M/s. PBI (India) Private Limited, Jammu V. The Additional Commissioner of Income-tax, Jammu

ITA 296/ASR/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 85948 (ITAT-AMRITSAR)
• Duration Of Justice: 2 year(s) 8 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-03-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 11-03-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 09-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: P N ARORA
• Keywords: Capital asset; Depreciation; Question of law; Revenue expenditure; Capital expenditure
• Section: 143(3); 32

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. A.D.JAIN, JUDICIAL MEMBER AND SH. B.P.JAIN, ACCOUNTANT MEMBER I.T.A. NO.296(ASR)/2012 ASSESSMENT YEAR:2007-08 PAN :AAACP9989N M/S. PBI (INDIA) PRIVATE LTD. VS. ADDL. COMMR. OF INCOME TAX, GANDHI NAGAR, JAMMU. RANGE-1, JAMMU. (APPELLANT) (RESPONDENT) APPELLANT BY:SH.P.N.ARORA, ADVOCATE RESPONDENT BY:SH.TARSEM LAL, DR DATE OF HEARING:11/03/2015 DATE OF PRONOUNCEMENT:17/03/2015 ORDER PER B.P.JAIN,AM: THIS APPEAL OF THE ASSESSEE ARISES FROM THE ORDER OF THE CIT(A), JAMMU, DATED 24.05.2012 FOR THE ASSESSMENT YEAR 20 07-08. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THE LD. CIT(A) HAS GROSSLY ERRED IN TREATING A SUM OF RS.12,73,685/- AS CAPITAL EXPENDITURE. 2. THAT THE EXPENDITURE WAS ON REPAIR AND BUILDING AND NO CAPITAL ASSET HAS BEEN CREATED. IT IS PRAYED THAT THE DISALLOWANCE OF RS.12,73,685/ - OUT OF BUILDING REPAIRS BE DELETED. ITA NO.296(ASR)/2012 2 3. THAT THE ASSESSEE CREAVES LEAVE TO ADD OR AMEND THE GROUNDS OF APPEAL. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E HAS CLAIMED RS.18,73,685/- AS FACTORY BUILDING REPAIRS AND PROV IDED THE DETAILS OF ITEM- WISE EXPENDITURE. THE AO TREATED RS.3,73,685/- AS A LLOWABLE REVENUE EXPENDITURE AND RS.15,00,000/- WAS TREATED AS CAPIT AL EXPENDITURE. AFTER ALLOWING DEPRECIATION OF RS.1,50,000/- I.E., @ 10% BALANCE AMOUNT OF RS.13,50,000/- WAS ADDED TO THE INCOME OF THE ASSES SEE. THE RELEVANT FINDINGS OF THE AO ARE REPRODUCED HEREINBELOW FOR THE SAKE OF CONVENIENCE: FROM PERUSAL OF THE ABOVE MENTIONED TABLE IT IS CL EAR THAT SUBSTANTIAL EXPENDITURE ON ACCOUNT OF PURCHASE OF S TEEL REINFORCEMENT, VARIOUS BUILDING MATERIALS LIKE BRICKS, SAND, COARS E AGGREGATE (BAJRI AND CRUSHER), TILES AND PLUMBING WORK HAS BEEN DON E BY THE ASSESSEE. EVEN AN CURSORY GLANCE IT IS SEEN THAT PURCHASE OF 1784 CEMENT BAGS AND STEEL REINFORCEMENT AMOUNTING TO RS.6,01,468/- (95,148 + 2,58,594 + 1,01,955 + 1,45,771) HAS BEEN MADE. IT I S SEEN THAT PAYMENT ON ACCOUNT OF PURCHASE OF DOORS AND WINDOWS AND MILD STEEL CHANNELS AMOUNTING TO RS.18,000/- AND RS.21,320/- H AS BEEN MADE WHICH ARE ALSO AN EXPENDITURE OF CAPITAL NATURE. FU RTHER, IT WOULD BE RELEVANT TO MENTION THAT THE ASSESSEE HAS MADE A PA YMENT OF RS.46,000/- ON ACCOUNT OF LABOUR CHARGED ON DISMAN TLING OF SHED WHICH IS QUITE SUBSTANTIAL. FROM THE EXAMINATION O F THE EXPENDITURE DEBITED UNDER THIS HEAD IT BECOMES ABUNDANTLY CLEAR THAT UNDER THE UMBRAGE OF REPAIRS THE ASSESSEE HAS DEBITED THE EXP ENDITURE ON ACCOUNT OF CONSTRUCTION OF A NEW STRUCTURE AND THE EXPENDITURE IS CAPITAL IN NATURE AND NOT REVENUE IN NATURE. FURTHE R, IT IS IMPORTANT TO KNOW THAT AN OPPORTUNITY WAS PROVIDED TO THE ASSESS EE TO JUSTIFY THE EXPENDITURE OF RS.18,73,685/- UNDER THIS HEAD. IN HIS REPLY DATED 12.11.2009 THE ASSESSEE THROUGH HIS COUNSEL SUBMITT ED AS UNDER: AS REGARDS TO REPAIR TO FACTORY BUILDING IT IS SUBM ITTED THAT ALL THE EXPENDITURE IS IN NATURE OF CURRENT REPAIRS AND NO CAPITAL EXPENDITURE ITA NO.296(ASR)/2012 3 HAS BEEN INCURRED AS NO NEW BUILDING HAS BEEN INCUR RED AS NO NEW BUILDING HAS BEEN CONSTRUCTED. IT MAY BE SUBMITTED THAT THE ASSESSEE HAS TWO FLOUR MILLS, GODOWNS, OFFICE BLOCK, STAFF Q UARTERS FOR ALL THESE BUILDING REPAIR IS REQUIRED FROM TIME TO TIME. IT I S SUBMITTED THAT THE PLANT INSTALLED CREATES, VIBRATION RESULTING WEAR A ND TEAR OF THE BUILDINGS CONSIDERING THE NATURE OF ASSESSEE WORK AS ALSO NUMBER OF BUILDINGS THE EXPENDITURE IS REASONABLE & IT IS PRA YED TO BE ALLOWED. FURTHER, VIDE REPLY DATED 10.12.2009 THE ASSESSEE THROUGH COUNSEL SUBMITTED AS UNDER: SUBMISSION WITH REGARD TO BUILDING REPAIR HAS ALR EADY BEEN FILED. IT IS FURTHER TO SUBMIT THAT REPAIR IS USUAL FEATURE AND FOR LAST 2 YEARS I.E. ASSESSMENT YEAR 2006-07 AND 2005-06 IT W AS RS.18.00 LACS AND RS.7.01 LACS RESPECTIVELY. FROM THE REPLIES FILED, IT IS SEEN THAT THE ASSESS EE HAS CHOSEN TO GIVE DETAILS OF COMPARATIVE EXPENDITURE INCURRED DU RING THE LAST TWO ASSESSMENT YEARS AND HAS TRIED TO JUSTIFY THE CAPIT AL EXPENDITURE MADE TO PROXY. FROM THE NATURE OF EXPENDITURE BY NO MEAN S IT CAN BE JUSTIFIED THAT THE ASSESSEE HAS UNDERTAKEN ONLY CUR RENT REPAIRS AS THE REPAIRS ARE ONLY OF MINOR NATURE AND DOES NOT REQUI RE DEMOLITION OF A STRUCTURE ON WHICH HUGE LABOUR CHARGES ARE TO BE G IVEN. IT IS A MATTER OF COMMON SENSE THAT BY USING 1784 BAGS OF CEMENT A ND 10.45 QTLS. OF STEEL ALONG WITH TRUCK LOADS OF BRICKS, CRUSHER, BA JRI AND SAND A NEW STRUCTURE OF PERMANENT NATURE HAS BEEN CREATED WHIC H IS CAPITAL IN NATURE, OUT OF THE EXPENDITURE OF RS.18,73,685/- DE BITED UNDER THIS HEAD, AN AMOUNT OF RS.15.00 LACS IS CAPITALIZED AND THE REST IS TREATED AS EXPENDITURE PERTAINING TO MINOR REPAIRS WHICH IS REVENUE IN NATURE. 3. THE LD. CIT(A) CONFIRMED THE ACTION OF THE A.O. 4. THE LD. COUNSEL FOR THE ASSESSEE ARGUED THAT MAT ERIALS USED FOR REPAIR WAS BRICKS, SAND, BARJRI, CRUSHER AND STEEL, WHICH IN FACT, WAS USED ON THE EXISTING STRUCTURE AND NO NEW CONSTRUCTION HAS BEEN MADE. THE LD. COUNSEL FURTHER ARGUED THAT THE ASSESSEE HAS TWO FLOUR MILL S, WAREHOUSES AND OFFICE SPACE AND THE CONSTRUCTED AREA IS 76,500 SQ. FT. AP PROX. AND LAND AREA OF ITA NO.296(ASR)/2012 4 APPROX. 67,700 SQ. FT. AND THE LAND IS LEASE HOLD. IT WAS FURTHER STATED THAT FOR PURCHASE OF WHEAT AND SALE OF FINISHED PRODUCTS, 60 0 TRUCKS ENTER PREMISES EVERY MONTH I.E. 7200 TRUCKS ANNUALLY. DAILY A NUMB ER OF PERSONS COME TO BUY AND SELL GENERALLY IN VEHICLES. THIS SHOWS THE NATURE AND QUANTUM OF TRAFFIC IN THE PREMISES. THE ASSESSEE HAS EMPLOYED MORE THAN 90 WORKERS DURING THE YEAR UNDER CONSIDERATION. IT WAS FURTHE R STATED BY THE LD. COUNSEL THAT MANUFACTURING PROCESS SHOWS THE QUANTUM OF WOR K BEING DONE WHICH RESULT IN WEAR & TEAR OF THE STRUCTURE. THE ASSESSE E PRODUCES QUALITY AND CLEAR PRODUCT WHICH HAS TO KEEP BOTH THE PREMISES, BUILDING AND PLANT AND MACHINERY IN GOOD SHAPE. THIS ENTAILS MAINTENANCE T HEREOF FROM TIME TO TIME. IT MAY BE SUBMITTED THAT THE EXPENDITURE HAS BEEN INCURRED THROUGHOUT THE YEAR. 4.1. THE LD. COUNSEL FURTHER SUBMITTED THAT CONSIDE RING THE VOLUME AND NATURE OF ACTIVITY AND THE NUMBER OF PERSONS EMPLOY ED DIRECTLY AND INDIRECTLY IN THE FACTORY PREMISES, SUBSTANTIAL WEA R & TEAR IS EXPECTED AND IS INCURRED. THE EXPENDITURE INCURRED IS IN ACCORDANCE WITH THE REQUIREMENTS OF THE ASSESSEE. THE TWO FACTORIES, EACH WITH HEIGHT O F OVER 50 FEET, GRIND WHEAT RESULTING IN VIBRATION TO THE FACTORY BUILDING. IT WAS SUBMITTED THAT BUILDING REPAIR IS A REGULAR FEATURE AND LAST YEAR AN AMOUNT OF RS.18,00 LACS HAS BEEN ITA NO.296(ASR)/2012 5 INCURRED. HE SUBMITTED THAT THE AO HAS NOT BROUGHT ANY MATERIAL ON RECORD TO JUSTIFY IN CONSIDERING THE AMOUNT OF RS.15 LACS AS CAPITAL EXPENDITURE. 4.2. THE LD. COUNSEL PLACED RELIANCE ON 205 TAXMAN 309 (BOM.) AND SUBMITTED THAT IN THIS CASE THE ASSESSEE WAS TENANT AND CONTRIBUTED A SUM OF RS.1.50 CRORES TOWARDS RECONSTRUCTION OF TENANTED P REMISES AND HONBLE COURT HELD THE SAME TO BE REVENUE EXPENDITURE. THE COURT RELIED UPON THE DECISION OF THE HONBLE SUPREME COURT IN CIT VS. MA DRAS AUTO SERVICES PVT. LTD. 233 ITR 468. IN THIS CASE, THE ASSESSEE HAS CONSTRUCTED A NEW BUILDING BY DEMOLISHING OLD STRUCTURE ON LEASE HOLD PROPERTY. THE BUILDING BELONGED TO THE LESSOR, HELD BY THE HONBLE COURT T HAT THE EXPENDITURE IS REVENUE IN NATURE. THE ASSESSEES PROPERTY IS ALSO ON LEASED LAND. 4.3. THE LD. COUNSEL FOR THE ASSESSEE FURTHER ARGUE D AND INVITED OUR ATTENTION TO THE DETAILS OF THE EXPENDITURE INCURRE D SINCE ASSESSMENT YEAR 2005-06 TO 2012-13, WHERE SIMILAR EXPENDITURE HAS B EEN INCURRED AND HAS BEEN ALLOWED IN ASSESSEES OWN CASE AND NECESSARY D ETAILS ALONGWITH PROFIT & LOSS ACCOUNT ARE PLACED IN THE PAPER BOOK AT DIF FERENT PAGES AS PER DETAIL OF PB 3-4. THEREFORE, THERE IS CONSISTENCY OF THE E XPENDITURE INCURRED BECAUSE OF THE NATURE OF MANUFACTURING CARRIED OUT IN THE FACTORY OF THE ASSESSEE. SIMILARLY CURRENT REPAIRS WERE MADE IN T HE FACTORY BUILDING, WHICH HAS BEEN ACCEPTED U/S 143(3) OF THE ACT BY THE DEP ARTMENT IN ASSESSEES ITA NO.296(ASR)/2012 6 OWN CASE AND NOTHING HAS BEEN BROUGHT ON RECORD BY ANY OF THE AUTHORITIES BELOW THAT THERE WAS DEMOLITION OF ANY STRUCTURE AN D FINDINGS HAVE BEEN ON CONJECTURES AND SURMISES AND WITHOUT ANY VERIFICATI ON OR INSPECTORS REPORT. 4.3. THE LD. COUNSEL FOR THE ASSESSEE, FURTHER RELI ED UPON THE DECISION OF THE HONBLE MADRAS HIGH COURT, IN THE CASE OF CIT V S. TVS LEAN LOGISTICS LTD., REPORTED IN (2007) 293 ITR 432 AND THE DECISI ON OF THE ITAT, AMRITSAR BENCH, IN THE CASE OF BRIGHT ENTERPRISES P. LTD. VS . DCIT, IN ITA NO.531(ASR)/2009 FOR THE A.Y.2006-07, DATED 21.05.2 014 AND POINTED OUT THE RELEVANT PARAS APPLICABLE TO THE ASSESSEES CAS E. THE LD. COUNSEL FOR THE ASSESSEE, ACCORDINGLY PRAYED TO REVERSE THE ORDER O F THE LD. CIT(A) AND ALLOW THE REPAIRS AND EXPENDITURE, AS CLAIMED. 5. THE LD. DR, ON THE OTHER HAND, ARGUED THAT THE D ECISION OF THE HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS. TV S LEAN LOGISTICS LTD. (SUPRA), IS NOT APPLICABLE IN THE PRESENT CASE, SI NCE THE ASSESSEE IN THAT CASE HAD PURCHASED A LEASEHOLD LAND AND THEREFORE, THE D ECISION OF CIT VS. TVS LEAN LOGISTICS LTD. (SUPRA), IS NOT APPLICABLE IN T HE PRESENT FACTS AND CIRCUMSTANCES. SIMILARLY, THE LD. DR ARGUED THAT T HE ISSUE DECIDED BY THE ITAT, AMRITSAR BENCH, IN THE CASE OF M/S. BRIGHT EN TERPRISES PVT. LTD. (SUPRA) IS ON DIFFERENT FACTS AND CANNOT BE MADE AP PLICABLE IN THE PRESENT FACTS AND CIRCUMSTANCES OF THE CASE. THE LD. DR, FU RTHER ARGUED THAT THE ITA NO.296(ASR)/2012 7 ASSESSEE HAD DEMOLISHED THE STRUCTURE AND HUGE LABO UR CHARGES WERE INCURRED AND THEREFORE, RELYING UPON THE ORDER OF T HE AO, HE ARGUED THAT THE NEW STRUCTURE OF PERMANENT NATURE HAD BEEN CREATED, WHICH IS OF CAPITAL IN NATURE. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND HAVE PER USED THE FACTS OF THE CASE. THE ASSESSEE HAS INCURRED EXPENDITURE OF RS.1 8,73,685/- STATED TO HAVE BEEN INCURRED ON CURRENT REPAIRS OF THE FACTORY BUI LDING. THE ALLEGATION OF THE AO IS THAT THERE IS DEMOLITION OF STRUCTURE ON WHIC H HUGE REPAIRS USING 1784 BAGS OF CEMENT AND 10.45 QTLS. OF STEEL ALONGWITH TRUCK LOADS OF BRICKS, CRUSHER BAJRI AND SAND HAS BEEN USED AND THEREFORE, STRUCTURE OF PERMANENT NATURE HAS BEEN CREATED WHICH IS OF CAPITAL IN NA TURE. FIRST OF ALL, THE FINDING OF THE AO IN THIS REGARD IS WITHOUT ANY BASIS AND ON CONJECTURES AND SURMISES AND WITHOUT BRINGING ANY MATERIAL ON RECOR D OR WITHOUT ANY REPORT OF THE INSPECTOR. THEREFORE, THIS FINDING OF THE AO BEING WITHOUT ANY BASIS CANNOT LEAD TO A CONCLUSION THAT THE ASSESSEE HAS INCURRED A CAPITAL EXPENDITURE. THE USE OF 1784 BAGS OF CEMENT AND 10 .45 QTLS. OF STEEL ALONGWITH CONSTRUCTION MATERIAL DOES NOT PROVE THAT THE EXPENSES HAVE BEEN INCURRED THAT OF CAPITAL IN NATURE. 6.1. THE ASSESSEE HAS SUBMITTED THE EXPLANATION BEF ORE THE AO THAT THE ASSESSEE HAS TWO FLOUR MILLS, GODOWNS, OFFICE BLOCK , STAFF QUARTERS HAVING ITA NO.296(ASR)/2012 8 VOLUME OF SALE OF 3.27 LAC QUINTALS AND PURCHASE O F 3.17 LAC QUINTALS OF WHEAT AND ONE CAN IMAGINE THE WEAR AND TEAR IN THE FACTORY AND WAREHOUSES. ALSO, 7200 TRUCKS USING THE PREMISES, THE ROAD IN THE PREMISES, WHICH REQUIRE REPAIR FROM TIME TO TIME. THE REPAIR IN THE FACTORY BUILDING IS A REGULAR FEATURE. SINCE THE PLANT INSTALLED CREATES VIBRATION RESULTING TO SUBSTANTIAL WEAR AND TEAR OF THE BUILDING AND ALSO BECAUSE OF THE MOVEMENT OF VARIOUS TRUCKS MENTIONED HEREINABOVE CREATES LOT OF WEAR AND TEAR. IT WAS EXPLAINED THAT IT WAS A REGULAR FEATURE NOT IN THE IMPUGNED YEAR BUT IN THE PRECEDING YEARS AS WELL AS IN THE FOLLOWING YEARS THAT THE INCOME TAX DEPARTMENT IN MOST OF THE YEARS HAVE ACCEPTED SUCH REPAIRS AS CURRENT REPAIRS AND NO DEFECT HAS BEEN POINTED OUT. THE DET AILS OF SUCH REPAIRS AS ACCEPTED BY THE INCOME-TAX DEPARTMENT IN ASSESSEES OWN CASE AND AS SUBMITTED BY THE LD. COUNSEL FOR THE ASSESSEE AT PB -3-4 ARE REPRODUCED HEREINBELOW: ASSTT. YEAR FACTORY BUILDING REPAIR EXP. CLAIMED ALLOWED BY THE AO IN TOTO AMT. TREATED AS CAPITAL EXPENDITURE BY AO AMOUNT TAKEN AS CAPITAL EXPENDITURE BY CIT(A) RELEVANT PAGES OF PAPER BOOK 2005- 06 7,01,150/- VIDE ORDER U/S 143(3) DATED 31/12/2007 REFER PAGES 5 TO 7 OF PAPER BOOK . PROFIT & LOSS A/C PAGE NO.26 DETAILS OF FACTORY BUILDING ITA NO.296(ASR)/2012 9 REPAIR EXP. PAGE NO.31 2006- 07 18,00,000/- VIDE ORDER U/S 143(1)(A) . . REFER PAGE 4 OF ASSTT. ORDER OF AY 2007- 08 2007- 08 UNDER APPEAL 18,73,865/- 13,50,000/- (15,00,000- 10% DEP) AND ALLOWED RS.3,73,865/- AS REVENUE EXPENDITURE 11,46,316/- (12,73,685- 10% DEP.) AND ALLOWED RS.6,00,000 AS REVENUE EXPENDITURE REFER PAGE 5 PARA 6 OF ASSTT.ORDER 2008- 09 32,50,385/- VIDE ORDER U/S 143(1)(A) PROFIT & LOSS A/C PAGE NO.38 DETAILS OF FACTORY BUILDING REPAIR EXP. PAGE 43 2009- 10 27,44,625/- VIDE ORDER U/S 143(3) DATED 02.12.2011 REFER PAGE 8 TO 18 OF PAPER BOOK . PROFIT & LOSS A/C PAGE NO.38 DETAILS OF FACTORY BUILDING REPAIR EXP. PAGE 43 2010- 13,34,188/- VIDE ORDER U/S 143(3) DATED PROFIT & LOSS A/C PAGE ITA NO.296(ASR)/2012 10 11 26.03.2013 REFER PAGE 19 TO 21 OF PAPER BOOK NO.54 DETAILS OF FACTORY BUILDING REPAIR EXP. PAGE NO.59 2011- 12 6,65,150/- VIDE ORDER U/S 143(1)(A) DETAILS OF FACTORY BUILDING REPAIR EXP. PAGE 87 2012- 13 20,43,931/- VIDE ORDER U/S 143(3) DATED 30/06/2014 REFER PAGE 71 TO 74 OF PAPER BOOK . DETAILS OF FACTORY BUILDING REPAIR EXP. PAGE 87 6.2. AS REGARDS EXPLANATION 1 TO SECTION 32(1), THE SAME IS REPRODUCED AS UNDER FOR THE SAKE OF CONVENIENCE: EXPLANATION 1.- WHERE THE BUSINESS OR PROFESSION OF THE ASSESSEE IS CARRIED ON IN A BUILDING NOT OWNED BY HIM BUT IN RE SPECT OF WHICH THE ASSESSEE HOLDS A LEASE OR OTHER RIGHT OF OCCUPANCY AND ANY CAPITAL EXPENDITURE IS INCURRED BY THE ASSESSEE FOR THE PUR POSES OF THE BUSINESS OR PROFESSION ON THE CONSTRUCTION OF ANY STRUCTURE OR DOING OF ANY WORK IN OR IN RELATION TO, AND BY WAY OF REN OVATION OR EXTENSION OF, OR IMPROVEMENT TO, THE BUILDING, THEN, THE PROV ISIONS OF THIS CLAUSE SHALL APPLY AS IF THE SAID STRUCTURE OR WORK IS A B UILDING OWNED BY THE ASSESSEE. 6.3. ON READING OF THE SAID EXPLANATION, IT IS FOUN D THAT THE SAID EXPLANATION IS APPLICABLE ONLY IF THE CAPITAL EXPEN DITURE IS INCURRED BY THE ITA NO.296(ASR)/2012 11 ASSESSEE ON LEASEHOLD PROPERTY BUT IN THE PRESENT C ASE, NO CAPITAL EXPENDITURE HAS BEEN INCURRED AS PER OUR FINDINGS HEREINABOVE. THEREFORE, EXPLANATION-1 TO SECTION 32(1) CANNOT BE MADE APPLICABLE IN THE P RESENT FACTS AND CIRCUMSTANCES OF THE CASE. 6.4. AS REGARDS THE DECISION OF THE HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS. TVS LEAN LOGISTICS LTD. (SUPRA), WHERE THE FACTS OF THE CASE AND THE DECISION OF THE COURT IS REPRODUCED HEREINEBLOW : THE ASSESSEE HAD PUT UP THE IMPUGNED CONSTRUCTION OF BUILDING ONLY ON THE LEASEHOLD LAND AND NO BUILDING WAS TAKEN ON LEASE BY THE ASSESSEE. THEREFORE, THE FICTION CREATED BY EXPLN.1 THAT THE BUILDING PUT UP BY HIM IN THE LEASEHOLD LAND OR STRUCTURE OR WORK SHALL BE CONSTRUED AS IF THE SAME IS OWNED BY THE ASSESSEE, IS NOT APPLICABLE TO THE CASE OF THE ASSESSEE AND THE EXPLN. 1 TO S. 32( 1) IS NOT ATTRACTED. WHAT CONSTITUTES A CAPITAL EXPENDITURE AND WHAT DOE S NOT, TO ATTRACT EXPLN. 1 TO S. 32(1) DEPENDS UPON THE CONSTRUCTION OF ANY STRUCTURE OR DOING ANY WORK OR IN RELATION TO AND BY WAY OF REN OVATION, EXTENSION OR IMPROVEMENT TO THE BUILDING WHICH IS PUT UP IN A BUILDING TAKEN ON LEASE BY HIM FOR CARRYING ON HIS BUSINESS AND PROFE SSION OF THE ASSESSEE, BUT NOT IN A CASE OF CONSTRUCTION OF ANY STRUCTURE OR DOING ANY WORK OR RELATION TO WHERE SUCH BUILDING IS PUT UP/CONSTRUCTED FOR THE PURPOSE OF BUSINESS OR THE PROFESSION OF THE AS SESSEE IN LAND TAKEN ON LEASE BY THE ASSESSEE. BECAUSE THE ASSESSEE DID NOT ACQUIRE A CAPITAL ASSET, VIZ. THE LAND IN THE INSTANT CASE, B UT HAS PUT UP A CONSTRUCTION OF THE BUILDING ONLY FOR THE BUSINESS ADVANTAGE, WITH THE RESULT THE ENTIRE CONSTRUCTION COST IS ADMISSIBLE AS THE REVENUE EXPENDITURE. NO SUBSTANTIAL QUESTION OF LAW AS RAIS ED BY THE TRIBUNAL, ARISES FOR CONSIDERATION, AS THE EXPLN.1 TO S. 32(1 ) IS NOT ATTRACTED. L.H. SUGAR FACTORY & OIL MILLS (P) LTD. VS. CIT (19 80) 19 CTR (SC) 185 : (1980) 125 ITR 293 (SC) AND CIT VS. BOMBAY DY EING & MANUFACTURING CO. LTD. (1996) 132 CTR (SC) 217): (1 996) 219 ITR 521 (SC) RELIED ON. EXPLANATION 1 TO S. 32(1) IS NOT APPLICABLE WHERE T HE ASSESSEE ONLY PUTS UP CONSTRUCTION OF BUILDING ON LEASEHOLD LAND AND BUILDING IS NOT ITA NO.296(ASR)/2012 12 TAKEN ON LEASE AND, THEREFORE, ENTIRE CONSTRUCTION COST IS ADMISSIBLE AS REVENUE EXPENDITURE. 6.5. THE LD. DR ARGUED THAT IN THE CASE OF CIT VS. TVS LEAN LOGISTICS LTD. (SUPRA), THE ASSESSEE HAD PURCHASED LEASE HOL D LAND WHEREAS IN THE PRESENT CASE, THE ASSESSEE HAS NOT PURCHASED ANY LE ASEHOLD LAND AND THEREFORE, THE DECISION IN THE CASE OF CIT VS. TVS LEAN LOGISTICS LTD. (SUPRA), IS NOT SPPLICABLE. 6.6. ON PERUSAL OF THE SAID DECISION BY US, WE ARE OF THE VIEW THAT THE ASSESSEE IS ON BETTER FOOTINGS, SINCE THE ASSESSEE IS IN OCCUPATION OF LEASEHOLD PROPERTY ON WHICH CURRENT REPAIRS HAVE BE EN DONE AND NO CAPITAL EXPENDITURE HAS BEEN INCURRED WHEREAS IN THE CASE O F CIT VS. TVS LEAN LOGISTICS LTD. (SUPRA), THE ASSESSEE HAS CONSTRUCTE D A BUILDING ON LEASEHOLD LAND AND SUCH CONSTRUCTION OF BUILDING ON THE LEASE HOLD LAND HAS BEEN HELD TO BE REVENUE EXPENDITURE AND EXPLANATION-1 TO SECTION 32 WAS NOT MADE APPLICABLE BY THE HONBLE MADRAS HIGH COURT. 6.7. AS REGARDS THE DECISION RELIED UPON BY THE ASS ESSEE OF ITAT, AMRITSAR BENCH, IN THE CASE OF M/S. BRIGHT ENTERPRI SES (P) LTD. (SUPRA), THOUGH THE SAID DECISION IS NOT DIRECTLY APPLICABLE TO THE PRESENT FACTS AND CIRCUMSTANCES OF THE CASE BUT IT SUPPORTS OUR VIEWS GIVEN HEREINABOVE, SINCE IN THE CASE OF M/S. BRIGHT ENTERPRISES (P) LTD. (SU PRA), THE EXPENDITURE WAS NECESSITATED BY THE DAMAGE CAUSED DUE TO THE AIR CO NDITIONING WORK ITA NO.296(ASR)/2012 13 UNDERTAKEN AND ALSO THERE WAS AN ALTERATION WORK AN D EXPENDITURE HAVING BEEN INCURRED AMOUNTING TO RS.10,81,561/- ON WOOD EN CEILING FOR RESTAURANT, MARBLE FLOORING FOR RESTAURANT, WALL PA NELING FOR RESTAURANT, POP CEILING FOR BUSINESS CENTRE ETC. IN ANY CASE, NOTH ING HAS BEEN BROUGHT ON RECORD THAT THE ASSESSEE HAS OBTAINED ANY ENDURING BENEFIT AND NO NEW ASSET HAS BEEN CREATED AND THE ASSESSEE HAS NO ADVANTAGE IN THE CAPITAL FIELD AND THE ASSESSEES ADVANTAGE CONSISTS IN FACILITATING T HE TRADING/MANUFACTURING OPERATIONS AND ENABLING THE ASSESSEE TO CONDUCT ITS BUSINESS MORE EFFICIENTLY AND MORE PROFITABLY. OUR VIEWS FIND SUPPORT FROM TH E DECISION OF THE HONBLE SUPREME COURT, IN THE CASE OF EMPIRE JUTE C O. LTD. VS. CIT REPORTED IN (1980) 124 ITR 1, WHERE IT HAS BEEN HEL D THAT THERE MAY BE CASES WHERE EXPENDITURE, EVEN IF INCURRED FOR OBTAINING A N ADVANTAGE OF ENDURING BENEFIT, MAY, NONE THE LESS, BE ON REVENUE ACCOUNT AND THE TEST OF ENDURING BENEFIT MAY BREAK DOWN. IT IS NOT EVERY ADVANTAGE O F ENDURING NATURE ACQUIRED BY AN ASSESSEE THAT BRINGS THE CASE WITHIN THE PRINCIPLE LAID DOWN IN THIS TEST. WHAT IS MATERIAL TO CONSIDER IS THE NA TURE OF THE ADVANTAGE IN A COMMERCIAL SENSE AND IT IS ONLY WHERE THE ADVANTAGE IS IN THE CAPITAL FIELD THAT THE EXPENDITURE WOULD BE DISALLOWABLE ON AN AP PLICATION OF THIS TEXT. IF THE ADVANTAGE CONSISTS MERELY IN FACILITATING THE A SSESSEES TRADING OPERATION OR ENABLING THE MANAGEMENT AND CONDUCT OF THE ASSES SEES BUSINESS TO BE ITA NO.296(ASR)/2012 14 CARRIED ON MORE EFFICIENTLY OR MORE PROFITABLY WHIL E LEAVING THE FIXED CAPITAL UNTOUCHED, THE EXPENDITURE WOULD BE ON REVENUE ACCO UNT, EVEN THOUGH THE ADVANTAGE MAY ENDURE FOR AN INDEFINITE FUTURE. THE TEST OF ENDURING BENEFIT IS, THEREFORE, NOT CERTAIN OR CONCLUSIVE TEST AND I T CANNOT BE APPLIED BLINDLY AND MECHANICALLY WITHOUT REGARD TO THE PARTICULAR F ACTS AND CIRCUMSTANCES OF A GIVEN CASE. 7. IN THE FACTS AND CIRCUMSTANCES, THE EXPENDITURE BEING OF REVENUE IN NATURE AS PER OUR FINDINGS HEREINABOVE AND IN VIEW OF THE DECISIONS OF VARIOUS COURTS OF LAW RELIED UPON REFERRED TO HEREI NABOVE, WE ARE OF THE VIEW THAT THE LD. CIT(A) IS NOT JUSTIFIED IN CONFIRMING THE ACTION OF THE AO. ACCORDINGLY, THE ORDER OF THE LD. CIT(A) IS REVERSE D AND THE AO IS DIRECTED TO ALLOW THE CLAIM OF THE ASSESSEE AS CURRENT REPAI RS IN THE FORM OF REVENUE EXPENDITURE, AS CLAIMED. THUS, ALL THE GROUNDS OF T HE ASSESSEE ARE ALLOWED. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN ITA NO.296(ASR)/2012 IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 17TH MARCH, 2015. SD/- SD/- (A.D.JAIN) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 17TH MARCH, 2015 /SKR/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE: M/S. PBI (INDIA) PRIVATE LTD., JAMMU 2. THE ADDL. CIT, R-1, JAMMU. ITA NO.296(ASR)/2012 15 3. THE CIT(A), JAMMU. 4. THE CIT, JAMMU. 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.