DCIT (OSD) 2(3), MUMBAI V. SATGURU INFOCORP SERVICES .LTD, MUMBAI

ITA 1557/MUM/2013

• Counselvise Citation: 155719914 RSA 2013
• Duration Of Justice: 1 year(s) 2 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-05-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2009-2010
• Appeal Filed On: 25-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MAURYA PRATAP
• Assessee Lawyers: VINITA SHAH
• Keywords: Capital asset; Revenue expenditure

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI , , BEFORE SHRI SANJAY ARORA, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA , JUDICIAL MEM BER . / ITA NO. 1557 / MUM./201 3 ( / ASSESSMENT YEAR : 20 0 9 10 ) ASSTT. COMMISSIONER OF INCOME TAX (OSD) CIRCLE 2(3) , AAYAKAR BHAVAN 101, M.K. ROAD, MUMBAI 400 020 .. / APPELLANT V/S SATGURU INSFOCORP SERVICES PVT. LTD. SUNTECK CENTRE, SUBHASH ROAD VILE PARLE (E), MUMBAI 400 057 .... / RESPONDENT ./ PERMANENT ACCOUNT NUMBER AAECS6683A / REVENUE BY : MR. MAURYA PRATAP / ASSESSEE BY : MS . VINITA SHAH / DATE OF HEARING 22 .0 5 .201 4 / DATE OF ORDE R 22.05.2014 / ORDER , / PER AMIT SHUKLA , J.M. THE PRESENT APPEAL HA S BEEN PREFE RRED BY THE REVENUE CHALLENGING THE IMPUGNED ORDER DATE D 11 TH DECEMBER 2012 , PASSED BY HE LEARNED COMMISSIONER (APPEALS) VI , MUMBAI , FOR THE ASSESSMENT YEAR 20 09 10. THE EFFECTIVE GROUNDS RAISED BY THE REVENUE ARE AS UNDER: SATGURU INSFOCORP SE RVICES PVT. LTD. 2 1. ON THE FACTS AND IN THE C IRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT(A) ERRED IN HOLDING THAT THE AMOUNT OF ` 38,81,321 UNDER THE HEAD REPAIRS AND MAINTENANCE EXPENSES AND THE AMOUNT OF ` 59,75,995 UNDER THE HEAD FURNITURE AND FIXTURE ARE THE REVENUE EXPENDITURE. 2. O N THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT(A) FAILED TO TAKE INTO ACCOUNT THE RATIO LAID DOWN BY HON'BLE SUPREME COURT IN THE CASE OF SARVANA SPINNING MILLS AS REPORTED IN 293 ITR 201. 2 . AT THE OUTSET, THE LEARNED COUNSEL, MS. VINITA SHAH, ON BEHALF OF THE ASSESSEE, SUBMITTED THAT THE LEARNED COMMISSIONER (APPEALS) HAS FOLLOWED EARLIER YEAR S APPELLATE ORDER FOR THE ASSESSMENT YEAR 2005 06 TO 2008 09 PASSED BY LEARNED COMMISSIONER (APPEALS) AND ALSO THE TRIBUNAL ORDER FOR TH E ASSESSMENT YEAR 2007 08. HE FURTHER SUBMITTED THAT THE TRIBUNAL HAS DECIDED THIS ISSUE IN FAVOUR OF THE ASSESSEE IN THE ASSESSMENT YEAR 2007 08 AND 2008 09 ALSO. 3 . THE LEARNED DEPARTMENTAL REPRESENTATIVE ALSO ADMITTED THAT THIS ISSUE STANDS COVERED BY THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE. 4 . AFTER CAREFULLY CONSIDERING THE RELEVANT FINDING OF THE LEARNED COMMISSIONER (APPEALS) AND ALSO THE TRIBUNAL ORDER DATED 29 TH DECEMBER 2011, PASSED IN ASSESSEES OWN CASE IN ITA NO.6060/MUM./2010, FOR THE ASSESSMENT YEAR 2007 08, A COPY OF WHICH HAS BEEN PLACED ON RECORD, WE FIND THAT THE ISSUE OF DISALLOWANCE OF CLAIM FOR THE REPAIR AND MAINTENANCE EXPENSES HAS BEEN THE ISSUE OF CONSISTENT DISPUTE COMING FROM THE EARLIER YEARS. THE REVENUES CASE HAS BEEN THAT THE EXPENDITURE UNDER THE HEAD REPAIRS AND MAINTENANCE ON BUILDING , FIXTURES AND FURNITURE IS CAPITAL IN NATURE, WHEREAS, THE ASSESSEES CLAIM HAS BEEN THAT IT IS REVENUE EXPENDITURE SATGURU INSFOCORP SE RVICES PVT. LTD. 3 INCURRED FOR THE BUSINESS CENTRE RUN BY THE ASSESSEE WHICH HAS B EEN TAKEN ON HIRE FROM MMTC LTD., MUMBAI. THE TRIBUNAL HAS DECIDED THIS ISSUE IN FAVOUR OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2007 08 IN ASSESSEES OWN CASE AFTER OBSERVING AND HOLDING AS UNDER: 8. WE ARE OF THE CONSIDERED VIEW THAT THE LEARNED CIT(A) HAS RIGHTLY STATED THAT CONSIDERING THE TOTAL BLOCK OF FURNITURE AND FIXTURES AMOUNTING TO ` 5.25 CRORES, THE REPAIRS AND MAINTENANCE EXPENDITURE OF ` 60 LAKHS COULD NOT BE STATED TO BE UNREASONABLE, PARTICULARLY WHEN THE FURNITURE AND FIXTURES WERE BEING USED FOR BUSINESS CENTRE. THE LEARNED CIT(A) HAS STATED THAT FURNITURE AND FIXTURES AT BUSINESS CENTRE REQUIRE INHERENT HIGHER MAINTENANCE EXPENDITURE AS BUSINESS CENTRE ARE USED BY A LARGE NUMBER OF PEOPLE FOR COMMERCIAL PURPOSES RESULTING IN HIGHER WEAR AND TEAR OF THE FURNITURE ETC. THE LEARNED CIT(A) HAS FURTHER STATED THAT THE ASSESSEE ITSELF HAD CAPITALIZED A SUM OF ` 28 LAKHS APPROXIMATELY ON ACCOUNT OF NEW FURNITURE AND FIXTURE. THE LEARNED DEPARTMENTAL REPRESENTATIVE HAS ALSO NOT DISPUTED THE OBSE RVATION NOF LEARNED CIT(A) THAT IN PRECEDING YEARS I.E., ASSESSMENT YEARS 2005 06 AND 2006 07, SIMILAR DISALLOWANCES WERE MADE BY THE ASSESSING OFFICER AND WERE DELETED BY THE FIRST APPELLATE AUTHORITY. AT THE TIME OF HEARING, LEARNED DEPARTMENTAL REPRESEN TATIVE COULD NOT STATE AS TO WHETHER THE DEPARTMENT HAD ACCEPTED THE SAID ORDERS OF LEARNED CIT(A) OR NOT. 9. CONSIDERING HE ABOVE FACTS AND ALSO CONSIDERING THE DECISION OF HON'BLE RAJASTHAN HIGH COURT IN THE CASE OF CIT V/S A.M. SANGHVI, 302 ITR 26, WHE REIN IT WAS HELD THAT EVEN IF THE SUBSTANTIAL AMOUNT IS SPENT ON REPAIRS AND RENOVATION OF OFFICE PREMISES TAKEN ON RENT, IT IS TO BE ALLOWED AS REVENUE EXPENDITURE BECAUSE NO CAPITAL ASSET IS ACQUIRED BY THE ASSESSEE. HENCE, WE HOLD THAT THERE IS NO INFIR MITY IN THE ORDER OF LD. CIT(A). THEREFORE, WE UPHOLD HIS ORDER BY REJECTING THE GROUNDS OF APPEAL TAKEN BY THE DEPARTMENT. 5 . T HE AFORESAID ORDER OF THE TRIBUNAL HAS ALSO BEEN FOLLOWED IN THE ASSESSMENT YEAR 2008 09. SINCE IDENTICAL FACTS ARE PERMEATING I N THIS YEAR ALSO, THEREFORE, CONSISTENT WITH THE VIEW TAKEN THEREIN, WE HOLD THAT THE EXPENDITURE CLAIMED BY THE ASSESSEE IS TO BE TREATED AS SATGURU INSFOCORP SE RVICES PVT. LTD. 4 REVENUE EXPENDITURE . CONSEQUENTLY, THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 6 . 6 . IN THE RESULT, REVENUES APPEAL IS DISMISSED . 22 ND MAY 2014 ORDER PRONOUNCED IN THE OPEN COURT O N 22 ND MAY 2014 SD/ - SANJAY ARORA ACCOUNTANT MEMBER SD/ - AMIT SHUKLA JUDICIAL MEMBER MUMBAI, DATED : 22 ND MAY 2014 / COPY OF THE ORDER FORWARDED TO : ( 1 ) / THE ASSESSEE ; ( 2 ) / THE REVENUE; ( 3 ) ( ) / THE CIT(A ) ; ( 4 ) / THE CIT, MUMBAI CITY CONCERNED ; ( 5 ) , , / THE DR, ITAT, MUMBAI ; ( 6 ) / GUARD FILE . / TRUE COPY / BY ORDER . / PRADEEP J. CHOWDHURY / SR. PRIVATE SECRETARY / / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI