Saraspur Nagrik Co.Op.Bank Ltd., Ahmedabad V. The ACIT.,(OSD)Circle-10, Ahmedabad

ITA 2492/AHD/2011

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 5971 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 6 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-05-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 02-05-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 05-10-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRADEEP KUMAR MAJUMDAR
• Assessee Lawyers: S N DIVATIA
• Keywords: Capital asset; Revenue expenditure; Capital expenditure

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD .., , BEFORE SHRI S.S. GODARA, JUDICIAL MEMBER & SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER ./ I.T.A. NO.2492/AHD/2011 ( / ASSESSMENT YEAR : 2008-09) SARASPUR NAGRIK CO-OP.BANK LTD. 1, DARSHAN SOCIETY STADIUM CIRCLE NR.COMMERCE SIX ROADS NAVRANGPURA, AHMEDABAD / VS. THE ACIT (OSD) CIRCLE-10 AHMEDBAD $ ./ ./ PAN/GIR NO. : AANFS 1529 H ( $' / APPELLANT ) .. ( ($' / RESPONDENT ) $') / APPELLANT BY : SHRI S.N. DIVATIA, AR ($'*) / RESPONDENT BY : SHRI PRADEEP KUMAR MAJUMDAR, SR.DR +,*- / DATE OF HEARING 02/05/2017 ./0*- / DATE OF PRONOUNCEMENT 04/ 05/2017 / O R D E R PER PRADIP KUMAR KEDIA, AM: THE CAPTIONED APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-XV I, AHMEDABAD [CIT(A) IN SHORT] DATED 10/08/2011 FOR THE ASSESSMENT YEAR (AY) 2008-09 . ITA NO. 2492/AH D/2011 SARASPUR NAGRIK CO-OP.BANK LTD. VS.ACIT (OSD) ASST.YEAR 2008-09 - 2 - 2. THE EFFECTIVE GROUNDS RAISED BY THE ASSESSEE I N ITS APPEAL IS TOWARDS DISALLOWANCE OF REPAIR EXPENDITURE INCURRED FOR OFFICE REPAIRS. IT IS THE CONTENTION OF THE ASSESSING OFFICER (AO) THA T THE EXPENDITURE INCURRED RS.12,55,512/- FOR REPAIR AND RENOVATION O F ITS ENTIRE BRANCH PREMISES IS IN THE NATURE OF CAPITAL EXPENDITURE AN D THUS NOT ALLOWABLE FOR DEDUCTION IN TERMS OF SECTION 30(10(II) OF THE INCO ME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS 'THE ACT'). 3. IN THE COURSE OF HEARING, THE LD.AR FOR THE ASSE SSEE REFERRED TO THE ASSESSMENT ORDER AND SUBMITTED THAT THE ASSESSEE IS A CO-OPERATIVE BANK AND ENGAGED IN THE BUSINESS OF BANKING. IT WAS POI NTED OUT BY THE LD.AR THAT THE BILLS FOR REPAIRS WERE PRESENTED TO THE AO FROM WHICH IT WAS OBSERVED BY THE AO THAT MAJOR PURCHASES ARE GRANITE SLABS, MARBLE, BRICKS AND CEMENT. APARTMENT FROM THAT, CEILING, SANITARY -WARES, PVC-PIPES PLYWOOD FOR FURNITURE, MAJOR ELECTRICAL WORK ETC. H AVE BEEN CARRIED OUT WHICH ARE IN THE NATURE OF REVENUE EXPENDITURE. TH E LD.AR SUBMITTED THAT THE ENTIRE EXPENDITURE WAS INCURRED TO ENSURE SMOOTH RUNNING OF THE BANK BRANCH IN NEW AGE ENVIRONMENT WHICH IMPLIES TH AT THE EXPENDITURE INCURRED WAS IN THE NATURE OF RENOVATION. THE EXPE NDITURE WAS INCURRED TO PRESERVE AND MAINTAIN AN ALREADY EXISTING ASSET AND THE EXPENDITURE INCURRED HAS NOT BROUGHT ANY NEW ASSET INTO EXISTEN CE AT ALL. THE LD.AR ASSERTED THAT THE EXPENDITURE WAS INCURRED TO MAINT AIN THE OPERATIONAL EFFICIENCY. ALL THE EXPENSES INCURRED ARE IN THE N ATURE OF REPAIR AND RENOVATION WHICH IS REVENUE IN CHARACTER. ITA NO. 2492/AH D/2011 SARASPUR NAGRIK CO-OP.BANK LTD. VS.ACIT (OSD) ASST.YEAR 2008-09 - 3 - 3.1. THE LD.AR RELIED UPON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. TALATHI AND PANTHAKY A SSOCIATED PVT.LTD. (2012) 343 ITR 309 (BOM) TO SUPPORT THE EXPENDITURE CLAIMED. 4. THE LD.DR, ON THE OTHER HAND, RELIED UPON THE OR DER OF THE CIT(A). 5. WE HAVE EXAMINED THE ISSUE CAREFULLY AND PERUSED THE RECORD. THE LIMITED CONTROVERSY IS WHETHER REPAIR EXPENDITURE S O INCURRED BY THE ASSESSEE REPRESENTS CAPITAL EXPENDITURE OR A REVENU E EXPENDITURE. HAVING CONSIDERED THE NATURE OF WORK EXECUTED BY TH E ASSESSEE AS RECORDED IN THE ASSESSMENT ORDER, WE OBSERVE THAT T HE AMOUNT SPENT CANNOT BE SAID TO BE A CAPITAL EXPENDITURE AS MADE OUT BY THE REVENUE. THE EXPENDITURE MIGHT HAVE SECURED SOME ENDURING BE NEFIT TO THE ASSESSEE BECAUSE OF THE RENOVATION AS ALLEGED. HOW EVER, THE TEST OF ENDURING BENEFIT PER SE IS NOT A CERTAIN OR CONCLUSIVE TEST AND CANNOT BE APPLIED BLINDLY AND MECHANICALLY WITH REGARD TO THE PARTICULAR FACTS AND CIRCUMSTANCES OF THE GIVEN CASE. THE ASSESSEE HAS SPENT MONEY ON REPLACEMENT OF FLOORING, PLASTERING, DOORS, PLUMBIN G ETC. SUCH AMOUNT INCURRED IN RENOVATION OF EXISTING LAYOUT CANNOT B E REGARDED AS A CAPITAL EXPENDITURE. IT IS MANIFEST THAT THE EXPENDITURE S O INCURRED BY THE ASSESSEE IS MERELY TOWARDS REFURNISHING AND RENOVAT ION OF THE EXISTING STRUCTURE AND IS NOT IN THE NATURE OF CREATION OF A CAPITAL ASSET. NO STRUCTURAL CHANGES IS SHOWN TO HAVE BEEN MADE BY TH E ASSESSEE WHILE ITA NO. 2492/AH D/2011 SARASPUR NAGRIK CO-OP.BANK LTD. VS.ACIT (OSD) ASST.YEAR 2008-09 - 4 - INCURRING SUCH EXPENDITURE. A REPAIR ORDINARILY IN VOLVES RENEWAL AND RESTORATION OF THE EXISTING WEAR AND TEAR. SUCH EX PENDITURE, IN OUR VIEW, IS IN THE NATURE OF CURRENT REPAIR IN SPITE OF PERC EIVED MAJOR EXPENSES ALLEGED TO HAVE BEEN INCURRED. IN THE AFORESAID R EASON, WE ANSWER THE ISSUE IN FAVOUR OF THE ASSESSEE BY HOLDING THAT THE COST OF REPAIR OR RENOVATION OF THE PREMISES IS IN THE NATURE OF REVE NUE EXPENDITURE AND IS THEREFORE LEGITIMATELY ALLOWABLE DEDUCTION. 6. IN THE RESULT, SUBSTANTIVE GROUND OF THE ASSESSE E IS ALLOWED. OTHER GROUNDS ARE ALTERNATIVE OR GENERAL IN NATURE AND TH EREFORE DO NOT CALL FOR ANY SEPARATE ADJUDICATION. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . THIS ORDER PRONOUNCED IN OPEN COURT ON 04 / 0 5 /201 7 SD/- SD/- (..) ( ) ( S.S. GODARA ) ( PRADIP KUMAR KEDIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 04/ 05 /2017 4..+,.+../ T.C. NAIR, SR. PS ITA NO. 2492/AH D/2011 SARASPUR NAGRIK CO-OP.BANK LTD. VS.ACIT (OSD) ASST.YEAR 2008-09 - 5 - !'#$%$' / COPY OF THE ORDER FORWARDED TO : 1. $' / THE APPELLANT 2. ($' / THE RESPONDENT. 3. 567- 8- / CONCERNED CIT 4. 8- ( ) / THE CIT(A)-XVI, AHMEDABAD 5. 9:-+67 , 670 , 5 / DR, ITAT, AHMEDABAD 6. <, / GUARD FILE. / BY ORDER, (9-- //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION .. 2.5.17 (DICTATION-PAD 9- P AGES ATTACHED AT THE END OF THIS APPEAL-FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 2.5.17 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S.4.5.17 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 4.5.17 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER