THE DY.C.I.T.-10(2), MUMBAI V. M/S. BANNER PHARMA CAPS PVT.LTD., MUMBAI

ITA 2599/MUM/2009

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2389 (ITAT-MUMBAI)
• Duration Of Justice: 7 year(s) 2 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-07-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 24-02-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 23-04-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NEIL PHILIP
• Assessee Lawyers: MANISH V SHAH

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUM BAI BEFORE SHRI R.C. SHARMA, AM AND SHRI SANDEEP GOSAIN , JM ./ I.T.A. NO.2599/MUM/2009 ( / ASSESSMENT YEAR: 2005-06) THE DY. COMMISSIONER OF INCOME-TAX- 10(2), ROOM NO.432, 4 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI-400 020. / VS. M/S. BANNER PHARMA CAPS PVT. LTD. CAPSULATION PREMISES, SION TROMBAY ROAD, DEONAR, MUMBAI-400 088. ./ ./PAN/GIR NO. AAACH 1173N ( /APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI NEIL PHILIP / RESPONDENT BY : SHRI MANISH V. SHAH / DATE OF HEARING : 11/07/2016 !'# / DATE OF PRONOUNCEMENT : 22/07/2016 $% / O R D E R PER R.C. SHARMA, A. M.: THIS IS AN APPEAL BY THE REVENUE DIRECTED AGAINST T HE ORDER BY THE COMMISSIONER OF INCOME TAX (APPEALS)- VI, MUMBAI ( CIT(A) FOR SHORT) DATED 04.03.2009 FOR THE ASSESSMENT YEAR (A.Y.) 2005-06, ON THE FOLLOWING GROUNDS:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW, THE LEARNED CIT(A) HAS ERRED IN HOLDING THAT THE EXPENSES OF RS .1.60 CRORES INCURRED ON REPAIRS ARE ALLOWABLE AS DEDUCTION U/S 30 OF THE I. T. ACT WITHOUT APPRECIATING THE FACT THAT THE REPAIRS WERE NOT THE CURRENT REPAIRS. 2 ITA NO. 2599/MUM/2009 (A.Y. 2005-06) DY. CIT V S. M/S. BANNER PHARMA CAPS PVT. LTD. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW, THE LEARNED CIT(A) HAS ERRED IN NOT APPRECIATING THAT THE ISSUE INVOLVED IN THE MATTER WAS WHETHER THE REPAIRS WERE IN THE NATURE OF CURR ENT REPAIRS OR OTHERWISE. 2. IN THIS APPEAL REVENUE IS AGGRIEVED FOR DELETIN G THE DISALLOWANCE OF RS.1,06,25,008/- MADE BY AO OUT OF CURRENT REPAIRS BY TREATING THE SAME AS CAPITAL IN NATURE. 3. WE HAVE CONSIDERED RIVAL CONTENTIONS AND GONE TH ROUGH ORDERS OF AUTHORITIES BELOW. IN THE ASSESSMENT ORDER, THE A.O. HAS NOTED THAT THE ASSESSEE HAS CONSTRUCTED WAREHOUSE AND UNDERTAKEN REPAIRS WHICH IS ACTUALLY RE-CONSTRUCTION, MAKING HEAVY ADDITIONS ON ALREADY EXISTING BUILDING . HENCE, ACCORDING TO THE AO, THE REPAIRS ARE NOT CURRENT REPAIRS BUT THEY AMOUNT TO IMPROVEMENT OR ADDITION THEREOF, THEREFORE NOT ALLOWABLE AS REVENUE EXPENSE S. 4. BY THE IMPUGNED ORDER CIT(A) DELETED THE DISALLO WANCE AFTER RECORDING FOLLOWING FINDINGS: I FIND THAT THESE REPAIRS ARE NOT CAPITAL IN NATURE NOT ONLY REPLACEMENT OF OLD WORN OUT PARTS. NO NEW ASSET HAS BEEN ACQUIRED BY THE ASSESSEE. THE ASSETS WHICH HAVE BEEN ACQUIRED HAS BEEN CAPITALIZE D BY THE ASSESSEE. HENCE, NO EXPENDITURE CAN BE DISALLOWED ON THIS GRO UND. RELIANCE IS PLACED ON THE DECISION OF BOMBAY HIGH COURT IN THE CASE OF CIT VS. OXFORD 3 ITA NO. 2599/MUM/2009 (A.Y. 2005-06) DY. CIT V S. M/S. BANNER PHARMA CAPS PVT. LTD. UNIVERSITY PRESS (108 ITR 166). THE A.O. IS DIRECTE D TO DELETE THIS ADDITION. THIS GROUND OF APPEAL IF ALLOWED. 5. WE HAVE CONSIDERED RIVAL CONTENTIONS AND FOUND F ROM RECORD THAT THE ASSESSEE HAS CONSTRUCTED A WARE HOUSE AND ALSO INCU RRED EXPENSES ON REPAIRS AND MAINTENANCE. HOWEVER, OUT OF TOTAL EXPENDITURE OF R S.2,66,60,885/- THE ASSESSEE HIMSELF HAS CAPITALIZED A SUM OF RS.1,60,35,877/-. THE EXPENSES AMOUNTING TO RS.6,25,384/- ALSO HAVE BEEN CAPITALIZED FOR CONSTR UCTION OF WAREHOUSE BUILDING. THE DETAILS OF REPAIR UNDERTAKEN SHOWING THAT NONE OF THEM HAS RESULTED IN ACQUISITION OF NEW ASSET BUT THESE ARE REPAIRS TO T HE CURRENT ASSETS ONLY WERE FILED BEFORE THE AO. THE CIT(A) AFTER CONSIDERING VARIOUS JUDICIAL PRONOUNCEMENTS AS REFERRED AT PAGE NO.2 OF THE APPELLATE ORDER AND AF TER APPLYING THE SAME TO THE FACTS OF THE CASE RECORDED THE FINDING TO THE EFFECT THAT THE REPAIRS UNDERTAKEN BY THE ASSESSEE WERE NOT CAPITAL IN NATURE BUT REPLACEMENT OF OLD WORN OUT PARTS AND NO NEW ASSETS HAS BEEN ACQUIRED BY THE ASSESSEE. THE F INDING SO RECORDED BY CIT(A) HAS NOT BEEN CONTROVERTED BY LD. DR BY BRINGING ANY POSITIVE MATERIAL ON RECORD. ACCORDINGLY WE DO NOT FIND ANY REASON TO INTERFERE INTO THE ORDER OF CIT(A) DELETING THE DISALLOWANCE MADE ON ACCOUNT OF REPAIR EXPENDITURE. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. 4 ITA NO. 2599/MUM/2009 (A.Y. 2005-06) DY. CIT V S. M/S. BANNER PHARMA CAPS PVT. LTD. ORDER PRONOUNCED IN THE OPEN COURT ON 22ND JULY, 2016 SD/- SD/- (SANDEEP GOSAIN) (R.C. SHARMA) &' $ / JUDICIAL MEMBER $ / ACCOUNTANT MEMBER ( ) MUMBAI; *$ DATED :22.07.2016 PS. ASHWINI / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. + ( ) / THE CIT(A) 4. + / CIT - CONCERNED 5. ./0 ''12 , 12# , ( ) / DR, ITAT, MUMBAI 6. 045 6 / GUARD FILE / BY ORDER, / !'# (DY./ASSTT. REGISTRAR) #$ %, ( ) / ITAT, MUMBAI.