The Dukes Retreat Ltd., Pune V. DCIT (HQ) (Admn), Pune

ITA 1726/PUN/2013

• Counselvise Citation: 172624514 RSA 2013
• Duration Of Justice: 1 year(s) 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-04-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 24-12-2014
• Assessment Year: 2010-2011
• Appeal Filed On: 10-09-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Question of law; Commercial expediency; Revenue expenditure; Capital expenditure
• Section: 143(3); 37(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO.1726/PN/2013 (ASSESSMENT YEAR : 2010-11) THE DUKES RETREAT LTD., MUMBAI PUNE ROAD, KHANDALA, DIST. PUNE. PAN : AAACT6211F . APPELLANT VS. DY. COMMISSIONER OF INCOME TAX, (HQ) (ADMIN), PUNE. . RESPONDENT ASSESSEE BY : MR. C. H. NANIWADEKAR DEPARTMENT BY : MR. RAJESH DAMOR DATE OF HEARING : 17-03-2015 DATE OF PRONOUNCEMENT : 10-04-2015 ORDER PER G. S. PANNU, AM THE CAPTIONED APPEAL BY THE ASSESSEE IS DIRECTED AG AINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-V, PUNE DA TED 10.07.2013 WHICH, IN TURN, HAS ARISEN FROM AN ORDER DATED 29.01.2013 PASSED BY THE ASSESSING OFFICER U/S 143(3) OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT) PERTAINING TO THE ASSESSMENT YEAR 2010-11. 2. IN THIS APPEAL, THE SOLITARY ISSUE RELATES TO TH E ACTION OF THE LOWER AUTHORITIES IN DISALLOWING EXPENDITURE OF RS.1,44,0 3,077/- INCURRED BY THE ASSESSEE ON RENOVATION OR MAINTENANCE OF A PART OF THE HOTEL BUILDING. 3. IN BRIEF, THE RELEVANT FACTS ARE AS FOLLOWS. TH E APPELLANT IS A COMPANY INCORPORATED UNDER THE PROVISIONS OF THE COMPANIES ACT, 1956 AND IS, INTER- ALIA, ENGAGED IN THE BUSINESS OF LOCOMOTIVE AND RUN NING OF A HOTEL UNIT LOCATED AT KHANDALA. THE ASSESSING OFFICER NOTED THAT IN R ELATION TO THE HOTEL UNIT, ASSESSEE CLAIMED EXPENDITURE OF RS.1,58,21,689/- UN DER THE HEAD REPAIRS AND ITA NO.1726/PN/2013 MAINTENANCE. THE SAID EXPENDITURE WAS INCURRED BY THE ASSESSEE ON RENOVATION OF 33 EXECUTIVE ROOMS IN THE HOTEL, WATE RPROOFING OF ROOF TOP AND RESTAURANT AND LOBBY IN FRONT OF RESTAURANT. THE A SSESSING OFFICER DID NOT ACCEPT THE PLEA OF THE ASSESSEE THAT SUCH EXPENDITU RE WAS REVENUE IN NATURE. IN APPEAL BEFORE THE CIT(A), THE PLEA OF THE ASSESS EE WAS THAT THE EXPENDITURE WAS ALLOWABLE AS A REVENUE EXPENDITURE INASMUCH AS NO NEW ASSET WAS CREATED BY INCURRENCE OF THE IMPUGNED EXPENDITURE A ND THAT THE SAID EXPENDITURE WAS OTHERWISE ALSO JUSTIFIED ON THE PRI NCIPLES OF COMMERCIAL EXPEDIENCY. THE CIT(A) ACCEPTED THE PLEA OF THE AS SESSEE PARTLY INASMUCH AS THE EXPENDITURE INCURRED ON WATERPROOFING OF ROO F TOP AND ON RESTAURANT AND LOBBY IN FRONT OF RESTAURANT AMOUNTING TO RS.14,18, 612/- WAS HELD TO BE A REVENUE EXPENDITURE AND THE BALANCE OF RS.1,44,03,0 77/- HAS BEEN HELD TO BE A CAPITAL EXPENDITURE ELIGIBLE FOR THE DEPRECIATION ALLOWANCE. NOT BEING SATISFIED WITH THE ORDER OF THE CIT(A), ASSESSEE IS IN APPEAL BEFORE US. 4. IN THE CONTEXT OF THE ABOVE DISPUTE AT THE OUTSE T, WE MAY REFER TO THE DETAILS OF THE IMPUGNED EXPENDITURE WHICH HAVE BEEN CULLED OUT IN PARA 7.1 OF THE ORDER OF THE ASSESSING OFFICER, AS UNDER :- PARTICULARS REVENUE EXPENDITURE ON 33 EXECUTIVE ROOMS CIVIL AND INTERIOR WORKS FOR 33 ROOMS COMPRISING OF DEMOLITION OF INTERNAL WALL, REMOVAL OF DOOR FRAME, ANTI TERMITE TREATMENT, CONCRETE FILLING OF FLOOR, CONSTRUCTION OF INTERNAL WALLS, P LASTERING, LAYING OF FLOOR TILES, DADDOING, WATER PROOFING, SKIRTING, PROVIDIN G AND FIXING SINGLE LEAF FLUSH DOOR, SLIDING DOOR FOR TOILETS, GLASS FOR BAT HROOM WINDOWS, FRAME FOR DUCT, FALSE CEILING WORK, REPAIRING AND REPLACI NG FURNITURE ITEMS IN THE ROOM LIKE WARDROBE, LUGGAGE RACK, CABINET FOR M INI-BAR, HEADBOARD, BED-SIDE TABLE, TRAP DOOR AND MIRRORS FOR TOILETS. 65,32,362 PURCHASE OF TILES 13,93,576 EXTERNAL PLUMBING WORK INCLUDING PIPES, VALVES, THE RMAL INSULATION FOR HOT WATER PIPES ETC. 5,91,341 BREAKING AND REMOVAL OF FALSE-CEILING, ALUMINUM WIN DOW WALLS, BATHROOM FLOORING, SANITARY FITTING IN BATHROOM, BA LCONY RAILINGS, WAGER AND SEWAGE PIPELINES, REMOVAL OF WARDROBES, AND LUG GAGE RACKS, REMOVAL OF TOILET WALLS, FALSE CEILING AND PARAPET WALL IN CORRIDOR ETC. 5,40,400 PAINTING WORK 3,89,313 FLOORING IN CORRIDOR IN FRONT OF THE EXISTING ROOMS , INCLUDING BREAKING 11,33,704 ITA NO.1726/PN/2013 AND REMOVING EXISTING FLOORING TILES AND EXISTING P LASTERING OF PARAPET WALL, PROVIDING AND LAYING ANDHRA STONE FLOORING AN D SKIRTING IN CORRIDOR AND STAIRCASE, CONSTRUCTION OF 600 MM WALL, PLASTER ING, WATERPROOF PLASTERING, PROVIDING AND FIXING OF MARBLE SKIRTING . BATHROOM FITTINGS INCLUDING CONCEALED CISTERN FLUSH , SHOWERS, HEALTH FAUCETS, STOP COCKS, BASIN MIXER, ANGLE VALVES, BOT TLE TRAP, WC TOILET SEAT WITH COVERS, WASH BASINS 12,82,461 PURCHASE OF VARIOUS TYPES OF STEEL PLATES AND BARS MAINLY USED FOR RCC INTERMEDIATE BAND ON BRICK WALL, EXTENDED SUPPO RT TO BALCONY ENCLOSED, ROOF AREA OUTSIDE ROOMS AND WINDOWS 12,00,856 MDF SKIRTING AND MDF T-PROFILE 1,05,348 MS SHEETS, POLYCARBONATE SHEETS AND FABRICATION CHA RGES FOR PERGOLA (SMALL FITTINGS OUTSIDE WINDOWS AND ROOFING TO PREV ENT RAIN WATER FROM COMING INSIDE) OUTSIDE ROOM WINDOWS AND STAIRCASE 5,72,572 PLASTERING OF CHAJJIS AND PARDI 1,21,975 OTHER MISCELLANEOUS ITEMS, WORK AND EXPENSES 5,39, 169 5. AT THE TIME OF HEARING, THE LD. REPRESENTATIVE F OR THE ASSESSEE EXPLAINED THAT THE HOTEL AT KHANDALA WAS OPENED IN 1990 COMPRISING 62 ROOMS AND IT IS A THREE STAR HOTEL FACILITY LOCATED IN HI LLY AREA WHICH FACES VERY HIGH RAINFALL. THEREFORE, HOTELS BUILDING REQUIRES VER Y HIGH MAINTENANCE AND NEEDS RENOVATION PERIODICALLY DUE TO WEATHER AND HEAVY RA INFALL. IT WAS POINTED OUT THAT WITH THE PASSAGE OF TIME AND NEW TRENDS, IT BE COME ESSENTIAL TO INCORPORATE NEW TRENDS TO ATTRACT NEW CUSTOMERS AND ALSO TO RETAIN OLD CUSTOMERS. THE LD. REPRESENTATIVE POINTED OUT THAT LAST MAJOR RENOVATION OF THE HOTEL WAS UNDERTAKEN IN THE YEAR 2000/2001 WHIC H IS A VERY LONG PERIOD AND CONSIDERING THAT THE HOTEL WAS A THREE STAR HOT EL FACILITY, THE BUILDING HAD UNDERGONE SIGNIFICANT WEAR AND TEAR DUE TO PASSAGE OF TIME, WEATHER CONDITION, ETC.. IT WAS FELT BY THE MANAGEMENT THA T EXPENDITURE WAS REQUIRED TO CREATE A NEW AMBIENCE FOR BETTER BUSINESS PROSPE CTS. WITH THIS BACKGROUND, DURING THE YEAR UNDER CONSIDERATION, AS SESSEE ADDED 18 NEW ROOMS AND OUT OF EXISTING 36 ROOMS, 33 ROOMS WERE A LSO RENOVATED. THE EXPENDITURE RELATABLE TO THE NEW 18 ROOMS WAS DULY CAPITALIZED AND ONLY THE EXPENDITURE INCURRED ON RENOVATION OF 33 ROOMS HAS BEEN CLAIMED AS REVENUE EXPENDITURE. IT WAS, THEREFORE, CONTENDED THAT THE RE WAS NO JUSTIFICATION TO SAY THAT RENOVATION UNDERTAKEN FOR THE 33 ROOMS HAVE RE SULTED IN CREATION OF ANY ADDITIONAL CAPACITY SO AS TO HOLD SUCH EXPENDITURE AS A CAPITAL EXPENDITURE. IN ITA NO.1726/PN/2013 THE COURSE OF THE HEARING, THE LD. REPRESENTATIVE V EHEMENTLY ARGUED THAT THE IMPUGNED EXPENDITURE IS ALLOWABLE AS A REVENUE EXPE NDITURE IN TERMS OF SECTION 37(1) OF THE ACT ON ACCOUNT OF COMMERCIAL E XPEDIENCY, WHICH WAS ADEQUATELY BROUGHT OUT BEFORE THE LOWER AUTHORITIES . IN THIS CONTEXT, IT HAS ALSO BEEN HIGHLIGHTED THAT SUCH COMMERCIAL EXPEDIENCY WA S NARRATED IN DETAIL BEFORE THE LOWER AUTHORITIES BY WAY OF WRITTEN SUBM ISSIONS, COPY OF WHICH HAS ALSO BEEN PLACED ON RECORD. IN THE COURSE OF HEARI NG, THE LD. REPRESENTATIVE FOR THE ASSESSEE RELIED UPON THE VARIOUS DECISIONS VIZ. EMPIRE JUTE COMPANY LTD. VS. CIT, 124 ITR 1 (SC), ALEMBIC CHEMICAL WORK S CO. LTD. VS. CIT, 177 ITR 377, AS ALSO THE DECISION OF THE KOLKATA SPECIA L BENCH OF THE TRIBUNAL IN THE CASE OF PEERLESS SECURITY LTD. VS. JCIT, 94 ITD 89. 6. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESEN TATIVE APPEARING FOR THE REVENUE POINTED OUT THAT THE IMPUGNED EXPENDITU RE WAS RELATED TO ADDITION/EXPENSES OF THE HOTEL BUILDING RENOVATION WHICH PROVIDED ENDURING BENEFIT TO THE ASSESSEE, AND WAS TO BE UNDERSTOOD A S CAPITAL IN NATURE. 7. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS. ITS A TRITE LAW THAT THE QUESTION AS TO WHETHER A PARTICULAR EXPENDITURE IS CAPITAL OR REVENUE IN NATURE IS A MIXED QUESTION OF LAW AND FACTS AND NO UNIVERSAL PRINCIPLE IS APPLICABLE IN ALL SITUATIONS. IN-FACT, THERE ARE A PLETHORA OF JUDICIAL RULINGS ON THE SUBJECT BUT A SINGULAR REFRAIN IS THAT EACH CAS E HAS TO BE DECIDED ON THE BASIS OF ITS OWN PECULIAR FACTS. IN THE PRESENT CA SE, ASSESSEE IS RUNNING A HOTEL AT KHANDALA AND DURING THE YEAR UNDER CONSIDE RATION, THE IMPUGNED EXPENDITURE OF RS.1,44,03,077/- HAS BEEN INCURRED B Y WAY OF RENOVATION OF THE EXISTING ROOMS. THE DETAILS OF SUCH EXPENDITURE HA VE BEEN ENUMERATED IN THE EARLIER PART OF THIS ORDER AND EVEN A CURSORY GLANC E SHOWS THAT NO NEW ASSET HAS BEEN CREATED. IN-FACT, ASSESSING OFFICER ALSO AGREES TO THE AFORESAID ITA NO.1726/PN/2013 PROPOSITION IN PARA 6 OF THE ASSESSMENT ORDER AS TH E FOLLOWING DISCUSSION WOULD SHOW :- IT IS AGREED THAT THE ASSESSEE HAS NOT BROUGHT INT O EXISTENCE ANY NEW ASSET BUT THE ASSESSEE HAS ITSELF ADMITTED TO OBTAIN A NE W ADVANTAGE BY RENOVATING THE HOTEL IN TERMS OF COMPETITIVE EDGE IN THE HOTEL INDUSTRY IN KHANDALA. 8. THE AFORESAID DISCUSSION BY THE ASSESSING OFFICE R SHOWS THAT THE CASE SETUP AGAINST THE ASSESSEE IS THAT IT HAS OBTAINED A NEW ADVANTAGE BY RENOVATING THE HOTEL IN TERMS OF COMPETITIVE EDGE I N THE HOTEL INDUSTRY IN KHANDALA. THE MOOT QUESTION IS AS TO WHETHER SUCH AN ADVANTAGE OBTAINED BY THE ASSESSEE AS A CONSEQUENCE OF THE AFORESAID E XPENDITURE IS IN CAPITAL FIELD OR IN REVENUE FIELD. IN ORDER TO ANSWER THE AFORESAID CONTROVERSY, IT WOULD ALSO BE RELEVANT TO UNDERSTAND THE COMMERCIAL REASO NS WHICH WEIGHED WITH THE ASSESSEE TO INCUR THE IMPUGNED EXPENDITURE. BE FORE THE LOWER AUTHORITIES, ASSESSEE MADE WRITTEN SUBMISSIONS WHEREBY THE COMME RCIAL EXPEDIENCY WAS SOUGHT TO BE DEMONSTRATED IN THE FOLLOWS WORDS :- THE COMMERCIAL EXPEDIENCY FOR INCURRING THE RENOVA TION EXPENSES HAVE BEEN STATED EARLIER. BRIEFLY, IT IS SUBMITTED THAT: A. THE HOTEL IS A THREE STAR HOTEL, LOCATED IN HILL Y AREA AND FACES VERY HIGH RAINFALL AND HENCE THE HOTEL BUILDING REQUIRES VERY HIGH MAINTENANCE AND ALSO REQUIRES RENOVATION PERIODICALLY DUE TO WE ATHER AND HEAVY RAINFALL. B. IN ORDER TO RETAIN REGULAR CUSTOMERS IT IS NECES SARY THAT THE MONOTONY OF THE SAME AMBIENCE AND FACILITY IS BROKEN THE HOT EL NECESSARILY HAS TO BE CARRY OUT REGULAR UPDATION AND RENOVATION, IN CLUDING ROOMS, CONFERENCE HALLS AND OTHER FACILITIES LIKE SWIMMING POOL, RESTAURANT ETC. C. WITH THE PASSAGE OF TIME, NEW TRENDS EMERGE IN T HE HOTEL INDUSTRY AND IT BECOMES ESSENTIAL TO INCORPORATE THE NEW TRENDS TO ATTRACT NEW CUSTOMERS AND ALSO TO RETAIN OLD CUSTOMERS. D. AS PER THE GENERAL PRACTICE IN THE HOTEL INDUSTR Y, PERIODIC UPGRADATION OF FACILITIES AND CHANGE OF AMBIENCE, AS WELL AS RE NOVATION OF THE INFRASTRUCTURE, INCLUDING ROOMS, RESTAURANTS ETC. I S A REGULAR FEATURE. E. KHANDALA BEING A TOURIST PLACE, THERE IS A LOT O F COMPETITION IN THIS BUSINESS. IN ORDER TO COMPETE WITH THE NEW HOTELS W HICH HAVE FRESH LOOK AND HAVE THE NEW AND MODERN FACILITIES, THE EX ISTING HOTELS ALSO REQUIRED TO CHANGE ON A CONTINUOUS BASIS. F. THE LAST MAJOR RENOVATION OF THE HOTEL WAS UNDER TAKING IN THE YEAR 2000/2001 WHICH IS A VERY LONG PERIOD BY THE GENERA L INDUSTRY ITA NO.1726/PN/2013 STANDARDS AND CONSIDERING THE FACT THAT THE HOTEL I S A THREE STAR HOTEL. FURTHER, AS STATED ABOVE, THERE WAS A SIGNIFICANT A MOUNT OF WEAR AND TEAR DUE TO PASSAGE OF TIME, USAGE AND WEATHER (RAI NY CONDITIONS) G. IN VIEW OF ABOVE FACTORS, THE MANAGEMENT REALIZE D THAT IT WAS HIGH TIME TO CREATE A NEW AMBIENCE IN ORDER TO RETAIN TH E FAITHFUL CUSTOMERS AND TO ATTRACT NEW CUSTOMERS. 9. ALL THE AFORESAID ASPECTS OF COMMERCIAL EXPEDIEN CY BROUGHT OUT BY THE ASSESSEE BEFORE THE LOWER AUTHORITIES HAVE NOT BEEN DISPUTED. THE ASSERTIONS MADE BY THE ASSESSEE CLEARLY POINT OUT THAT WHAT TH E ASSESSEE SOUGHT TO ACHIEVE BY INCURRING THE EXPENDITURE WAS TO RETAIN ITS BUSINESS BY OFFERING AND UPGRADING ITS FACILITIES FOR EXISTING AS WELL AS NE W CUSTOMERS. IN-FACT, THE DETAIL OF THE EXPENDITURE ALSO REVEAL THAT IT HAS BEEN INC URRED ON UPGRADING THE FACILITIES, CHANGE OF AMBIENCE AND RENOVATION OF TH E INFRASTRUCTURE INCLUDING ROOMS, RESTAURANT, ETC. IN OUR CONSIDERED OPINION, IN SUCH LIKE SITUATION WHERE THE QUESTION IS WHETHER EXPENDITURE INCURRED BY AN ASSESSEE IS CAPITAL OR REVENUE EXPENDITURE, IT WOULD BE QUITE APPROPRIATE TO BEAR IN MIND THE FOLLOWING OBSERVATIONS IN THE CASE OF HALLSTORMS P ROPERTY LTD. VS. FEDERAL COMMISSIONER OF TAXATION, 72 CLR 634, WHICH ARE AS UNDER :- WHAT IS AN OUTGOING OF CAPITAL AND WHAT IS AN OUTG OING ON ACCOUNT OF REVENUE DEPENDS ON WHAT THE EXPENDITURE IS CALCULATED TO EF FECT FROM A PRACTICAL AND BUSINESS POINT OF VIEW RATHER THAN UPON THE JURISTI C CLASSIFICATION OF THE LEGAL RIGHTS, IF ANY SECURED, EMPLOYED OR EXHAUSTED IN TH E PROCESS. 10. THE IMPORT OF THE AFORESAID OBSERVATIONS IS THA T THE CONTROVERSY OUGHT TO BE ADDRESSED IN THE CONTEXT OF THE BUSINESS NECE SSITY OR EXPEDIENCY. IF THE OUT-GOING EXPENDITURE IS TARGETED TO RETAIN THE REG ULAR CUSTOMERS AND ALSO ATTRACTED NEW CUSTOMERS WITH UPGRADATION OF FACILIT IES AND CHANGE OF AMBIENCE, IT WOULD CERTAINLY QUALIFY TO BE AN OBJEC TIVE OF BUSINESS NECESSITY OR EXPEDIENCY. THUS, IN SUCH AS SITUATION THE EXPENDI TURE CAN BE SAID TO BE INCURRED IN THE REVENUE FIELD ESPECIALLY IN THE PRE SENT CASE WHEN THERE IS NO DISPUTE THAT NO NEW ASSET HAS BEEN CREATED WITH THE INCURRENCE OF THE IMPUGNED EXPENDITURE. AT THE PRESENT STAGE, WE MAY ALSO REFER TO AN ITA NO.1726/PN/2013 ARGUMENT TAKEN BY THE REVENUE TO SAY THAT BY INCURR ENCE OF THE IMPUGNED EXPENDITURE A PORTION OF THE BALCONY OUTSIDE THE RO OMS HAVE BEEN BROUGHT INTO THE ROOM SPACE ITSELF THEREBY INCREASING THE CAPACI TY OF THE ROOM. ON THIS BASIS, IT IS SOUGHT TO BE MADE OUT THAT THIS HAS RE SULTED IN ENHANCED PROFIT YIELDING CAPACITY AND THEREFORE A PORTION OF THE IM PUGNED EXPENDITURE IS CAPITAL IN NATURE. IN OUR CONSIDERED OPINION, A ME RE INCREASE IN THE ROOM SPACE ON ACCOUNT OF ENCLOSING OF THE BALCONY AREA W OULD NOT SHOW ANY INCREASE IN CAPACITY OR CREATION OF ANY NEW ASSET S O AS TO RENDER SUCH EXPENDITURE AS A CAPITAL EXPENDITURE. IN-FACT, IN THIS CONTEXT, THE LD. REPRESENTATIVE FOR THE ASSESSEE REFERRED TO THE JUD GEMENT OF THE HONBLE DELHI HIGH COURT IN THE CASE OF COMFORT LIVING HOTE LS P. LTD. VS. CIT, (2014) 363 ITR 182 (DELHI) WHEREIN ASSESSEE WAS RUNNING A HOTEL AND IT HAD INCURRED EXTENSIVE REPAIRS WHICH RESULTED IN INCREASED SEATI NG CAPACITY OF THE EXISTING BAR IN THE HOTEL. THE REVENUE HAD SETUP A CASE THA T SUCH INCREASED SEATING RESULTED IN ENHANCEMENT OF PROFIT YIELDING CAPACITY SO AS TO RENDER THE EXPENDITURE CAPITAL IN NATURE. THE HONBLE HIGH CO URT DISAGREED WITH THE REVENUE BY NOTICING THAT IT WAS ONLY AN INCREASE IN SEATING CAPACITY OF THE EXISTING BAR WHICH DID NOT RESULT IN CREATION OF AN Y NEW ASSET. BY FOLLOWING THE AFORESAID PROPOSITION, THE HONBLE HIGH COURT IN TH E CASE OF COMFORT LIVING HOTELS PVT. LTD. (SUPRA), HELD THE EXPENDITURE TO B E REVENUE IN NATURE. IN OUR CONSIDERED OPINION, THE RATIO OF THE AFORESAID DECI SION IS SQUARELY APPLICABLE IN THE PRESENT CONTEXT AND THEREFORE A MERE INCREASE I N THE ROOM SIZE DUE TO INCLUSION OF BALCONY AREA WOULD NOT RESULT IN CREAT ION OF ANY NEW ASSET OR INCREASED PROFIT YIELDING CAPACITY SO AS TO RENDER THE EXPENDITURE CAPITAL IN NATURE. 11. IN-FACT, THE BENEFIT TO THE ASSESSEE ACCRUING A S A RESULT OF THE IMPUGNED EXPENDITURE, THOUGH SPREAD OVER A NUMBER OF YEARS, IS CERTAINLY IN THE REVENUE FIELD AND THEREFORE SUCH AN EXPENDITURE PROVIDES TH E ASSESSEE WITH AN ITA NO.1726/PN/2013 ADVANTAGE IN A COMMERCIAL SENSE AND THEREFORE THE E XPENDITURE HAS TO BE HELD TO BE REVENUE IN NATURE, FOLLOWING THE PRINCIP LES LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF EMPIRE JUTE CO. (SUPRA ). AS A CONSEQUENCE, WE THEREFORE SET-ASIDE THE ORDER OF THE CIT(A) AND DIR ECT THE ASSESSING OFFICER TO DELETE THE DISALLOWANCE AND TREAT THE EXPENDITURE O F RS.1,44,03,077/- AS REVENUE IN NATURE IN TERMS OF SECTION 37(1) OF THE ACT. 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED ON 10 TH APRIL, 2015. SD/- SD/- (SUSHMA CHOWLA) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE, DATED: 10 TH APRIL, 2015. SUJEET COPY OF THE ORDER IS FORWARDED TO : - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A)-V, PUNE; 4) THE CIT-V, PUNE; 5) THE DR A BENCH, I.T.A.T., PUNE; 6) GUARD FILE. BY ORDER //TRUE COPY// ASSISTANT REGISTRAR I.T.A.T., PUNE