Gem Hospital and Research Centre Private Limited , Coimbatore V. ACIT Corporate Circle 2 , Coimbatore

ITA 1620/CHNY/2017

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 8700 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 5 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-12-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 23-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HARI GOVIND
• Assessee Lawyers: S RAMACHANDRAN
• Keywords: Capital asset; Capital expenditure

Judgement Text

, , IN THE INCOME-TAX APPELLATE TRIBUNAL B BENCH, CHE NNAI . . . , , BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER & SHRI S. JAYARAMAN, ACCOUNTANT MEMBER ./ I.T.A.NO.1620/CHNY/2017 / ASSESSMENT YEAR :2014-15 M/S. GEM HOSPITAL AND RESEARCH CENTRE PRIVATE LIMITED, 45A, PANKAJAMILL ROAD, RAMANATHAPURAM, COIMBATORE 641 045. [PAN: AABCG8302P] VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 2, COIMBATORE 641 018. ( /APPELLANT ) ( / RESPONDENT ) # $ / APPELLANT BY : SHRI S. RAMACHANDRAN, C.A. &'# $ / RESPONDENT BY : SHRI HARI GOVIND, JCIT $ + / DATE OF HEARING : 03.12.2018 $ + /DATE OF PRONOUNCEMENT : 17.12.2018 / O R D E R PER S. JAYARAMAN, ACCOUNTANT MEMBER : THIS IS AN APPEAL FILED BY THE ASSESSEE , DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) 1, COIMBA TORE, IN ITA NO. 197/16-17 DATED 30.03.2017 FOR THE ASSESSMENT YEAR 2014-15. 2. M/S. GEM HOSPITAL AND RESEARCH CENTRE PRIVATE L IMITED, COIMBATORE HAD TAKEN TWO ADJACENT BUILDINGS ON LEASE AT TIRUP PUR, WHICH WERE ALSO USED FOR RUNNING HOSPITAL, INCURRED .43,66,888/- AND CLAIMED THEM UNDER THE HEAD REPAIRS & MAINTENANCE OF THE BUILDING. WHILE MAKING THE ASSESSMENT I.T.A. I.T.A. I.T.A. I.T.A. NO. NO.NO. NO.1620 16201620 1620/M/1 /M/1/M/1 /M/17 77 7 2 FOR THE ASSESSMENT YEAR 2014-15, AFTER EXAMINING TH E ISSUE, THE ASSESSING OFFICER HELD THAT THE IMPUGNED EXPENSES ARE HAVING ENDURING BENEFIT TO THE ASSESSEE AND HENCE, DISALLOWED THEM TREATING IT AS CAPITAL EXPENDITURE. AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A). THE LD. CIT(A) DISMISSED THE APPEAL ON THIS ISSUE. 3. AGGRIEVED, THE ASSESSEE FILED THIS APPEAL, BY I TS REVISED GROUNDS, IT CHALLENGED THE DECISION OF THE LD. CIT(A)S ON T HIS ISSUE ALONE. THE LD. AR SUBMITTED THAT THE ASSESSEE, IN ORDER TO ESTABLISH A BRANCH HOSPITAL AT THIRUPPUR, TOOK A PROPERTY ON LEASE FOR A PERIOD OF 59 MONTHS. AS PER THE LEASE DEED, THE ASSESSEE HAS TO CARRY OUT ALL THE R EPAIRS AT ITS COST AND IN ORDER TO MAKE THE BUILDING SUITABLE FOR RUNNING THE HOSPITAL, IT SPENT .43.67 LAKHS IN CARRYING OUT VARIOUS EXPENSES VIZ., FALSE CEILING, PAINTING, REPLACEMENT OF FLOORING TILES, GLASS DOORS, PLASTE RING OF WALLS, CARPENTERING, INTERIOR DECORATION, ETC. ALL THESE EXPENDITURES WE RE INCURRED AT A RENTED BUILDING, WHICH WAS TAKEN ON LEASE FOR A VERY SHORT PERIOD OF 59 MONTHS I.E., LESS THAN FIVE YEARS. THE NATURE OF EXPENDITURE ITSELF CLEARLY SHOWING THAT IT IS OF REVENUE IN NATURE AND NO NEW CAPITAL ASSET C AME INTO EXISTENCE. THE LD. CIT(A) FAILED TO TAKE NOTE OF THE FACTS THAT T HE ASSESSEE WAS PERMITTED BY THE LESSER TO CARRY OUT THE ALTERATION AND INTERIOR DECORATION WORK TO THE BUILDING AT ITS COST AND THE ASSESSEE WAS REQUIRED TO HANDOVER THE BUILDING WITH THEM ON EXPIRY OF LEASE PERIOD. FURTHER, THE ASSESSEE MERELY EFFECTED I.T.A. I.T.A. I.T.A. I.T.A. NO. NO.NO. NO.1620 16201620 1620/M/1 /M/1/M/1 /M/17 77 7 3 NECESSARY REPAIRS, MODIFICATION AND ALTERATIONS TO THE LEASED BUILDING FOR MAKING IT SUITABLE FOR RUNNING THE HOSPITAL AND NO NEW STRUCTURE WAS BUILT AND NO PLINTH AREA WAS ADDED TO THE EXISTING BUILDING. IN THIS REGARD, THE ASSESSEE TOOK US THROUGH THE PAPER BOOK AND RELIED ON THE JURISDICTIONAL HIGH COURT DECISIONS IN THE CASE OF THIRU AROORAN SUGARS LTD. V. DCIT [2013] 31 TAXMANN.COM 3 (MAD) AND CIT V. AYESHA HO SPITALS (P.) LTD. [2007] 292 ITR 266 (MAD). THE LD. AR SUBMITTED THAT THE RATIO LAID IN THE CASE OF CIT V. AYESHA HOSPITALS (P.) LTD. (SUPRA) P ERFECTLY APPLIES TO THIS CASE. PER CONTRA, THE LD. DR SUPPORTED THE ORDERS O F LOWER AUTHORITIES. 4. WE HEARD THE RIVAL SUBMISSIONS AND GONE THROUGH THE RELEVANT MATERIALS. THE UNDISPUTED FACTS ARE THAT THE ASSESS EE HAS TAKEN THE BUILDINGS ON LEASE FOR A SHORT PERIOD OF 59 MONTHS AND INCURRED THE IMPUGNED EXPENDITURE TO MAKE IT SUITABLE FOR RU NNING THE HOSPITAL. ON EXPIRY OF THE LEASE PERIOD , THE ASSESSEE WAS REQ UIRED TO HANDOVER THE BUILDINGS WITH THEM. THE NATURE OF EXPENDITURES A RE SUCH AS FALSE CEILING, PAINTING, REPLACEMENT OF FLOORING TILES, GLASS DOO RS, PLASTERING OF WALLS, CARPENTERING, INTERIOR DECORATION, ETC. BY INCURRIN G THEM, THE ASSESSEE HAS NOT CREATED ANY NEW CAPITAL ASSET FOR ITSELF, T HE BENEFIT OF IT COULD BE REAPED OVER A PERIOD SO THAT ONE CAN SAY THAT TH ERE IS AN ENDURING BENEFIT FOR THE ASSESSEE. THEY WERE INCURRED PROBABLY FOR M AKING THE HOSPITAL WORKABLE. THUS, THE CLAIM MADE BY THE ASSESSEE FAL LS WITHIN THE RATIO LAID I.T.A. I.T.A. I.T.A. I.T.A. NO. NO.NO. NO.1620 16201620 1620/M/1 /M/1/M/1 /M/17 77 7 4 DOWN BY THE HONBLE JURISDICTIONAL HIGH COURT IN TH E CASE OF CIT V. AYESHA HOSPITALS (P.) LTD. (SUPRA) AND ACCORDINGLY, ITS A PPEAL IS ALLOWED. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED ON 17 TH DECEMBER, 2018 AT CHENNAI. SD/- (N.R.S. GANESAN) JUDICIAL MEMBER SD/- (S. JAYARAMAN) ACCOUNTANT MEMBER CHENNAI, DATED, THE 17.12.2018 VM/- $ &./ 0/ /COPY TO: 1. # / APPELLANT, 2. &'# / RESPONDENT, 3. 1 ( ) /CIT(A), 4. 1 /CIT, 5. / &3 /DR & 6. /GF.