DCIT, New Delhi V. M/s. Anand Health Care Ltd., New Delhi

ITA 1799/DEL/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 65562 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-10-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 18-04-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANUSHA KHURANA
• Assessee Lawyers: SANJEEV KWATRA CAS
• Keywords: Revenue expenditure; Capital expenditure
• Section: 37(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH `A : NEW DELHI) BEFORE SHRI U.B.S. BEDI, JUDICIAL MEMBER AND SHRI A.N. PAHUJA, ACCOUNTANT MEMBER ITA NOS.1798 & 1799/DEL./2012 (ASSESSMENT YEARS : 2004-05 & 08-09) DCIT, CIRCLE 6(1), VS. ANAND HEALTH CARE LTD., NEW DELHI (PRESENTLY KNOWN AS M/S METRO MEDICAL SERVICES PVT. LTD.), 21, COMMUNITY CENTRE, PREET VIHAR, NEW DELHI. (PAN/GIR NO.AABCA4199G) (APPELLANT) (RESPONDENT) ASSESSEE BY : S/SHRI HIREN MEHTA & SANJEEV KWATRA, CAS REVENUE BY : MS. ANUSHA KHURANA, SR.DR ORDER PER U.B.S. BEDI, J.M. THESE TWO APPEALS OF THE REVENUE ARE DIRECTED AGAIN ST SEPARATE ORDERS OF THE CIT (A), CHANDIGARH, BOTH DATED 13.01.2012, RELEVANT TO ASSESSMENT YEARS 2004-05 & 07-08, WHEREBY DELETION OF ADDITION OF RS.1,32,380 AND RS. 15,85,580/- BEING 30% OF THE REPAIRS AND MAINTENANCE HAVING BEEN TREATED AS TO BE OF CAP ITAL NATURE BY THE ASSESSING OFFICER, RESPECTIVELY HAS BEEN CHALLENGED. 2. FOR ASSESSMENT YEAR 2004-05, ASSESSING OFFICER M ADE DISALLOWANCE AS UNDER: PERUSAL OF P&L A/C OF THE ASSESSEE REVEALS THAT IT HAS DEBITED AN AMOUNT OF RS.441269/- ON ACCOUNT OF BUILDING MAINTENANCE. AS SESSEE WAS ASKED TO FURNISH COMPLETE DETAILS OF THE SAME WHICH IT FURNISHED VID E ITS REPLY DATED 21.12.2009. PERUSAL OF ABOVE DETAILS REVEAL THAT PART OF THE SA ID EXPENSES IS ON ACCOUNT OF NEW TILES, NEW DOORS, ELECTRICAL ITEMS ETC. WHICH ARE C APITAL IN NATURE AS ASSESSEE WOULD DRAW ENDURING BENEFIT FORM IT. WHEN ASSESSEE WAS A SKED REGARDING THE SAME IT SUBMITTED, EXPENDITURE ON BUILDING MAINTENANCE IS TO KEEP THE BUILDING IN RUNNING CONDITIONS WHICH INCLUDES PAINING AND WHILE WASHING, REPAIRS OF I.T.A. NOS.1798 & 1799/DEL./2012 (A.YS. : 2004-05 & 07-08) 2 BATHROOMS, DOORS ETC. THUS WHOLE OF THE EXPENSES I S REVENUE IN NATURE. ASSESSEES REPLY HAS BEEN CONSIDERED, HOWEVER, 30% OF THE SAID EXPENSES OF RS.441269/- I.E. RS.132380 IS DISALLOWED ON ESTIMAT E BASIS U/S 37(1) OF THE I.T. ACT. 3. ASSESSEE CHALLENGED SUCH DISALLOWANCE MADE BY TH E ASSESSING OFFICER AND IT WAS SUBMITTED BEFORE FIRST APPELLATE AUTHORITY THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF RUNNING OF HOSPITALS. IN ORDER TO PROVIDE BEST PAT IENT CARE, THE ASSESSEE IS REQUIRED TO PROVIDE EXCELLENT ATMOSPHERE AND HYGIENIC CONDITION S IN THE HOSPITALS. THE ASSESSEE IS HAVING HOSPITAL BUILDING AT 21, COMMUNITY CENTRE, P REET VIHAR, DELHI AND DURING THE YEAR UNDER CONSIDERATION, ASSESSEE HAD INCURRED GENERAL REPAIR AND MAINTENANCE IN RESPECT OF THE HOSPITAL BUILDING, INCLUDING THE EXPENSES ON PL ASTIC AND WHILE PAINT, TILES FIXING OF NURSERY AND OT ROOM, REPAIR OF DOOR CLOSER, LOCK PA RTS, REPAIRS OF BATHROOMS AND OTHER BUILDING REPAIRS ETC. AND LABOUR CHARGES ON THE SAM E. THE DETAILS OF REPAIR AND MAINTENANCE BUILDING FILED DURING THE ASSESSMENT PROCEEDINGS WERE ALSO FILED BEFORE CIT(A). IN ORDER TO INDICATE THAT IT WOULD CLEARLY SUBSTANTIATE THE ABOVE AVERMENT INASMUCH AS ALL PAYMENTS WITH REGARD TO REPAIR WORK HAVE BEEN MADE FOR PURCHASE OF BUILDING MATERIAL, PAINTS, TILES ETC. THEREFORE, I N ESSENCE, THE ENTIRE AMOUNT OF EXPENDITURE INCURRED WAS FOR PRESERVATION AND MAINT ENANCE OF EXISTING ASSET I.E. HOSPITAL BUILDING AT PREET VIHAR. SO, ASSESSING OFFICER WAS NOT JUSTIFIED IN ARBITRARILY DISALLOWING THE PART OF REPAIRS EXPENSES. IT IS TRITE LAW THAT THE DISPUTE BETWEEN CAPITAL AND REVENUE EXPENDITURE IS TO BE DECIDED ON THE FACTS AND CIRCU MSTANCES OF EACH CASE. THERE IS NO DEFINITE TEST OR STRAIGHT JACKET FORMULA FOR DETERM INING WHETHER A PARTICULAR EXPENDITURE IS CAPITAL OR REVENUE. SO, RELIANCE WAS PLACED ON THE DECISION OF HONBLE SUPREME COURT IN ABDUL KAYOOM VS. CIT, 44 I.T.R. 689 TO PLEAD FOR DE LETION OF THE PART OF THE EXPENSES DISALLOWED. 4. CIT(A) WHILE CONSIDERING AND ACCEPTING THE PLEA OF THE ASSESSEE HAS CONCLUDED TO DELETE THE IMPUGNED ADDITION AS PER PARA.3.3 OF HIS ORDER AS UNDER: I HAVE CONSIDERED THE SUBMISSION OF LD.COUNSELS FO R THE APPELLANT AND HAVE GONE THROUGH JUDGMENT DATED 24.09.2009 OF HONBLE ITAT, CHANDIGARH IN THE CASE OF THE GROUP COMPANY U.G. HOSPITALS (P) LTD. (SUPRA). THE APPELLANT COMPANY WAS TAKEN OVER BY THE METRO GROUP OF HOSPITALS AND AFTE R THE CHANGE IN THE OWNERSHIP OF THE SHARES HOLDING, THE HOSPITAL BECAME PART OF THE METRO GROUP AND HAD TO CONFORM TO CERTAIN MINIMUM STANDARDS. THE REPAIRS WERE CARRIED OUT TO PROVIDE I.T.A. NOS.1798 & 1799/DEL./2012 (A.YS. : 2004-05 & 07-08) 3 BEST PATIENT CARE, EXCELLENT ATMOSPHERE AND HYGIENI C CONDITIONS. SIMILAR REPAIRS HAD BEEN CARRIED OUT IN THE CASE OF ANOTHER HOSPITA L OF THE GROUP COMPANY M/S U.G. HOSPITALS (P) LTD. AND THE ASSESSING OFFICER H AD TREATED THE REPAIR AND MAINTENANCE OF THE BUILDING IN THAT CASE ALSO AS CA PITAL EXPENDITURE. THE ADDITION MADE WAS DELETED BY THE HONBLE ITAT, CHANDIGARH VI DE ORDER DATED 24.09.2009 IN I.T.A. NOS.1037 & 1057/CHANDI/2008 FOR ASSESSMEN T YEAR 2005-06. HENCE, BY RESPECTFULLY FOLLOWING THE DECISION OF THE HONBLE ITAT, CHANDIGARH (SUPRA), THE ADDITION MADE OF RS.1,32,380/- BY TREATING THE EXPE NDITURE CLAIMED ON ACCOUNT OF REPAIR AND MAINTENANCE AS CAPITAL EXPENDITURE IS DE LETED. GROUND OF APPEAL NO.2 IS ALLOWED. 5. AGGRIEVED BY THIS ORDER OF CIT(A), DEPARTMENT HA S COME UP IN APPEAL AND IT IS STRONGLY PLEADED AND WHILE RELYING UPON ORDER OF AS SESSING OFFICER IT WAS URGED FOR REVERSAL OF THE ORDER OF CIT(A) AND RESTORING THAT OF THE ASSESSING OFFICER BECAUSE THE ASSESSING OFFICER HAS NOT DISALLOWED THE ENTIRE EX PENDITURE, BUT ONLY 30% OF THE SAME AND HAS GIVEN VALID REASON FOR MAKING THE IMPUGNED ADDITION AT 30% OF THE TOTAL EXPENDITURE CLAIMED. THEREFORE, HIS ACTION BEING L EGALLY VALID, WHICH MAY BE RESTORED BY SETTING ASIDE THE ORDER OF THE CIT(A). 6. LD.COUNSEL FOR THE ASSESSEE, WHILE RELYING UPON THE ORDER OF CIT(A), HAS PLEADED FOR SIMILAR TREATMENT AS GIVEN TO ANOTHER HOSPITAL WHERE IDENTICAL ADDITION WAS MADE WITH RESPECT TO REPAIR AND MAINTENANCE, IN WHICH LD.CIT( A), WHILE RELYING UPON ITAT, CHANDIGARH BENCH DECISION FOR THE ASSESSMENT YEAR 2 005-06 IN THE CASE OF M/S U.G. HOSPITAL (P) LTD., HAS DELETED SUCH ADDITION AND CI T(A) FOLLOWED THE ITAT DECISION TO DELETE THE IMPUGNED ADDITION, SINCE NO CONTRARY MAT ERIAL OR HIGHER COURTS ORDER/DECISION HAS BEEN CITED AND FACTS AND CIRCUMSTANCES OF THE C ASE IN HAND AND CASE RELIED UPON BY THE CIT(A) OF ITAT, CHANDIGARH BENCH DECISION ARE S IMILAR, THEREFORE, ACTION OF THE CIT(A) IS FULLY JUSTIFIED, WHICH SHOULD BE UPHELD. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CONSIDER ED THE MATERIAL ON RECORD AS WELL AS PRECEDENT RELIED UPON BY THE CIT(A) AND FIN D THAT ON THE BASIS AND REASONING GIVEN BY LD.CIT(A) ARE THE SECOND AND CONVINCING AN D NEITHER ANY CONTRARY MATERIAL IS PLACED ON RECORD NOR ANY HIGHER COURTS ORDER IS FI LED WHEN IT IS OTHERWISE A COVERED MATTER. THEREFORE, WE DO NOT FIND ANY INFIRMITY OR FLAW IN THE ORDER OF HE CIT(A) WHICH IS CONFIRMED AND PLEA OF THE REVENUE FOR ASSESSMENT YEAR 2004-05 IS REJECTED. THEREFORE, THE APPEAL OF THE REVENUE FOR ASSESSMENT YEAR 2004- 05 IS DISMISSED. I.T.A. NOS.1798 & 1799/DEL./2012 (A.YS. : 2004-05 & 07-08) 4 8. AS REGARDS APPEAL FOR ASSESSMENT YEAR 2007-08 IS CONCERNED, ADDITION OF RS.15,85,850/- BEING 30% OF THE EXPENDITURE ON ACCO UNT OF REPAIR AND MAINTENANCE OF BUILDING HAS BEEN MADE BY THE ASSESSING OFFICER, WH ICH CAME TO BE DELETED BY THE CIT(A) WHILE FOLLOWING CHANDIGARH BENCH IN THE CASE OF U.G. HOSPITALS (P) LTD. (SUPRA). AGAINST SUCH ORDER OF CIT(A), DEPARTMENT HAS COME U P IN APPEAL AND IT IS STRONGLY PLEADED THAT CIT(A) HAS NOT APPRECIATED THE FACT TH AT EXPENDITURE ON REPAIR AND MAINTENANCE OF BUILDING IS MORE THAN 35% OF THE VA LUE OF THE ASSET. SO, CIT(A) HAS ERRED IN NOT APPRECIATING THE FACT THAT EXPENDITURE ON ACCOUNT OF PUTTING UP FALSE CEILING, NEW TILES/WINDOWS ETC. CANNOT BE TREATED AS REVENU E EXPENDITURE. THEREFORE, IT WAS PLEADED FOR SETTING ASIDE THE ORDER OF CIT(A) AND R ESTORING THAT OF THE ASSESSING OFFICER. 9. LD.COUSNEL FOR THE ASSESSEE HAS RELIED UPON THE ORDER OF CIT(A) AND PLEADED FOR ITS CONFIRMATION AS ISSUE IS COVERED IN FAVOUR OF T HE ASSESSEE BY ITAT DECISION CITED SUPRA. 10. WE HAVE HEARD BOTH THE SIDES, CONSIDERED THE MA TERIAL ON RECORD AND FIND THAT THERE IS NO DIFFERENCE IN MATERIAL FACTS OF THE PRE SENT CASE AND THE CASE DECIDED FOR THE EARLIER YEAR AND SINCE IN EARLIER YEAR, CIT(A) HAS DELETED THE IMPUGNED ADDITION BY FOLLOWING THE ITAT BENCH DECISION CITED SUPRA AND S AME HAS BEEN APPLIED HERE IN THIS YEAR WHEN NEITHER ANY DISTINGUISHABLE FEATURE IS TH ERE NOR ANY INFIRMITY IS POINTED OUT OR FOUND, THEREFORE, FOLLOWING OUR DECISION FOR THE EA RLIER YEAR, WE UPHOLD THE ORDER OF THE CIT(A) AND DISMISS THE APPEAL OF THE REVENUE FOR TH IS YEAR ALSO. 11. AS A RESULT, BOTH THE APPEALS FILED BY THE REV ENUE GET DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 05.10.2012. SD/- SD/- (A.N. PAHUJA) ACCOUNTANT MEMBER (U.B.S. BEDI ) JUDICIAL MEMBER DATED : OCT. 05, 2012. SKB COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A), CHANDIGARH. 5. CIT(ITAT) DEPUTY REGISTRAR, ITAT I.T.A. NOS.1798 & 1799/DEL./2012 (A.YS. : 2004-05 & 07-08) 5