ITO 21(2)(2), MUMBAI V. PRITAMLAL J DOSHI, MUMBAI

ITA 2247/MUM/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1029 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-04-2017
• Appeal Filed By: Department
• Bench Allotted: C
• Assessment Year: misc
• Appeal Filed On: 03-04-2014
• Court: TRIBUNAL
• Assessee Lawyers: N JAYCHANDRAN
• Keywords: Sale consideration of property below Jantri Value; Depreciation; Business expenditure; Opportunity of being heard; Question of law; Revenue expenditure; Capital expenditure
• Section: 260A; 133(6); 32; 54; 37

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES C, MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI RAM IT KOCHAR, ACCOUNTANT MEMBER ITA NO.1993/MUM/2014 ASSESSMENT YEAR: 2010-11 LATE PRITAMLAL J. DOSHI THROUGH LEGAL HEIR SHRI TUSHAR DOSHI, M/S NATVARLAL VEPARI & CO. CHARTERED ACCOUNTANTS, ORICON HOUSE, 4 TH FLOOR, 12, K. DUBASH MARG, MUMBAI- 400023 / VS. INCOME TAX OFFICER, WARD-21(2)(2), C-10, 5 TH FLOOR, PRATYAKSHAKAR BHAVAN, BANDRA KURLA COMPLEX, BANDRA (EAST), MUMBAI-400051 ( /ASSESSEE) ( ! / REVENUE) PAN. NO. AIOPD5634M ITA NO.2247/MUM/2014 ASSESSMENT YEAR: 2010-11 INCOME TAX OFFICER, WARD-21(2)(2), C-10, 5 TH FLOOR, PRATYAKSHAKAR BHAVAN, BANDRA KURLA COMPLEX, BANDRA (EAST), MUMBAI-400051 / VS. LATE PRITAMLAL J. DOSHI THROUGH LEGAL HEIR SHRI TUSHAR DOSHI M/S NATVARLAL VEPARI & CO. CHARTERED ACCOUNTANTS, ORICON HOUSE, 4 TH FLOOR, 12, K. DUBASH MARG, MUMBAI- 400023 ( ! / REVENUE) ( /ASSESSEE) PAN. NO. AIOPD5634M PRITAMLAL J. DOSHI ITA NO.1993 & 2247/MUM/2014 2 ! / REVENUE BY SHRI AJIT KUMAR SRIVASTAVA ALONG WITH SHRI RAJAT MITTAL / ASSESSEE BY SHRI N. JAYCHANDRAN ' !# $ % / DATE OF HEARING : 24/04/2017 $ % / DATE OF ORDER: 26/04/2017 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE ASSESSEE AS WELL AS THE REVENUE IS IN CROSS AP PEAL FOR ASSESSMENT YEAR 2010-11 AGAINST THE IMPUGNED OR DER DATED 21/01/2014 OF THE LD. FIRST APPELLATE AUTHORI TY, MUMBAI. IN THE APPEAL OF THE REVENUE (ITA NO.2247/MUM/2014), THE FIRST GROUND PERTAINS TO DEL ETING THE DISALLOWANCE OF RS.12,48,00,000/-, CLAIMED AS D EDUCTION U/S 54 OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT). 2. DURING HEARING, THE LD. CIT-DR, SHRI AJIT KUMAR SRIVASTAVA ALONG WITH SHRI RAJAT MITTAL, LD. DR, PL ACED RELIANCE UPON THE ASSESSMENT ORDER BY DEFENDING THE ADDITION MADE BY THE LD. ASSESSING OFFICER. ON THE OTHER HAN D, SHRI N. JAYENDRAN, LD. COUNSEL FOR THE ASSESSEE DEFENDED THE IMPUGNED ORDER BY PLACING RELIANCE UPON THE DECISIO N IN CIT VS MRS. HILLA J.B. WADIA, (1995) 216 ITR 376 (BOM.) , CIT VS SMT. BHARTI C. KOTHARI (2000) 244 ITR 352 (KOL.), C IT VS R.L. SUD (2000) 245 ITR 727 (DEL.). OUR ATTENTION WAS A LSO INVITED TO THE AGREEMENT DATED 29/10/2009 FOR THE P URCHASE OF THE RESIDENTIAL FLAT (PAGES 50 TO 64 OF THE PAPE R BOOK) AND DEVELOPERS CONFIRMATION ALONG WITH RECEIPT OF PAYME NTS PRITAMLAL J. DOSHI ITA NO.1993 & 2247/MUM/2014 3 RECEIVED AGAINST THE PURCHASE OF FLAT (PAGE 65 TO 6 8 OF THE PAPER BOOK). THE CRUX OF THE ARGUMENT IS IN SUPPORT TO THE IMPUGNED ORDER. 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS , IN BRIEF, ARE THAT THE ASSESSEE CLAIMED EXEMPTION U/S 54 OF T HE ACT TO THE EXTENT OF RS.12.48 CRORES. THE LD. ASSESSING O FFICER SOUGHT DETAILS OF THE PURCHASING OF NEW PROPERTY, W HICH WERE FILED VIDE LETTER DATED 29/10/2009. THE LD. ASSESSI NG OFFICER WAS OF THE VIEW THAT THE LETTER WAS NOT AN AGREEMEN T FOR PURCHASE OF THE PROPERTY AND WAS MERELY LETTER OF E XPRESSING THE DESIRE TO PURCHASE THE HOUSE. THE LD. ASSESSING OFFICER ASKED THE ASSESSEE TO PRODUCE THE REGISTERED PURCHA SE AGREEMENT TO WHICH THE ASSESSEE FILED THE REGISTERE D AGREEMENT DATED 27/03/2012 FOR PURCHASE OF NEW PROP ERTY ENTERED BETWEEN THE ASSESSEE AND M/S GENEXT HARDWAR E & PARTS PVT. LTD. AND M/S CAPRICON REALITY LTD. THE L D. ASSESSING OFFICER WAS OF THE VIEW THAT THE PURCHASE AGREEMENT BETWEEN THE ASSESSEE AND THE SELLER WAS D ATED 27/03/2012, WHICH IS BEYOND TWO YEARS FROM THE DATE OF SALE OF THE ORIGINAL ASSET, BEING 21/09/2009. HE CONCLUD ED THAT THE ASSESSEE DID NOT PURCHASE THE PROPERTY WITHIN T WO YEARS, THEREFORE, CLAIMED DEDUCTION U/S 54 OF THE ACT WAS NOT AVAILABLE TO THE ASSESSEE. THE LD. ASSESSING OFFICE R ALSO DISALLOWED THE CLAIMED OF STAMP DUTY CHARGES PAID O N THE PURCHASE OF NEW PROPERTY OBSERVING THAT THE SAME CA NNOT BE PRITAMLAL J. DOSHI ITA NO.1993 & 2247/MUM/2014 4 CATEGORIZED AS WHOLLY AND EXCLUSIVELY INCURRED FOR THE SALE OF ORIGINAL PROPERTY. 2.2. THE AGGRIEVED ASSESSEE CARRIED THE MATTER BEF ORE THE FIRST APPELLATE AUTHORITY, WHEREIN, THE FACTUAL MAT RIX WAS CONSIDERED. CERTAIN CASES WERE RELIED UPON AS MENT IONED AT PAGE-8 OF THE IMPUGNED ORDER AND FINALLY THE ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE, DIRECTING THE AS SESSING OFFICER TO ALLOW THE CLAIMED DEDUCTION U/S 54 OF TH E ACT. THE REVENUE IS AGGRIEVED AND IS IN APPEAL BEFORE THIS T RIBUNAL. 2.3. IF THE OBSERVATION MADE IN THE ASSESSMENT ORD ER, LEADING TO ADDITION MADE TO THE TOTAL INCOME, CONCL USION DRAWN IN THE IMPUGNED ORDER, MATERIAL AVAILABLE ON RECORD, ASSERTIONS MADE BY THE LD. RESPECTIVE COUNSEL, IF K EPT IN JUXTAPOSITION AND ANALYZED, WE FIND THAT THE ENTIRE COST OF PURCHASE OF RS.12.48 CRORES WAS PAID BY THE ASSESSE E WITHIN A PERIOD OF THREE MONTH FROM THE DATE OF SALE OF OL D ASSET, THEREFORE, WE FIND MERIT IN THE CONTENTION OF THE A SSESSEE. THE DECISION IN CIT VS R.L. SOOD, (SUPRA), SHASHI VERMA VS CIT (224 ITR 106) (MP) ALONG WITH THE CASES CITED BEFOR E US AND ALSO MENTIONED IN THE IMPUGNED ORDER, SUPPORTS THE CASE OF THE ASSESSEE. THE ASSESSEE FINALLY GOT THE NEW ASSE T REGISTERED ON 27/03/2012, WHICH WAS WITHIN A PERIOD OF THREE YEARS FROM THE DATE OF SALE OF ORIGINAL ASSET . THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CI T VS MRS. HILLA J.B. WADIA, (1995) 216 ITR 376 (BOM.) HELD TH AT FOR CLAIMING EXEMPTION U/S 54 OF THE ACT, IF THERE IS S UBSTANTIAL PRITAMLAL J. DOSHI ITA NO.1993 & 2247/MUM/2014 5 INVESTMENT IN THE NEW PROPERTY AND DOMAIN OVER IT W ITHIN THE PRESCRIBED PERIOD, THE PROPERTY USED AS A RESIDENCE , THE ASSESSEE IS ENTITLED TO EXEMPTION U/S 54 OF THE ACT . THE HON'BLE HIGH COURT ALSO CONSIDERED CBDT CIRCULAR NO .471 DATED 15/10/1986. WHILE COMING TO THIS CONCLUSION, THE HON'BLE COURT DULY CONSIDERED THE DECISION IN CI T VS MRS. SEHJADA BEGUM 173 ITR 397 (AP), CIT VS SUBRAMANIYA BHATT 165 ITR 571 (KARN.), SHANTA BEN P. GANDHI VS CIT129 ITR 218 (GUJ.). IN THE LIGHT OF THE FOREGOING DISCUSSIO N, FACTS ON RECORD, AND THE JUDICIAL PRONOUNCEMENTS, WE FIND NO INFIRMITY IN THE CONCLUSION OF THE LD. COMMISSIONER OF INCOME TAX (APPEAL), THEREFORE, THIS GROUND OF THE REVENUE IS DISMISSED. 3. THE NEXT GROUND PERTAINS TO DELETING THE DISALLOWANCE OF BROKERAGE PAID OF RS.13,76,544/-. T HE ARGUMENT ADVANCED BY THE LD. CIT-DR IS THAT THE ASS ESSEE COULD NOT SATISFACTORILY PROVE THE SERVICES WERE RE NDERED BY THE BROKER. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSESSEE, DEFENDED THE CONCLUSION ARRIVED AT IN THE IMPUGNED ORDER BY CONTENDING THAT NECESSARY DETAILS WERE FIL ED BY THE ASSESSEE. 3.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND T HAT THE ASSESSEE CLAIMED RS.13,76,544/- PAID AS BROKERAGE A S COST OF THE NEW ASSET. THE LD. ASSESSING OFFICER ISSUED NOT ICES U/S 133(6) TO M/S HOMEBAY RESIDENTIAL PVT. LTD. WHO SUB MITTED THE COPIES OF INVOICE AND CONFIRMED THE RECEIPT OF BROKERAGE. PRITAMLAL J. DOSHI ITA NO.1993 & 2247/MUM/2014 6 THE PAYMENTS WERE MADE THROUGH ACCOUNT PAYEE CHEQUE BY THE ASSESSEE, THEREFORE, WE FIND NO INFIRMITY IN TH E CONCLUSION OF THE LD. COMMISSIONER OF INCOME TAX (APPEAL), THU S, THIS GROUND OF THE REVENUE IS ALSO DISMISSED. 4. NOW, WE SHALL TAKE UP THE APPEAL OF THE ASSESSE E IN ITA NO.1993/MUM/2014, WHEREIN, THE ONLY GROUND RAIS ED BY THE ASSESSEE PERTAINS TO UPHOLDING THE ASSESSMENT O RDER IN NOT DEDUCTION FROM THE FULL VALUE OF SALE CONSIDERA TION THE INDEXED COST OF IMPROVEMENT OF THE FLAT FOR A SUM O F RS.38,37,169/-. THE LD. COUNSEL FOR THE ASSESSEE I NVITED OUR ATTENTION TO PAGE 30 AND 31 OF THE PAPER BOOK, CONT AINING THE DETAILS OF EXPENSES. THE LD. DR INVITED OUR ATTENTI ON TO PAGE- 14 OF THE IMPUGNED ORDER. 4.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS , IN BRIEF, ARE THAT THE LD. ASSESSING OFFICER NOTED THAT THE A SSESSEE DEDUCTED RS.38,37,169/- ON ACCOUNT OF INDEXED COST OF IMPROVEMENT OF THE ORIGINAL ASSET. THE LD. ASSESSIN G OFFICER, FROM THE DETAILS, FILED BY THE ASSESSEE, OBSERVED T HAT THE COST OF IMPROVEMENT ARE IN THE NATURE OF REPAIRS AND MAI NTENANCE SUCH AS INSTALLATION OF AIR-CONDITIONER, CURTAINS, LINING MATERIAL, CARPENTARY WORK, POLISH WORK, PAINTING WO RKS, WINDOWS, ELECTRICAL WORK, CIVIL AND PLUMBING WORK, ETC. THE ASSESSEE PLACED RELIANCE UPON THE DECISION IN CIT V S RAMASWAMY MUDALIYAR (196 ITR 939). THE LD. ASSESSIN G OFFICER OBSERVED THAT THE ASSESSEE SOLD THE PROPERT Y AFTER PRITAMLAL J. DOSHI ITA NO.1993 & 2247/MUM/2014 7 ALMOST THREE YEARS OF HAVING INCURRING THE SAID EXP ENDITURE, THEREFORE, HE REJECTED THE CLAIM OF DEDUCTION. ON APPEAL BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEAL) DECIDED AGAINST THE ASSESSEE. THE ASSESSEE IS IN APPEAL BEF ORE THIS TRIBUNAL. 4.2. IF THE OBSERVATION MADE IN THE ASSESSMENT ORD ER, LEADING TO ADDITION MADE TO THE TOTAL INCOME, CONCL USION DRAWN IN THE IMPUGNED ORDER, MATERIAL AVAILABLE ON RECORD, ASSERTIONS MADE BY THE LD. RESPECTIVE COUNSEL, IF K EPT IN JUXTAPOSITION AND ANALYZED, WE FIND THAT THE HON'BL E JURISDICTIONAL HIGH COURT ON THE ISSUE IN HAND IN T HE CASE OF RPG ENTERPRISES LTD. VS DCIT (2016) 138 DTR 0049 (B OM) : (2016) 386 ITR 0401 (BOM) : (2016) 240 TAXMAN 0614 (BOMBAY), VIDE ORDER DATED 29/06/2016 MADE AN ELABO RATE DISCUSSION AND HELD AS UNDER:- 1. THIS APPEAL UNDER SECTION 260A OF THE INCOME TA X ACT, 1961 (THE ACT) CHALLENGES THE ORDER DATED 18TH APRIL, 2001 OF THE INCOME TAX APPELLATE TRIBUNAL (TRIBUNAL). THE IMPUGNED ORDER DATED 18 AP RIL 2001 RELATES TO A.Y. 1996-97. 2. ON 30 JULY 2004 THIS APPEAL WAS ADMITTED ON THE FOLLOWING SUBSTANTIAL QUESTION OF LAW: 'WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW, INCOME TAX APPELLATE TRIBUNAL WAS CORRECT IN HOLDIN G THAT THE EXPENDITURE TO THE EXTENT OF 75% OF RS. 31,32,841/- WAS CAPITAL IN NATURE?' 3. BRIEF FACTS LEADING TO THIS APPEAL ARE AS UNDER : (A) SINCE THE YEAR 1995, THE APPELLANT WAS IN OCCUP ATION AS A TENANT OF 7TH FLOOR OF CEAT MAHAL, WORLI, MUMBAI (SAID PREMIS ES). THE APPELLANT WAS PAYING A MONTHLY RENT OF RS. 73,530/-. IN THE A.Y. 1996-97, THE APPELLANT FILED ITS RETURN OF INCOME DECLARING AN INCOME OF R S. 17.46 LAKHS. THE APPELLANT HAD DEBITED A SUM OF RS. 47.63 LAKHS TO T HE PROFIT AND LOSS ACCOUNT UNDER THE HEAD 'REPAIRS AND MAINTENANCE' WH ILE DETERMINING ITS INCOME. OUT OF THE AFORESAID AMOUNT OF RS. 47.63 LA KHS AS EXPENDITURE, PRITAMLAL J. DOSHI ITA NO.1993 & 2247/MUM/2014 8 AN AMOUNT OF RS. 31.32 LAKHS RELATED TO THE SAID PR EMISES. THE ASSESSING OFFICER ON EXAMINATION OF THE NATURE OF EXPENSES FO UND THAT THE SAME WERE SUBSTANTIALLY CAPITAL IN NATURE I.E. RENOVATIN G THE SAID PREMISES BY DOING CIVIL WORK. HOWEVER, SOME PART OF ITS EXPENDI TURE WERE FOUND TO BE REVENUE IN NATURE, EXAMPLE PLASTERING. THEREFORE, T HE ASSESSING OFFICER ATTRIBUTED 75% OF THE EXPENDITURE CLAIMED AS CAPITA L AND 25% AS REVENUE I.E. RS. 23.49 LAKHS (CAPITAL EXPENDITURE) AND RS. 7.83 LAKHS (REVENUE EXPENDITURE) AGGREGATING TO RS. 31.32 LAKHS. THE AS SESSING OFFICER ALLOWED 10% DEPRECIATION I.E. RS. 2.34 LAKHS ON THE CAPITAL EXPENDITURE OF RS. 23.49 LAKHS UNDER SECTION 32 OF THE ACT AND AN FURTHER AMOUNT OF RS. 7.83 LAKHS AS REVENUE EXPENDITURE. THE AFORESAID EX ERCISE RESULTED IN THE ASSESSING OFFICER PASSING AN ORDER DATED 18TH JULY 1999 DETERMINING THE APPELLANT'S INCOME AT RS. 41.25 LAKHS. (B) BEING AGGRIEVED, THE APPELLANT CARRIED THE ISSU E OF REPAIRS AND MAINTENANCE, IN APPEAL TO THE COMMISSIONER OF INCOM E TAX (APPEAL) [CIT (A)]. ON CONSIDERATION OF THE NATURE OF EXPENDITURE INCURRED BY THE APPELLANT, THE CIT (A) HELD THAT SUBSTANTIAL EXPENS ES INCURRED ON THE SAID PREMISES WAS ON ACCOUNT OF MAJOR STRUCTURAL RENOVAT ION. THUS, CAPITAL IN NATURE. THEREFORE THE CIT (A) BY ORDER DATED 24TH F EBRUARY 2000 UPHELD THE ASSESSMENT ORDER DATED 18TH JULY 2004 OF THE AS SESSING OFFICER DISALLOWING THE CLAIM OF RS. 23.49 LAKHS AS REVENUE EXPENDITURE. (C) BEING AGGRIEVED, THE APPELLANT CARRIED THE ISSU E OF NATURE OF EXPENDITURE IN APPEAL TO THE TRIBUNAL. THE IMPUGNED ORDER OF THE TRIBUNAL ON FACTS FOUND THAT SUBSTANTIALLY, THE EXPENDITURE ON RENOVATION GIVES A BENEFIT OR ADVANTAGE OF ENDURING NATURE. THEREFORE SUBSTANTIALLY ON CAPITAL ACCOUNT QUALIFYING FOR DEPRECIATION IN TERMS OF EXP LANATION-I TO SECTION 32 OF THE ACT. IN THE CIRCUMSTANCES, IT UPHELD THE ORD ER OF THE CIT (A), HOLDING THAT THE EXPENDITURE TO THE EXTENT OF RS. 23.49 LAK HS OUT OF RS. 31.32 LAKHS IS ON CAPITAL ACCOUNT AND CANNOT BE ALLOWED AS REVE NUE EXPENDITURE. 4. BEING AGGRIEVED, THE APPELLANT IS IN APPEAL AND THE APPEAL HAS BEEN ADMITTED ON THE ABOVE QUESTION OF LAW. MR. JHAVERI, LEARNED COUNSEL APPEARING FOR THE APPELLANT IN SUPPORT SUBMITS AS U NDER :- (A) THE EXPENDITURE OF RS. 31.32 LAKHS CLAIMED ON A CCOUNT OF REPAIRS AND MAINTENANCE OF THE SAID PREMISES IS ALLOWABLE AS RE VENUE EXPENDITURE. THIS IS NO LONGER RES INTEGRA IN VIEW OF THE DECISI ONS OF THIS COURT IN CIT V. TALATHI AND PANTHAKY ASSOCIATED (P.) LTD. [2012] 34 3 ITR 309/205 TAXMAN 309/18 TAXMANN.COM 367 (BOM.) AND CIT V. HED E CONSULTANCY (P.) LTD. [2002] 258 ITR 380/[2003] 127 TAXMAN 597 (BOM.). IN THE ABOVE CASES, IT IS SUBMITTED THAT ON AN IDENTICAL FACTUAL SITUATION THE EXPENDITURE ON RENOVATION OF TENANTED PREMISES HAS BEEN ALLOWED AS REVENUE EXPENDITURE UNDER SECTION 37 OF THE ACT; (B) THE EXPENDITURE OF RS. 31.32 LAKHS INCURRED ON RENOVATION OF THE SAID PREMISES BEING REPAIRS IS ALLOWABLE UNDER SECTION 3 0 OF THE ACT; AND (C) IN ANY CASE THERE IS NO BASIS INDICATED FOR APP ORTIONING THE EXPENDITURE IN THE RATIO OF 75% AND 25% BETWEEN CAPITAL AND REV ENUE ACCOUNT. THEREFORE, THE FINDING OF THE AUTHORITIES IS NOT SU STAINABLE; PRITAMLAL J. DOSHI ITA NO.1993 & 2247/MUM/2014 9 5. WE FIND THAT THE APPELLANT WAS A TENANT OF THE S AID PREMISES. IT WAS PAYING MONTHLY RENT OF RS. 73,530/- FROM APRIL, 199 5 ONWARDS UNDER THE AGREEMENT DATED 15TH FEBRUARY, 1995. FURTHER THE AG REEMENT PROVIDED THAT THE COST OF REPAIRS AND RENOVATION I.E. CIVIL, ELECTRICAL, PLUMBING, POLISHING ETC. WOULD BE CARRIED OUT BY THE APPELLAN T AT ITS OWN EXPENSES AFTER TAKING PRIOR PERMISSION FROM THE LANDLORD. AL L THE AUTHORITIES UNDER THE ACT HAVE RENDERED A FINDING OF FACT THAT THE SO CALLED 'REPAIRS AND MAINTENANCE' WERE IN FACT EXTENSIVE RENOVATION INVO LVING CIVIL WORK. THIS EXPENSE RESULTED IN AN ADVANTAGE/BENEFIT OF A ENDUR ING NATURE IN AS MUCH AS IT INTER ALIA RESULTED IN THE APPELLANT BEING AB LE TO ACCOMMODATE MORE NUMBER OF EMPLOYEES AND FACILITATE IMPROVING ITS TR ADING OPERATIONS. THUS THE BENEFIT OBTAINED BY THE APPELLANT, ACCORDING TO THE AUTHORITIES WAS SUBSTANTIALLY IN THE CAPITAL FIELD AND COULD NOT BE ENTIRELY ALLOWED AS REVENUE EXPENDITURE. THE SUBMISSION ON BEHALF OF TH E APPELLANT, BEFORE US, THAT AS THE APPELLANT DOES NOT OWN THE PREMISES THE EXPENDITURE INCURRED ON RENOVATION GOES TO THE BENEFIT OF THE O WNER OF THE SAID PREMISES, THEREFORE IN THE HANDS OF THE TENANT IT C AN ONLY BE REVENUE EXPENDITURE IS MORE THEN MET BY THE IMPUGNED ORDER OF THE TRIBUNAL. THIS IN VIEW OF THE FACT THAT THE IMPUGNED ORDER PLACES RELIANCE UPON EXPLANATION-I TO SECTION 32 OF THE ACT, WHICH ALLOW S DEPRECIATION TO A TENANT IN CASE OF ANY CAPITAL EXPENDITURE INCURRED FOR RENOVATION/IMPROVEMENT TO THE BUILDING IN THE HANDS OF THE TENANT BY DEEMING THE TENANT TO BE THE OWNER OF THE PREMISES. IN THIS CASE THE BENEFIT OF DEPRECIATION HAS BEEN GIVEN TO THE APPEL LANT ON THE CAPITAL EXPENDITURE INCURRED FOR RENOVATION. 6. MR. JHAVERI, LEARNED COUNSEL FOR THE APPELLANT-A SSESSEE THEN SUBMITS THAT ON AN IDENTICAL FACT SITUATION EXPENDITURE INC URRED BY TENANT HAS BEEN ALLOWED AS REVENUE EXPENDITURE BY THIS COURT. THERE FORE IT IS SUBMITTED THAT THE ENTIRE ISSUE IS NO LONGER OPEN TO DEBATE A S IT STANDS CONCLUDED IN FAVOUR OF THE APPELLANT BY THE DECISIONS OF THIS CO URT IN TALATHI & PANTHAKI ASSOCIATES (P.) LTD. (SUPRA) AND HEDE CONSULTANCY ( P.) LTD. (SUPRA). IN TALATHI & PANTHAKI ASSOCIATES (P.) LTD. (SUPRA) THE TENANT OF THE PREMISES HAD CONTRIBUTED A SUM OF RS. 1.50 CRORES TO THE WOR K OF REPAIRS AND RESTORATION/RECONSTRUCTION OF THE BUILDING IN WHICH IT WAS A TENANT. THE ENTIRE AMOUNT OF RS. 1.50 CRORES WAS CLAIMED AS REV ENUE EXPENDITURE. THE ASSESSEE THEREIN HAD ENTERED INTO AN AGREEMENT WITH THE DEVELOPER TO CONTRIBUTE RS. 1.50CRORES FOR THE RECONSTRUCTION /REPAIRS/RESTORATION OF THE BUILDING IN CONSIDERATION OF THERE BEING NO INC REASE IN THE RENT PAYABLE BY THE ASSESSEE IN THE NEW STRUCTURE TO THAT BEING PAID IN THE OLD STRUCTURE. IT WAS IN THE AFORESAID FACTS THAT IT WA S HELD THAT WHERE A LUMP- SUM PAYMENT OF RS. 1.50 CRORES GETS RID OF ANNUAL B USINESS EXPENSES CHARGEABLE AGAINST REVENUE THEN THE LUMPSUM IS TO B E REGARDED AS A REVENUE/BUSINESS EXPENDITURE. THE BENEFIT OBTAINED BY THE ASSESSEE IN THE ABOVE CASE WAS PREMISES AT A LOWER RENT IN VIEW OF THE CONTRIBUTION MADE TO THE DEVELOPER FOR REPAIRING/RECONSTRUCTING THE PREMISES. THUS, THE EXPENDITURE WAS IN THE REVENUE FIELD AND ALLOWABLE UNDER SECTION 37 OF THE ACT. IN THE PRESENT FACTS, NOTHING IS ON RECORD TO INDICATE THAT THERE WAS ANY ADVANTAGE SECURED BY THE APPELLANT IN THE R EVENUE FIELD. THERE WAS NO DECREASE IN THE RENT NOR WAS THERE ANY EMBAR GO ON FUTURE INCREASE IN THE RENT IN CONSIDERATION OF THE EXPEND ITURE FOR RENOVATION. THEREFORE, THE ABOVE DECISION WOULD NOT APPLY TO TH E FACTS OF THE PRESENT CASE. PRITAMLAL J. DOSHI ITA NO.1993 & 2247/MUM/2014 10 7. SIMILARLY, THE DECISION OF THIS COURT IN HEDE CO NSULTANCY (P.) LTD. (SUPRA) UPON WHICH ALSO RELIANCE IS PLACED UPON ALS O DEALT WITH THE SITUATION WHERE THE AMOUNT EXPENDED FOR INTERIOR DE CORATION AND RENOVATING OF A GODOWN PREMISES SO AS TO BE CONVERT ED INTO AN OFFICE PREMISES WAS ALLOWED AS A REVENUE EXPENDITURE, WILL NOT APPLY TO THE PRESENT FACTS. THIS IS BECAUSE IN THAT CASE THE TEN ANT GOT THE BENEFIT OF LOWER RENT IN VIEW OF THE EXPENDITURE INCURRED ON R ENOVATION. IT WAS IN THAT CONTEXT THAT THIS COURT UPHELD THE VIEW OF THE TRIB UNAL THAT THE EXPENDITURE FOR REPAIRS AND RENOVATION WAS IN THE REVENUE FIELD . AS POINTED OUT ABOVE, IN THE PRESENT CASE, THERE IS NOTHING ON RECORD TO INDICATE THAT ANY BENEFIT WAS OBTAINED BY THE ASSESSEE IN THE REVENUE FIELD F OR HAVING EXPENDED THE AMOUNT OF RS. 31.32 LAKHS FOR REPAIRS/RENOVATIO N OF THE OFFICE PREMISES. THUS, THE AFORESAID DECISIONS WOULD HAVE NO APPLICATION TO THE FACTS OF THE PRESENT CASE. 8. IT WAS NEXT CONTENDED THERE IS NO BASIS INDICATE D BY THE AUTHORITIES UNDER THE ACT FOR APPORTIONING THE EXPENDITURE IN T HE RATIO OF 75% AND 25% BETWEEN CAPITAL AND REVENUE ACCOUNT BY THE REVE NUE. WE FIND THAT THE AUTHORITIES ON FACTS FOUND THAT SOME OF THE EXP ENDITURE INCURRED OUT OF RS. 31.32 LAKHS WAS INCURRED FOR MAINTENANCE SUCH A S PLASTERING ETC. THIS ALLOWING OF 25% WAS ON THE BASIS OF AN ESTIMATE. NO THING HAS BEEN SHOWN TO US THAT THE ESTIMATION BY THE AUTHORITIES ON THE BASIS OF FACTS FOUND WAS IN ANY WAY ARBITRARY OR PERVERSE. THUS WE FIND NO M ERIT IN THE ABOVE SUBMISSION. 9. IN THE VIEW TAKEN BY US THAT THE EXPENDITURE OF 75% OF RS. 31.32 LACS I.E. RS. 23.49 LAKHS IS ON CAPITAL ACCOUNT, THE SUB MISSION TO CLAIM DEDUCTION ON ACCOUNT OF SECTION 30 OF THE ACT MADE BY THE APPELLANT NEED NOT BE EXAMINED. NOR THE DECISION OF THE DELHI HIGH COURT IN CIT V. HI LINE PENS (P.) LTD. [2008] 306 ITR 182/175 TAXMAN 1 32 (DELHI) RELIED UPON FOR INTERPRETATION OF SECTION 30 OF THE ACT NE ED BE EXAMINED. THIS FOR THE REASON THAT THE EXPLANATION TO SECTION 30 OF TH E ACT ITSELF PROVIDES THAT THE AMOUNT PAID ON THE COST OF REPAIRS WOULD NOT IN CLUDE ANY EXPENDITURE WHICH IS IN THE NATURE OF CAPITAL EXPENDITURE. ALTH OUGH THIS EXPLANATION TO SECTION 30 OF THE ACT WAS INTRODUCED IN 2004 W.E.F. 1ST APRIL, 2004, THE EXPLANATION ITSELF CLARIFIES THAT IT HAS BEEN INTRO DUCED FOR REMOVAL OF DOUBTS. THEREFORE, IT WOULD BE APPLICABLE EVEN FOR THE PERIOD PRIOR 1ST APRIL, 2004 INCLUDING THE SUBJECT ASSESSMENT YEAR. IT IS FOR THE ABOVE REASON THE LEARNED COUNSEL FOR THE APPELLANT VERY F AIRLY DID NOT EVEN ATTEMPT TO SUGGEST THAT DEDUCTION UNDER SECTION 30 OF THE ACT WOULD BE AVAILABLE EVEN IN RESPECT OF CAPITAL EXPENDITURE. 10. IN THE ABOVE VIEW, THE CONCURRENT FINDING OF FA CT BY THE AUTHORITIES UNDER THE ACT THAT THE EXPENDITURE INCURRED CLAIMIN G TO BE THE REPAIRS AND MAINTENANCE WAS IN FACT ON ACCOUNT OF RENOVATION OF THE PREMISES, LEADING TO ENDURING BENEFIT TO THE APPELLANT ASSESSEE IN AS MUCH AS IT ENABLED THE APPELLANT TO ACCOMMODATE LARGER NUMBER OF EMPLOYEES AND ALSO FACILITATE ITS TRADING OPERATIONS. THIS BENEFIT WOULD BE AVAIL ABLE TO IT FOR A LONG PERIOD OF TIME AND THUS, WAS CAPITAL IN NATURE. IT WAS IN THE ABOVE VIEW THAT THE TRIBUNAL GRANTED THE BENEFIT OF DEPRECIATI ON TO THE EXTENT THE CLAIM AS REVENUE EXPENDITURE WAS DISALLOWED. PRITAMLAL J. DOSHI ITA NO.1993 & 2247/MUM/2014 11 11. IN THE ABOVE VIEW, WE FIND THAT THE VIEW TAKEN BY THE AUTHORITIES UNDER THE ACT INCLUDING THE TRIBUNAL, CANNOT BE FAULTED A S THE APPELLANT HAS FAILED TO ESTABLISH THAT THE EXPENDITURE OF RS. 31. 32 LAKHS CLAIMED AS 'REPAIRS AND MAINTENANCE' WAS IN THE REVENUE FIELD. IN THE ABOVE VIEW, THE SUBSTANTIAL QUESTION OF LAW AS FRAMED HEREINABO VE IN PARAGRAPH 2 IS ANSWERED IN THE AFFIRMATIVE I.E. IN FAVOUR OF THE R ESPONDENT REVENUE AND AGAINST THE APPELLANT ASSESSEE. 12. THE APPEAL IS DISPOSED OF IN THE ABOVE TERMS. THE ASSESSEE IS DIRECTED TO PRODUCE THE NECESSARY EVIDENCE IN SUPPORT OF HIS CLAIM. IN THE LIGHT OF T HE ABOVE ORDER FROM HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF RPG ENTERPRISES LTD., THE LD. ASSESSING OFFICER IS DIRECTED TO EXAMINE THE CLAIM OF THE ASSESSEE AND AFTER CONSIDE RING THE FACTUAL MATRIX DECIDED IN ACCORDANCE WITH LAW. THE ASSESSEE BE GIVEN OPPORTUNITY OF BEING HEARD, THUS, THIS GRO UND OF THE ASSESSEE IS REMANDED BACK TO THE FILE OF THE ASSESS ING OFFICER AND THUS ALLOWED FOR STATISTICAL PURPOSES. FINALLY, THE APPEAL OF THE REVENUE IS DISMISSED AN D THAT OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES . THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 24/04/17. SD/- SD/- ( RAMIT KOCHAR ) (JOGINDER SINGH) # / ACCOUNTANT MEMBER $# / JUDICIAL MEMBER ' # MUMBAI; ' DATED : 26/04/2017 F{X~{T? P.S/. .. %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. )*+, / THE APPELLANT 2. -.+, / THE RESPONDENT. PRITAMLAL J. DOSHI ITA NO.1993 & 2247/MUM/2014 12 3. ' 0 ( )* ) / THE CIT, MUMBAI. 4. ' 0 / CIT(A)- , MUMBAI 5. 2!3 - , )*% ) 4 , ' # / DR, ITAT, MUMBAI 6. 5 6# / GUARD FILE. / BY ORDER, .2* - //TRUE COPY// / (DY./ASSTT. REGISTRAR) , ' # / ITAT, MUMBAI