A.C.I.T.6(1), MUMBAI V. ALBRIGHT & WILSONS CHEMICALS LTD, MUMBAI

ITA 1777/MUM/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 78988 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 2 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-05-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: I
• Next Hearing Date: 29-05-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 03-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: MANISH V SHAH
• Keywords: Depreciation; Revenue expenditure; Capital expenditure
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH I, MUMBAI BEFORE SHRI B.R.BASKARAN, ACCOUNTANT MEMBER AND DR. S.T.M. PAVALAN, JUDICIAL MEMBER ITA NOS. 1777/MUM/2011 ASSESSMENT YEAR: 2007-08 ACIT 6(1), ROOM NO 506, 5 TH FLOOR, AAYAKAR BHAWAN, MUMBAI-400 020 VS. ALBRIGHT & WILSONS CHEMICALS LTD, PHOENIX HOUSE, A- WING, 4 TH FLOOR 462, S.B. MARG, LOWER PAREL(W), MUMBAI-400013 (APPELLANT) (RESPONDENT) PERMANENT ACCOUNT NO. :- AAACA 3841 L ASSESSEE BY : SHRI MANISH V SHAH REVENUE BY : SHRI SANJEEV JAIN DATE OF HEARING : 29.05.2014 DATE OF PRONOUNCEMENT : 29.05.2014 O R D E R PER DR. S.T.M. PAVALAN, JM: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAI NST THE ORDER OF THE LD.CIT(A)-14, MUMBAI DATED 22.12.2010 FOR THE ASSES SMENT YEAR 2007-09. 2. IN THIS APPEAL, THE REVENUE HAS AGITATED THE ACT ION OF THE LD.CIT(A) IN DELETING THE DISALLOWANCE/ADDITION OF RS.19,96,293/ - PERTAINING TO THE EXPENDITURE CLAIMED BY THE ASSESSEE ON ACCOUNT OF REPAIRS AND M AINTENANCE BY TREATING THE SAME AS REVENUE EXPENDITURE AS AGAINST THE AO TREAT ING THE SAME AS CAPITAL EXPENDITURE. 3. BRIEFLY STATED, THE ASSESSEE, A COMPANY ENGAGED IN THE BUSINESS OF MANUFACTURE, SALE, PROCESSING, TRADING OF CHEMICALS AND AGENCY COMMISSION, DURING THE YEAR UNDER CONSIDERATION HAD CLAIMED/INCURRED R EPAIRS AND MAINTENANCE EXPENSES OF BUILDING AMOUNTING TO RS.52,62,000/-. H OWEVER, IN THE ASSESSMENT FRAMED UNDER SECTION 143(3) OF THE INCOME TAX ACT, THE AO HAD DISALLOWED AN AMOUNT OF RS.19,96,293/- OF THE SAID EXPENDITURE ON THE GROUND THAT THE SAME IS ITA NOS. 1777/MUM/2012 ALBRIGHT &WILSONS CHEMICALS INDIA LTD ASSESSMENT YEAR: 2007-08 2 CAPITAL IN NATURE. IN THE PROCESS OF DISALLOWING TH E SAID EXPENDITURE, THE AO ALLOWED A DEPRECIATION @ 5% ON THE SAID DISALLOWANCE WHICH IN EFFECT RESULTED IN AN ADDITION OF RS.18,96,478/-. ON APPEAL, THE LD.CIT(A) DELETED THE IMPUGNED DISALLOWANCE/ADDITION MADE BY THE AO ON THE REASON THAT THE EXPENDITURE INCURRED BY THE ASSESSEE HAD NOT RESULTED IN BRINGING INTO E XISTENCE OF ANY NEW ASSET OR ANY PERMANENT OR ENDURING BENEFIT HAD ACCRUED TO THE AS SESSEE. AGGRIEVED BY THE IMPUGNED DECISION, THE REVENUE IS IN APPEAL BEFORE US. 4. HAVING HEARD BOTH THE SIDES AND PERUSED THE MATE RIAL ON RECORD, IT IS PERTINENT TO MENTION THAT THE DETAILS OF THE EXPEND ITURE INCURRED BY THE ASSESSEE ON ACCOUNT OF REPAIRS AND MAINTENANCE OF BUILDING ARE STATED BY THE LD.CIT(A) IN HIS ORDER AT PAGE NO 3. THE PERUSAL OF THE DETAILS OF T HE EXPENDITURE CLAIMED BY THE ASSESSEE REVEALS THAT THE EXPENDITURE INCURRED BY T HE ASSESSEE HAS NEITHER RESULTED IN BRINGING INTO EXISTENCE OF ANY NEW ASSET NOR ANY PERMANENT/ENDURING BENEFIT HAD ACCRUED TO THE ASSESSEE. IN SUCH AN EVENT, THE EXPE NDITURE INCURRED BY THE ASSESSEE CANNOT BE TREATED TO BE A CAPITAL EXPENDITURE. MORE OVER, THE LD.CIT(A), WHILE DELETING THE IMPUGNED DISALLOWANCE/ADDITION BY TREA TING THE SAID EXPENDITURE AS REVENUE IN NATURE, HAS RELIED ON THE DECISION OF TH E TRIBUNAL IN THE ASSESSEES OWN CASE IN ITA NO. 55/MUM/08 FOR THE AY 2004-05, WHERE IN SIMILAR EXPENSES INCURRED BY THE ASSESSEE HAS BEEN TREATED AS REVENUE EXPENDI TURE. IT IS NOTEWORTHY TO POINT OUT THAT THE REVENUE HAS NOT CONTRADICTED THE FACT THAT NO FURTHER APPEAL HAS BEEN PREFERRED BY THE REVENUE BEFORE THE HIGH COURT AGAI NST THE SAID DECISION OF THE TRIBUNAL. IN VIEW OF THE FACT THAT THE LD.CIT(A) HA S TAKEN COGNIZANCE OF THE DECISION OF THE TRIBUNAL IN THE ASSESSEES OWN CASE AND ALSO HAS CORRECTLY APPRECIATED THE FACTS & POSITION OF LAW FOR DELETING THE IMPUGNED D ISALLOWANCE/ADDITION MADE BY THE AO, WE DO NOT FIND ANY JUSTIFIABLE REASON TO INTERF ERE WITH THE DECISION OF THE LD.CIT(A) IN DELETING THE IMPUGNED DISALLOWANCE/ADD ITION AND THUS THE SAME IS UPHELD. 5. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 29 TH DAY OF MAY, 2014. //SD// //SD// ITA NOS. 1777/MUM/2012 ALBRIGHT &WILSONS CHEMICALS INDIA LTD ASSESSMENT YEAR: 2007-08 3 (B.R.BASKARAN) (DR. S.T.M. PAVALAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 29.05.2014. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR I BENCH //TRUE COPY// BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.