY AND PROFITABILITY AND AVOIDING HEALTH HAZARDS, IT DID N OT INCREASE THE VOLUME OF PRODUCTIVE CAPACITY WITH THE RESULT THAT THE EXP ENDITURE HAS TO BE TREATED AS REVENUE EXPENDITURE IN VIEW OF THE DECIS ION OF HON. SUPREME COURT IN ALLEMBIC CHEMICAL WORKS CO. LTD. V. CIT 17 7 ITR 377 [SC]. 16. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIO NS OF THE ASSESSEE, HELD THAT THE PAYMENT OF RS. 14,65,500 APPEARS TO B E OF REVENUE IN NATURE. NO CAPITAL ASSET WAS CREATED FOR THE ASSESS EE AND THE EXPENDITURE DID NOT INCREASE THE PRODUCTION CAPACIT Y OF THE ASSESSEE. THEREFORE, HE DIRECTED THE ASSESSING OFFICER TO ALL OW THE EXPENDITURE OF RS. 14,65,500 AS REVENUE EXPENDITURE. 17. THE LD. DR RELIED ON THE ORDER OF THE ASSESSING OFFICER. 18. THE LD. AR OF THE ASSESSEE RELIED UPON THE DECI SION OF THE AHMEDABAD BENCH OF THE TRIBUNAL IN THE CASE OF JCIT V. DEVER SONS INDUSTRIES LTD. ITA NO. 2008/AHD/99 A.Y. 1996-97 O RDER DATED 11-11- 2005 AND SUBMITTED THAT THE TRIBUNAL IN THAT CASE H AS ALLOWED THE CLAIM OF THE ASSESSEE OF RS. 4,20,000 BEING AMOUNT PAID T O AMC TOWARDS SETTING UP OF A COMMON AFFLUENT TREATMENT PLANT AS A REVENUE ITA NO. 1555/AHD/2005, ITA NO.1683/AHD/2005 M/S.AKASH FASHION PRINT P VT. LTD. ASST.YEAR -2001-02 - 17 - EXPENDITURE. THEREFORE, FOLLOWING THE SAME, THE CLA IM OF THE ASSESSEE SHOULD BE ALLOWED. 19. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE O N RECORD. THE ASSESSEE PAID RS. 14,67,500/- TO AHMEDABAD TEXTILE PROCESSORS ASSOCIATION WHO IN TURN PAID THE AMOUNT TO AHMEDABA D MUNICIPAL CORPORATION FOR LAYING NARODA PIRANA MEGA PIPELINE FOR DISCHARGE OF EFFLUENCE BY THE PROCESSING UNITS. THE ASSESSEE CLA IMED THE AMOUNT AS A REVENUE EXPENDITURE WHICH WAS DISALLOWED BY THE LEA RNED ASSESSING OFFICER AS A CAPITAL EXPENDITURE WHICH WAS ALLOWED BY THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) AS REVENUE EXPE NDITURE. THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) WHILE A LLOWING THE CLAIM OF THE ASSESSEE OBSERVED THAT THE NO CAPITAL ASSET WAS CREATED BY THE ASSESSEE. THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE RELIED ON THE DECISION OF AHMEDABAD BENCH OF THE TRIBUNAL IN THE CASE OF JCIT VS. DEVERSONS INDUSTRIES LTD. IN ITA NO.2008/AHD/19 99 ORDER DATED 11.11.2005, WHEREIN THE TRIBUNAL HELD THAT CONTRIBU TION MADE TO AHMEDABAD MUNICIPAL CORPORATION FOR SETTING UP OF T HE COMMON EFFLUENT TREATMENT PLANT AND FOR THE LAYING OF THE PIPELINE NETWORK FOR CONVEYANCE OF DISCHARGE IS A REVENUE EXPENDITURE. W E FIND THAT IN THE INSTANT CASE, THE ASSESSEE BY INCURRING THE SAID EX PENDITURE HAS NOT ACQUIRED ANY NEW CAPITAL ASSET. THEREFORE, WE DO NO T FIND ANY GOOD REASON TO INTERFERE WITH THE ORDER OF THE LEARNED C OMMISSIONER OF ITA NO. 1555/AHD/2005, ITA NO.1683/AHD/2005 M/S.AKASH FASHION PRINT P VT. LTD. ASST.YEAR -2001-02 - 18 - INCOME TAX(APPEALS), WHICH IS CONFIRMED AND THE GRO UND OF THE APPEAL OF THE REVENUE IS DISMISSED. 20. GROUND NO. 2 OF THE APPEAL OF THE REVENUE RELAT ES TO DELETING THE EXPENDITURE INCURRED ON BUILDING REPAIRS OF RS. 22, 50,862. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER OB SERVED THAT THE ASSESSEE HAS INCURRED TOTAL EXPENDITURE OF RS. 38,7 7,645 ON REPAIRS AND MAINTENANCE OUT OF WHICH RS. 22,50,862 WAS ON BUIL DING REPAIR PURCHASES AND BUILDING REPAIRS EXPENSES. ACCORDING TO THE ASSESSING OFFICER, THE EXPENDITURE INCURRED WAS TOWARDS THE A CQUISITION OF THE NEW ASSETS. THE ASSESSING OFFICER OBSERVED THAT SUB MISSIONS OF THE ASSESSEE OF VARIOUS CAUSES SUCH AS FLOOD, RAIN FALL AND EARTHQUAKE HAVE SIMPLY BEEN PRESENTED AS A SOURCE OF SUPPORT, NOT O N MERITS BUT SIMPLY ON THE INCIDENCE AND OCCURRENCE OF ALL THE 3 NATURA L CALAMITIES DURING HE YEAR UNDER CONSIDERATION. THEREFORE, THE EXPENDITUR E OF RS. 22,50,862 HAS TO BE TREATED AS COST OF ACQUISITION OF AN ENTI RELY NEW FIXED ASSETS WHICH IS CAPITAL IN NATURE. THEREFORE, HE TREATED T HE EXPENDITURE AS CAPITAL EXPENDITURE AND ALLOWED DEPRECIATION @ 10% THEREON. 21. IN APPEAL, THE LD. CIT(A) OBSERVED THAT THE CON TENTION OF THE ASSESSEE IS THAT THE ASSESSING OFFICER WANTED TO DI SALLOW RS. 22,50,862 BUT IN THE FINAL SUMMARY, HAS DISALLOWED RS. 38,77, 645. FURTHER, THE SUM OF RS. 22,50,862 DISALLOWANCE WAS MADE BY THE ASSES SING OFFICER MERELY ON SUSPICION ONLY THAT THE EXPENDITURE WAS FOR CREA TION OF A NEW ASSET. HE HAS NOT IDENTIFIED ANY PARTICULAR ASSET OR ASSE TS, WHICH HAVE BEEN ITA NO. 1555/AHD/2005, ITA NO.1683/AHD/2005 M/S.AKASH FASHION PRINT P VT. LTD. ASST.YEAR -2001-02 - 19 - NEWLY CREATED. BUILDING REPAIRS IS A NORMAL FEATURE IN FACTORY. THE EXPENDITURE INCURRED ON REPAIRS CANNOT BE DISALLOWE D ON A MERE ASSUMPTION THAT THE EXPENDITURE IS A CREATION OF N EW ASSET. THE LD. CIT(A) THEREFORE HELD THAT THE ASSESSING OFFICER WA S NOT JUSTIFIED IN DISALLOWING THE SUM EVEN RS. 22,50,862. ACCORDINGLY , HE DIRECTED THE ASSESSING OFFICER TO ALLOW DEDUCTION OF RS. 38,77,6 45 TO THE ASSESSEE AS REVENUE EXPENDITURE. 22. THE LD. AR OF THE ASSESSEE AT THE TIME OF THE H EARING, HAS RELIED UPON THE DECISION OF NEW SHORROCK SPINNING & MANUFA CTURING V. COMMISSIONER OF INCOME TAX (1956) 30 ITR 338 (BOM) WHEREIN IT WAS HELD THAT IF REPAIRS TO ASSETS ARE ATTENDED TO WHEN NEED ARISES, THEY ARE CURRENT REPAIRS; HENCE ASSESSEE REPLACING A PART OF TEXTILE LOOMS AFTER SIXTY YEARS, IN THE ABSENCE OF ANY FINDING THAT REP AIRS WERE REQUIRED TO BE ATTENDED TO EARLIER ARE CURRENT REPAIRS WITHIN T HE MEANING OF S. 10(2)(V). 23. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUPPORT ED THE ORDER OF THE ASSESSING OFFICER. 24. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE O N RECORD. IN THE INSTANT CASE, THE ASSESSEE INCURRED EXPENDITURE OF RS.22,50,862/-ON REPAIRS TO BUILDING. THE LEARNED ASSESSING OFFICER TREATED THE SAME AS CAPITAL EXPENDITURE ON THE GROUND THAT THE ASSESSEE HAD SUBMITTED THAT THE BUILDINGS WERE EXTENSIVELY DAMAGED TO FLOOD, RA INFALL AND ITA NO. 1555/AHD/2005, ITA NO.1683/AHD/2005 M/S.AKASH FASHION PRINT P VT. LTD. ASST.YEAR -2001-02 - 20 - EARTHQUAKE. IN APPEAL, THE LEARNED COMMISSIONER O F INCOME TAX(APPEALS) ALLOWED THE EXPENDITURE AS REVENUE EXP ENDITURE ON THE GROUND THAT THE LEARNED ASSESSING OFFICER HAS NOT F OUND THAT THE ASSESSEE BY INCURRING THE EXPENDITURE HAS CREATED T HE NEW ASSET. WE FIND THAT IN THE INSTANT CASE, THE EXPENDITURE WAS INCURRED FOR REPAIRS TO THE BUILDING WHICH WERE DAMAGED DUE TO NATURAL CALA MITIES SUCH AS FLOOD, RAINFALL AND EARTHQUAKE ETC.. WE FIND THAT I T IS NOT THE CONTENTION OF THE REVENUE THAT THE ASSESSEE HAD CONSTRUCTED A NEW BUILDING OR HAS MADE ANY ADDITION TO THE EXISTING BUILDING. AS NO NEW ASSET WAS ACQUIRED BY THE ASSESSEE, THEREFORE, THE LEARNED CO MMISSIONER OF INCOME TAX(APPEALS) WAS FULLY JUSTIFIED IN DIRECTIN G THE LEARNED ASSESSING OFFICER TO TREAT THE EXPENDITURE AS REVEN UE EXPENDITURE AND ALLOW DEDUCTION TO THE ASSESSEE. OUR VIEW FIND SUPP ORT FROM THE DECISION OF HONBLE PUNJAB & HARIYANA HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. PORRITS & SPENCER (A ) LTD. (2002) 257 ITR 49 (P&H), WHEREIN IT WAS HELD THAT TRIBUNAL HAV ING TAKEN A POSSIBLE VIEW THAT THE EXPENSES INCURRED BY ASSESSEE ON EXTE NSIVE RENOVATION WERE IN THE NATURE OF CURRENT REPAIRS AND WERE ALLO WABLE AS DEDUCTION AFTER COMING TO A FINDING THAT NO NEW ASSET WAS CRE ATED NOR ANY ENDURING BENEFIT WAS OBTAINED BY THE ASSESSEE NO SU BSTANTIAL QUESTION OF LAW ARISES. THEREFORE, WE CONFIRM THE ORDER OF T HE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) AND DISMISS THE GROUND OF APPEAL OF THE REVENUE. ITA NO. 1555/AHD/2005, ITA NO.1683/AHD/2005 M/S.AKASH FASHION PRINT P VT. LTD. ASST.YEAR -2001-02 - 21 - IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED AND THAT OF THE REVENUE IS DISMISSED. ORDER SIGNED, DATED AND PRONOUNCED IN THE COURT ON 11/09/2009. ( T.K. SHARMA ) ( N.S. SAINI ) JUDICIAL MEMBER A CCOUNTANT MEMBER AHMEDABAD; DATED 11/09/2009 PARAS # COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS)-V, AHMEDABAD 5. THE DR, AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT.REGISTRAR), ITAT, AHMEDABAD