Liza Jigish Shah, Ahmedabad V. The ACIT.,Cent.Circle-2(4), Ahmedabad

ITA 2075/AHD/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 76741 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 9 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-06-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 29-05-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 23-08-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P L KUREEL
• Assessee Lawyers: S N DIVETIA
• Keywords: Capital expenditure
• Section: 143(3); 37(1); 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD (BEFORE SHRI D.K. TYAGI, J.M. & SHRI ANIL CHATURVE DI, A.M.) I.T. A. NO. 2075/AHD/2011 (ASSESSMENT YEAR: 2008-09) SHRI LIZA JIGISH SHAH 4 TH FLOOR, SAHAJ APARTMENT, NR RAJPATH ROW HOUSE, OPP. CHITRAKUT-1, BODAKDEV, AHMEDABAD V/S ACIT-CENTRAL CIRCLE 2(4), AHMEDABAD (APPELLANT) (RESPONDENT) PAN: ALLPS 9711N APPELLANT BY : SHRI S.N. DIVETIA RESPONDENT BY : SHRI P.L. KUREEL, SR. D.R. ( )/ ORDER DATE OF HEARING : 29-05-201 4 DATE OF PRONOUNCEMENT : 06-06-2014 PER SHRI ANIL CHATURVEDI,A.M. 1. THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER OF CIT(A)-III, AHMEDABAD DATED 17.06.2011 FOR A.Y. 2008-09. 2. THE FACTS AS CULLED OUT FROM THE MATERIAL ON RECORD ARE AS UNDER. 3. ASSESSEE IS AN INDIVIDUAL RUNNING A SCHOOL. ASSESSE E FILED HER RETURN OF INCOME FOR A.Y. 08-09 ON 13.03.2009 DECLARING TOTAL INCOME OF RS. 2,79,576/-. THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER THE ITA NO 2075/AHD/2011 . A.Y. 2008- 09 2 ASSESSMENT WAS FRAMED UNDER SECTION 143(3) VIDE ORD ER DATED 20.12.2010 AND THE TOTAL INCOME WAS ASSESSED AT RS. 4,99,782/- . AGGRIEVED BY THE ORDER OF A.O, ASSESSEE CARRIED THE MATTER BEFORE CI T(A). CIT(A) GRANTED PARTIAL RELIEF TO THE ASSESSEE. AGGRIEVED BY THE OR DER OF CIT(A), THE ASSESSEE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS:- 1. THE LD. CIT(A) HAS ERRED IN FACTS AND IN LAW BY DIS ALLOWING BUILDING RENOVATION EXPENSES AMOUNTING TO RS. 1,85,516/- (RS. 2,20206 RS. 34,690), TREATING THEM AS CAPITAL EXPENDITURE. 2. THE LD. CIT(A) HAS ERRED IN LAW BY NOT TREATING RS. 1,85,516/- AS CURRENT REPAIRS U/S 30 AND 31 OF THE I.T. ACT. THOUGH 2 GROUNDS ARE RAISED BY ASSESSEE BUT BOTH TH E GROUNDS ARE INTERCONNECTED AND THEREFORE CONSIDERED TOGETHER. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, A.O. N OTICED THAT ASSESSEE HAD DEBITED RS. 2,20,206/- AS BUILDING RENOVATION E XPENSES. THE ASSESSEE WAS ASKED TO JUSTIFY THE ALLOWABILITY OF E XPENSES, IN REPLY TO WHICH ASSESSEE INTERALIA SUBMITTED THAT ASSESSEE HA D TAKEN NEW PREMISES ON RENT AND THE EXPENSES WERE IN THE RENTED BUILDIN G USED FOR THE PURPOSE OF SCHOOL SO AS TO MAKE IT SUITABLE FOR CHILDREN. THE SUBMISSION OF THE ASSESSEE WAS NOT FOUND ACCEPTABLE TO THE A.O. AS A. O WAS OF THE VIEW THAT THE EXPENDITURE WAS OF CAPITAL IN NATURE. HE ACCORDINGLY DISALLOWED THE CLAIM OF ASSESSEE. AGGRIEVED BY THE ORDER OF A.O, ASSESSEE CARRIED THE MATTER BEFORE CIT(A). CIT(A) A FTER CONSIDERING THE SUBMISSION OF THE ASSESSEE GRANTED PARTIAL RELIEF T O THE ASSESSEE BY HOLDING AS UNDER:- 4.3. SINCE IN THIS CASE, DURING THE YEAR UNDER CONS IDERATION THE APPELLANT HAS TAKEN A NEW BUILDING PREMISES ON RENT FOR ITS SCHOOL, THE EXPENDITURE IN CURRED ON THIS BUILDING CANNOT BE TREATED AS CURREN T REPAIRS. FOR THE PURPOSE OF CURRENT REPAIRS, THE AS SET HAS TO BE WITH THE APPELLANT IN THE PAST WHICH REQUIRES REPAIRS SO THAT IT CAN WORK JUST LIKE IT W AS WORKING PRIOR TO THE REPAIRS. THEREFORE, ALL THE ITA NO 2075/AHD/2011 . A.Y. 2008- 09 3 EXPENDITURES INCURRED BY THE APPELLANT IN RESPECT O F THE BUILDING PREMISES CANNOT BE TREATED AS CURREN T REPAIRS. AS REGARDS THE EXPENSES INCURRED BY THE AP PELLANT ON THE REPAIRS OF THE FURNITURE, IT IS TO B E STATED THAT AGAIN THE APPELLANT WOULD BE ENTITLED T O CLAIM THE CURRENT REPAIRS IN RESPECT OF EXISTING FURNITURE WITH THE APPELLANT. THE EXPENDITURE INCUR RED BY THE APPELLANT ON THE REPAIR OF THE DOORS OF THE BUILDING PREMISES CANNOT BE TREATED AS CURRENT REPA IRS. ONLY THE EXPENDITURE INCURRED BY THE APPELLANT IN RESPECT OF REPAIR OF TABLES AND CHAIRS WHICH WER E USED BY THE APPELLANT IN THE CLASSROOMS IN EARLIE R YEARS, WOULD BE ELIGIBLE EXPENDITURE IN THE YEAR UN DER CONSIDERATION IF THE REPAIRS FALLS UNDER THE HE AD OF CURRENT REPAIRS. FROM THE DETAILS OF THE EXPENDITURE INCURRED FOR RE PAIRS TO CHAIRS AND TABLES, IT IS NOTICED THAT THE APPELLANT HAS INCURRED THE EXPENDI TURE OF RS. 14,440 AND RS. 20,250 IN RESPECT OF THE BILLS ISSUED BY DARSHITI FURNITURE. IN MY VIEW AT T HE MOST ONLY SUCH EXPENSES CAN BE TREATED AS CURREN T REPAIRS. IN OTHER WORDS, AT THE MOST THE AMOUNT OF RS. 14,440 + 20,250 = RS. 34,690 CAN BE TREATED AS CURRENT REPAIRS IN RESPECT OF CHAIRS AND TABLES. IN OTHER WORDS, THE APPELLANT GETS RELIEF OF RS. 34,6 90 ONLY. THE OTHER EXPENSES ARE NOT CURRENT REPAIRS AN D THEREFORE THE A.O WAS JUSTIFIED IN DISALLOWING TH E SAME. 5. AGGRIEVED BY THE ORDER OF CIT(A), THE ASSESSEE IS N OW IN APPEAL BEFORE US. 6. BEFORE US, THE LD. A.R. REITERATED THE SUBMISSIONS MADE BEFORE CIT(A). HE FURTHER POINTED TO THE DETAILS OF EXPENSES OF BU ILDING RENOVATION ACCOUNT REPRODUCED AT PAGE 7 OF THE ORDER OF CIT(A) . FROM THE DETAILS HE POINTED OUT THE NATURE OF EXPENSES AND SUBMITTED TH AT THE NATURE OF EXPENSES ARE SUCH THAT IT CANNOT BE CONSIDERED TO B E OF CAPITAL IN NATURE AND IT CANNOT BE SAID TO BE HAVING AN ENDURING BENE FIT. HE FURTHER SUBMITTED AND POINTED TO THE SUBMISSION MADE BEFORE CIT(A) WHEREIN THE ASSESSEE HAD CLAIMED THE EXPENDITURE UNDER SECTION 37(1) BUT CIT(A) DECIDED THE ISSUE CONSIDERING THE EXPENSES OF ALLOW ABILITY OF EXPENSES UNDER SECTION 30 AND 31 OF THE ACT. HE THEREFORE SU BMITTED THAT THE ENTIRE EXPENSES WERE IN THE NATURE OF REPAIRS AND THEREFOR E ALLOWABLE UNDER SECTION 37 OF THE ACT. LD. D.R. ON THE OTHER HAND R ELIED ON THE ORDER OF A.O AND CIT(A). 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IT IS AN UNDISPUTED FACT, THAT ASSESSEE HAD DURING THE YEAR TAKEN NEW ITA NO 2075/AHD/2011 . A.Y. 2008- 09 4 PERMISSIONS RENT AND HAD SHIFTED THE SCHOOL IN THE BIGGER RENTED PREMISES. FROM THE DETAILS OF EXPENSES AS LISTED AT PAGE 7 OF THE ORDER OF CIT(A), IT IS SEEN THAT THE EXPENSES ARE WITH RESPECT TO ALTER ATION TO FURNITURE LIKE GLASS FITTINGS, REPAIRS TO LOCKS, MISCELLANEOUS REP AIR WORKS, REPAIRS TO FURNITURE, WATER PROOFING AND OTHER MISCELLANEOUS R EPAIRS ETC. FROM THE NATURE OF EXPENSES IT CANNOT BE SAID THAT THE EXPEN SES HAVE RESULTED IN GETTING ENDURING BENEFIT TO THE ASSESSEE AND APPEAR TO BE OF REVENUE IN NATURE. BEFORE US, THE REVENUE HAS ALSO NOT BROUGHT ANY MATERIAL ON RECORD TO CONTROVERT THE SUBMISSIONS OF THE ASSESSE E. CONSIDERING THE NATURE OF EXPENSES, WE ARE OF THE VIEW THAT THE EXP ENSES ARE REVENUE IN NATURE AND THEREFORE ALLOWABLE UNDER SECTION 37(1) OF THE ACT. WE DIRECT THE A.O TO ALLOW THE EXPENSES. THUS THE GROUND OF A SSESSEE ARE ALLOWED. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN OPEN COURT ON 06 - 06 - 2014. SD/- SD/- (D.K. TYAGI) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD. TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHM EDABAD