B & A Digi Tactical Solutions Private Limited, CHENNAI V. DCIT, CHENNAI

ITA 304/CHNY/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 6343 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 16-08-2017
• Assessment Year: 2013-2014
• Appeal Filed On: 03-02-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: B SAGADEVAN IRS
• Assessee Lawyers: N V BALAJI
• Keywords: Capital asset; Depreciation; Principle of natural justice; Revenue expenditure; Capital expenditure
• Section: 32

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A (SMC) BENCH : CHENNAI . , [BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT M EMBER ] ./I.T.A. NO.304/MDS/2017 / ASSESSMENT YEAR : 2013-2014 B & A DIGI TACTICAL SOLUTIONS PVT. LTD, NO.1, LALITHPURAM STREET, ROYAPETTAH, CHENNAI 600 014. [PAN AAECB 3553G] VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 1(2) CHENNAI. ( !' / APPELLANT) ( #$!' /RESPONDENT) / APPELLANT BY : SHRI. N.V. BALAJI, ADVOCATE /RESPONDENT BY : SHRI. B. SAGADEVAN, IRS, JCIT. /DATE OF HEARING : 23-08-2017 !' /DATE OF PRONOUNCEMENT : 28-08-2017 % / O R D E R THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST AN ORDER DATED 23.11.2016 OF THE LD. COMMISSIONER OF INCOME TAX (A PPEALS)-1, CHENNAI. ITA NO.304/MDS/2017. :- 2 -: 2. GROUNDS TAKEN BY THE ASSESSEE ARE REPRODUCED HEREUN DER:- 1) THE ORDER OF THE LEARNED CIT (A) IN CONFIRMING THE ORDER OF THE ASSESSING OFFICER DETERMINING THE INCOME OF YOUR APPELLANT AT A LOSS OF RS.3,17,540/- IS AGAINST LAW , THE FACTS AND CIRCUMSTANCES OF THE CASE AND IS AGAINST THE PRINCIPLES OF EQUITY AND NATURAL JUSTICE. 2) THE CIT (A) ERRED IN HOLDING THAT THE EXPENDITURE INCURRED BY THE APPELLANT TOWARDS REPAIRS IN THE LEASEHOLD PREMISES IS NOT AN EXPENDITURE ALLOWABLE UNDER SECTION 31 AS CURRENT REPAIRS OR ALTERNATIVEL Y AS EXPENDITURE UNDER SECTION 37. 3) THE CIT (A) ERRED IN HOLDING THAT THE EXPENDITURE INCURRED BY THE APPELLANT IN ITS LEASEHOLD PREMISES IS A CAPITAL EXPENDITURE. 4) THE CIT (A) FAILED TO APPRECIATE THE SUBMISSION OF THE APPELLANT THAT THE BREAK OF UP THE EXPENDITURE SUPP ORTS THE SUBMISSION THAT THE EXPENDITURE IS REVENUE IN NATURE. 5) THE CIT (A) FAILED TO APPRECIATE THAT THE EXPENDITU RE SHOULD BE CAPITAL IN NATURE WHICH RESULTS IN A CONSTRUCTION OF ANY STRUCTURE OR DOING ANY WORK BY WAY OF RENOVATION OR EXTENSION OF, OR IMPROVEMENT TO TH E BUILDING, FOR APPLYING EXPLANATION 1 TO SECTION 32. IN THE CASE OF THE APPELLANT IN THE ABSENCE OF THE SAME, T HE ASSESSING OFFICER OUGHT TO HAVE ALLOWED THE DEDUCTI ON AS REVENUE EXPENDITURE. 6) THE CIT (A) ERRED IN NOT APPLYING THE RATIO OF DECI SIONS CITED BEFORE HIM INCLUDING THAT OF THE JURISDICTION AL HIGH COURT 7) THE CIT (A) ERRED IN NOT CONSIDERING THE SUBMISSION OF THE APPELLANT THAT IN EVEN IF IT IS TO HELD THAT TH E EXPENDITURE IS CAPITAL IN NATURE, THE EXPENDITURE T OWARDS TEMPORARY STRUCTURES ARE ELIGIBLE FOR DEPRECIATION AT THE RATE OF 100%, 8) WITHOUT PREJUDICE, THE CIT (A) AND THE ASSESSING OFFICER OUGHT TO HAVE SEEN THAT THE EXPENDITURE WHICH IS CONSIDERED AS CAPITAL IN NATURE WOULD FALL IN DIFFE RENT BLOCK OF ASSETS ELIGIBLE FOR HIGHER DEPRECIATION, ITA NO.304/MDS/2017. :- 3 -: 9) WITHOUT PREJUDICE, THE CIT (A) AND THE ASSESSING OFFICER OUGHT TO HAVE ALLOWED THE DEPRECIATION IN RESPECT O F DEPRECIATION DISALLOWED IN THE EARLIER ASSESSMENT Y EAR. 10) YOUR APPELLANT PREFERS THIS APPEAL ON THESE GROUNDS AND SUCH OTHER GROUNDS THAT MAY BE ADDUCED BEFORE O R AT THE TIME OF HEARING OF THIS APPEAL. 3. GROUNDS 1 & 10 ARE GENERAL IN NATURE NEEDING NO S PECIFIC ADJUDICATION. 4. ISSUE RAISED BY THE ASSESSEE THROUGH ITS GROUNDS 2 TO 9 IN RESPECT OF TREATMENT OF CERTAIN EXPENDITURE INCURRE D BY THE ASSESSEE IN A LEASEHOLD PREMISES. LD. COUNSEL FOR THE ASSESSE E SUBMITTED THAT ASSESSEE COMPANY ENGAGED IN IT SUPPORT SERVICES HAD INCURRED AN EXPENDITURE OF D1,76,31,122/- FOR INTERIORS IN ITS LEASEHOLD PREMISES. AS PER LD. AUTHORISED REPRESENTATIVE NOT ONLY THE EXPENDITURE WAS INCURRED IN LEASEHOLD PREMISES, BUT THE ITEMS OF E XPENDITURE WERE PAINTING, ELECTRICAL WORK, HVAC WORK, NETWORKING EX PENDITURE, WHICH WERE ALL IN THE NATURE OF REVENUE OUTGO. AS PER L D. AUTHORISED REPRESENTATIVE LOWER AUTHORITIES HAD CONSIDERED T HE EXPENDITURE INCURRED AS CAPITAL IN NATURE. LD. AUTHORISED REPR ESENTATIVE FAIRLY POINTED OUT THAT SIMILAR ISSUE IN ASSESSEES OWN CA SE HAD COME UP BEFORE THE TRIBUNAL FOR THE IMMEDIATE PRECEDING AS SESSMENT YEAR AND ISSUE STOOD DECIDED AGAINST THE ASSESSEE. HOWEVER, ACCORDING TO HIM, ASSESSEES CLAIM THAT EXPENDITURE INCURRED IN LEAS EHOLD PREMISES WERE REVENUE IN NATURE WAS NOT CONSIDERED BY THE TRIBUNA L. AS PER LD. AUTHORISED REPRESENTATIVE, HIS CLAIM PRIMARILY WAS THAT THE EXPENDITURE ITA NO.304/MDS/2017. :- 4 -: INCURRED WAS REVENUE IN NATURE AND NOT CAPITAL IN NATURE. ACCORDING TO HIM, EXPLANATION 1 TO SEC. 32 OF THE INCOME TAX ACT , 1961 (IN SHORT THE ACT) COULD BE APPLIED ONLY WHERE THE EXPEND ITURE INCURRED IN LEASEHOLD ITEMS WAS CAPITAL IN NATURE. ALTERNATIVEL Y ACCORDING TO HIM, EVEN IF IT WAS CONSIDERED AS CAPITAL EXPENDITURE IT WAS ONLY FOR A TEMPORARY STRUCTURE ELIGIBLE FOR 100% DEPRECIATION. RELIANCE WAS PLACED ON THE DECISION OF CO-ORDINATE BENCH IN THE CASES OF M /S. AMEC FOSTER WHEELER INDIA PVT LTD VS. DCIT IN ITA NO.153 0/MDS/2016, DATED 25.11.2016 THAT OF M/S. CHOLAMANDALAM DISTRIB UTION SERVICES LTD. VS. ACIT IN ITA NOS.1952 & 1953/MDS/2016, DATE D 05.10.2016 AND THAT OF M/S. CADENSWORTH (INDIA) LTD VS. ACIT I N 2838/MDS/2016, DATED 25.01.2017. SPECIFIC RELIANCE WAS ALSO PLACED ON THE JUDGMENT OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF THIRU AROORAN SUGARS LTD VS. DCIT, 350 ITR 324. 5. PER CONTRA, LD. DEPARTMENTAL REPRESENTATIVE SUBMIT TED THAT THERE WAS NO CLAIM BY THE ASSESSEE THAT EXPENDITURE INCURRED WAS REVENUE IN NATURE EXPENDITURE BEFORE THE LD. ASSESS ING OFFICER. SUCH CLAIM, ACCORDING TO HIM, WAS MADE FIRST TIME BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEALS) AND THE LD. CO MMISSIONER OF INCOME TAX (APPEALS) HAD RIGHTLY FOUND THAT THE CLA IM COULD NOT BE ALLOWED. ACCORDING TO HIM, STRUCTURE ERECTED BY TH E ASSESSEE WAS NOT TEMPORARY IN NATURE. RELIANCE WAS PLACED ON THE J UDGMENT OF HONBLE ITA NO.304/MDS/2017. :- 5 -: MADHYA PRADESH HIGH COURT IN THE CASE OF MALWA VANASPATI & CHEMICAL CO. LTD VS. CIT, 154 ITR 655 THAT OF HONBLE GUJARAT HIGH COURT IN THE CASE OF KHIMJI VISRAM AND SONS (GUJARAT) PRIVATE LTD. VS . CIT 209 ITR 993 AND THAT OF HONBLE BOMBAY HIGH COURT IN THE CASE OF NEW SHORROCK SPINNING AND MANUFACTURING CO. LTD VS. CIT 30 ITR 338. FURTHER ACCORDING TO HIM, LD. ASSESSING OFFICER HAD ALLOWED PART OF THE CLAIM, WHICH WAS FOUND TO BE REVENUE IN NATURE. 6. I HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSE D THE ORDERS OF THE AUTHORITIES BELOW. THE EXPENDITURE WH ICH HAS BEEN CLAIMED BY THE ASSESSEE AS REVENUE EXPENDITURE OR ALTERNATIVELY ELIGIBLE FOR 100% DEPRECIATION ARE REPRODUCED HERE UNDER:- PARTY NAME PARTICULARS AMOUNT CAUVERY BUILDTECH PLUMBI NG AND SANITARY WORKS 5,79,198 CAUVERY BUILDTECH SCREED WORKS & CIVIL WORKS AT TOILET AND ELECTRICAL / UPS ROOM 24,38,519 CAUVERY BUILDTECH INTERIORS 53,10,565 CAUVERY BUILDTECH NETWORKING 14,33,748 CAUVERY BUILDTECH HVAC 20,22,363 CAUVERY BUILDTECH S PRINKLER SYSTEMS 2,37,775 CAUVERY BUILDTECH INTERIORS (ADDITIONAL) 6,99,621 CAUVERY BUILDTECH FIRE PROTECTION SYSTEMS 11,87,293 CAUVERY BUILDTECH LIGHT FIXTURES 6,33,092 CAUVERY BUILDTECH ELECTRICAL WORKS 27,43,841 CAUVERY BUILDTECH FIRE PROTECTION 1,81,291 CAUVERY BUILDTECH ROLLER BLINDS 1,63,817 TOTAL VALUE 1,76,31,122 IT IS ADMITTED POSITION THAT ASSESSEE ITSELF HAD TR EATED THE ABOVE EXPENDITURE AS CAPITAL OUTGO IN ITS BOOKS OF ACCOUN TS. FOR PRECEDING ASSESSMENT YEAR, THERE WERE SIMILAR EXPENDITURE INC URRED BY THE ITA NO.304/MDS/2017. :- 6 -: ASSESSEE, WHICH WAS A SUBJECT MATTER OF DISALLOWAN CE. WHAT WAS HELD BY THIS TRIBUNAL AT PARA 3 TO 7 OF ITS ORDER DATED 08.06.2017 IN ITA NO.1503/MDS/2016, IN RELATION TO THE SAID YEAR IS R EPRODUCED HEREUNDER:- 3.0 GROUND NOS.2-6 ARE RELATED TO THE ADDITION OF RS.59,24,141/- REPRESENTING THE DISALLOWANCE OF DEPRECIATION ON FURNITURE & FIXTURES. THE AO FOUND THAT THE ASSESSEE HAS CLAIMED 100% DEPRECIATION ON INTERIORS AND FURNITURE & FIXTURES STATING THAT THESE ITEMS ARE T EMPORARY STRUCTURES WHICH WERE VALUED AT RS.65,82,378/-. THE AO CALLED FOR THE DETAILS OF THE INTERIOR WORKS DONE B Y THE ASSESSEE AND OBSERVED FROM THE INVOICES THAT THE EXPENDITURE WAS INCURRED FOR INTERIOR, CARPENTRY, P AINTING, SECURITY SYSTEM, MODULAR FURNITURE, CHAIRS AND NET WORK ETC. SINCE ALL THE EXPENSES ARE CAPITAL IN NATURE, THE A O TREATED THE ENTIRE EXPENSES AS CAPITAL EXPENDITURE AND THE SAME IS NOT ALLOWABLE U/S.31 OF IT ACT ,UNDER THE HEAD CURR ENT REPAIRS AND ACCORDINGLY HELD IT AS CAPITAL ASSET A ND ALLOWED THE DEPRECIATION @10% TREATING THE SAME AS FURNITUR E AND FIXERS, WHICH RESULTED IN ADDITION OF RS.59,24,141/ -. 4.0 AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE WENT ON APPEAL BEFORE THE CIT(A) AND LD.CIT(A) DISM ISSED THE ASSESSEES APPEAL HOLDING THAT THE EXPENDITURE IN QUESTION WAS NEITHER REPAIR WORK NOR TO BE TREATED AS CURRENT REPAIRS. FOR READY REFERENCE, WE EXTRACT TH E RELEVANT PARAGRAPHS OF THE LD.CIT(A) PARA NO.5-10 AS UNDER: 5. I HAVE CAREFULLY CONSIDERED THE FACTS IN ISSUE, THE REASONS BASED ON WHICH THE AO HAS PREFERRED THE DISALLOWANC E / ADDITION, THE ARGUMENTS ADVANCED BY THE APPELLANT AND MATERIA L ON RECORD. THE AO HELD THAT THE AMOUNT OF RS.65,82,378/- INCUR RED TOWARDS IMPROVEMENT ON LEASEHOLD PREMISES WAS TO BE CAPITAL IZED IN TERMS OF EXPLANATION 1 TO S.32(1). IT WAS ALSO NOTE D THAT THE APPELLANT HAD CLAIMED THE ENTIRE EXPENDITURE TO THE TUNE OF RS.65,82,378/- AFTER EXCLUDING A SUM OF RS.25,44,26 5/- TOWARDS CURRENT REPAIRS WHICH WAS NEGATED BY THE AO IN VIEW OF THE PROVISIONS OF S.32(1) R.W. EXPLANATION. THE APPELLA NT HAD WHILE PRESSING ITS CASE AT THE APPELLATE STAGE SPLIT UP T HE ENTIRE EXPENDITURE INTO AS MANY AS SEVERAL COMPONENTS BY S EGREGATING THEM TOWARDS INTERIOR CARPENTRY AND PAINTING, ELECT RICAL WORKS, CABLING AND NETWORKING WORK, DUCTING TILING AND WAL L PANELING. 6. RENOVATION PER SE WOULD BE A COMPOSITE ITEM OF A CTIVITY WHICH WOULD BE VIOLATED IN ITS CONCEPT IF THE SAME IS SPL IT UP INTO ITA NO.304/MDS/2017. :- 7 -: SMALLER FRAGMENTS. THIS IS SO AS THESE SMALLER INDI VIDUAL ACTIVITIES WOULD NOT MAKE AVAILABLE ANY FACILITY WHICH COULD B E USED BY THE APPELLANT VOID OF THE OTHER CO-RELATED ACTIVITIES. RENOVATION THEREFORE WOULD ENCOMPASS AND INCLUDE THE SUM TOTAL OF ALL SUCH ACTIVITIES TO MAKE AVAILABLE A COMMON FACILITY FOR THE USE OF THE APPELLANT. SIMPLY PUT, ALL ACTIVITIES PUT TOGETHER RESULT IN RESTORING TO GOOD AND USABLE CONDITION AND SUCH AN EXERCISE WOULD INCLUDE REPAIRS AS A INTEGRAL PART THEREOF. I N ANY CASE RENOVATION AS THIS WOULD NOT QUALIFY TO BE CONSIDER ED AS CURRENT REPAIRS AND TO THAT EXTENT THE APPELLANT WOULD BE THE BENEFICIARY TO THE USAGE OF THE FACILITY FOR SEVERAL YEARS DURI NG THE LEASE PERIOD OF THE PREMISES. 7. THE CASE OF THE APPELLANT RESTS ON THE PLEA THAT IT IS A LEASEHOLD PREMISE AND HENCE EXPENDITURE SHOULD BE T REATED AS BEING TOWARDS CURRENT REPAIRS NOTWITHSTANDING THE P ROVISION IN EXPLANATION 1 TO S.32(1). IN MY CONSIDERED VIEW, TH IS CANNOT BE ACCEPTED FOR THE REASON THAT THERE IS A SPECIFIC PR OVISION TO DEAL WITH SUCH EXPENDITURE. FURTHERMORE, THE RIGHTS AND ENTITLEMENTS OF THE APPELLANT ARE NOT ADVERSELY IMPAIRED AS THE EXPENDITURE QUALIFIES FOR DEPRECIATION AND IN THE EVENT THAT TH E PREMISES ARE VACATED THE APPELLANT IS ENTITLED TO TERMINAL BENEF ITS WITH REGARD TO THE EXPENDITURE / INVESTMENT MADE. IT MAY NOT BE OUT OF PLACE TO MENTION THAT ALMOST ALL FACILITIES AS THE ONE OP ERATED BY THE APPELLANT ARE RUN FROM LEASED PREMISES. MOST OF THE M BEING ON LONG LEASE TERMS. 8. ALSO WITH REGARD TO THE CLAIM PREFERRED BY THE A PPELLANT U/S.37 AND NOT U/S.32, THE SAME IS NOT TENABLE ON FACTS AN D IN LAW. IT IS SETTLED LAW THAT THE PROVISIONS OF S.37 ARE APPLICA BLE IN RESPECT OF GENERAL EXPENSES, WHERE EXPENDITURE NOT SPECIFIED I N S.30 TO S.36 ARE TO BE CONSIDERED. AS ALSO, EXPENDITURE WHICH IS NOT CAPITAL OR PERSONAL IN NATURE AND WHICH IS WHOLLY AND EXCLUSIV ELY LAID OUT OR EXPENDED FOR THE PURPOSE OF BUSINESS. THESE EXCLUDE EXPENSES FOR ANY PURPOSE WHICH IS AN OFFENCE OR PROHIBITED B Y LAW ETC. SEC.37(1) THEREFORE BEING A RESIDUAL PROVISION, CAN NOT BE TAKEN AID OF, UNLESS AND UNTIL IT IS ESTABLISHED THAT NON E OF THE PROVISIONS OF S.30 TO 36 ARE APPLICABLE TO A GIVEN CASE. THIS VIEW FINDS SUPPORT FROM THE RATIO IN MALWA VANASPATI AND CHEMICAL COMPANY LTD V. CIT 154 ITR 655 (MP) AND KHIMJI VISR AM AND SONS P LTD V CIT 209 ITR 993 (GUJ.). 9. IN THIS CONTEXT, IT WILL SERVE USEFUL PURPOSE TO REFER TO THE DECISION OF THE HONBLE KERALA HIGH COURT DATED 18. 8.2015 IN LNDUS MOTOR COMPANY P LTD V. DCIT 378 ITR 707. WHIL E EXAMINING A SIMILAR CLAIM THE HONBLE COURT OBSERVE D .... AFTER THE INTRODUCTION OF EXPLANATION 1 TO SECTION 32(1) OF THE ACT, THERE IS NO SCOPE LEFT OUT AT ALL FOR ANY INTERPRET ATION SINCE BY A LEGAL FICTION, THE ASSESSEE IS TREATED AS THE OWNER OF THE BUILDING FOR THE PERIOD OF HIS OCCUPATION. THIS MEANS THAT B Y REFURBISHING, DECORATING OR BY DOING INTERIOR WORK IN THE BUILDIN G AND ENDURING BENEFIT WAS DERIVED BY THE ASSESSEE FOR THE PERIOD OF OCCUPATION AND, THEREFORE, IS CAPITAL EXPENDITURE AND NOT REVE NUE EXPENDITURE ACCORDING TO US, BY ADDING EXPLANATIO N 1 TO SECTION 32(1) PARLIAMENT HAS MANIFESTED ITS LEGISLATIVE INT ENTION TO TREAT THE EXPENDITURE INCURRED BY THE ASSESSEE ON LEASEHO LD BUILDING AS CAPITAL EXPENDITURE AND, THEREFORE, EXPLANATION I T O SECTION 32(1) ITA NO.304/MDS/2017. :- 8 -: CANNOT BE SUBJECTED TO ANY FURTHER INTERPRETATION. FURTHER THE LANGUAGE OF EXPLANATION 1 IS VERY PLAIN AND CLEAR A ND THERE IS NO SCOPE FOR PROVIDING A DIFFERENT MEANING FOR THE WOR DS USED AND, HENCE, WE ARE BOUND TO CONSIDER THE QUESTION BY GIV ING THE LITERAL MEANING TO THE EXPRESSIONS AND PHRASEOLOGIES BY THE LEGISLATURE APPLIED. FURTHER APPLYING THE RATIO, AMONGST OTHER S, OBTAINING IN THE CASE OF MADRAS AUTO SERVICE P LTD 233 ITR 468 T HE HONBLE HIGH COURT, THE JURISDICTIONAL ITAT IN ITS ORDER DA TED 11.9.2015 IN ITA NO.700/MDS/2014 FOR THE A.Y.2008-09 IN THE CASE OF THE CONTINENTAL ENTERPRISES V. ITO HAS DISMISSED THE CL AIM OF 100% DEPRECIATION BY THE ASSESSEE. 10. FOR THE DETAILED REASONS DISCUSSED AND ILLUSTRA TIONS MADE IN THE FOREGOING AND APPLYING THE RATIO AS ABOVE, THE VIEW TAKEN BY THE AO IN REJECTING THE CLAIM OF THE APPELLANT AS A REVENUE EXPENDITURE IS UPHELD. THIS GROUND OF APPEAL IS DIS MISSED. 5.0 DURING THE APPEAL HEARING, THE LD.AR SUBMITTED THA T THE ASSESSEE HAS UNDERTAKEN REPAIR WORKS IN THE LEA SED PREMISES AND WORKS WERE CARRIED IN THE LEASED PREMI SES. THE LD.AR FURTHER SUBMITTED THAT THE ASSESSEE HAS TAKEN THE PREMISES FOR SHORT TERM LEASE AND AT THE TIME OF VA CATING THE LEASED PREMISES, THE TEMPORARY STRUCTURES CANNOT BE REMOVED OR RE-USED ON VACATING THE PREMISES AND IT WOULD BE COMPLETELY WASTEFUL EXPENDITURE AND LOSS TO THE ASSESSEE. THE ASSESSEE ALSO SUBMITTED THE PAPER BOOK WITH DETAILS OF ITEM- WISE PURCHASE OF VARIOUS MATERIALS AND WORKS CARRIED ON BY THE ASSESSEE. THE LD.AR FURTHER ARGUED THAT ALL THE WO RKS CARRIED ON BY THE ASSESSEE WERE TEMPORARY STRUCTURES WHICH ARE ELIGIBLE FOR DEDUCTION @100% DEPRECIATION. 6.0 ON THE OTHER HAND, THE LD.DR ARGUED THAT THE ASSESSEE HAS TAKEN THE PREMISES ON LEASE AND FIXED THE FURNI TURE AND FIXTURES IN THE LEASE HOLD PREMISES AND CARRIED ON INTERIOR CARPENTRY PAINTING WORKS AND CREATED AN ASSET IN TH E LEASEHOLD PREMISES. THE ASSET CREATED WAS NOT DISPUTED BY TH E ASSESSEE SINCE THE ASSESSEE HIMSELF HAS CATEGORIZED THE EXPE NDITURE AS ASSET AND CLAIMED 100% DEPRECIATION. THE ASSESSEE HAS NOT CARRIED ON ANY REPAIRS OR RENOVATION TO THE EXISTIN G ASSETS TO CLAIM THE EXPENDITURE AS CURRENT REPAIRS U/S.31 OF IT ACT. THE ASSESSEE HAS CREATED PERMANENT ASSET WHICH IS ENDUR ING IN NATURE AND ACCORDINGLY, THE LD.DR ARGUED THAT THE A O RIGHTLY CATEGORIZED IT AS FURNITURE & FIXTURES AND ALLOWED DEPRECIATION @10% AND NO INTERFERENCE IS CALLED FOR. 7.0 WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL PLACED BEFORE US. ITA NO.304/MDS/2017. :- 9 -: THE ASSESSEE HAS INCURRED THE EXPENDITURE THROUGH M/S.KAVERI BUILD TECH FOR AN AMOUNT OF RS.65,82,377 /- RELATING TO THE ITEMS OF ASSETS. SEPARATE BREAK UP OF WALL PANELING AND PURCHASE OF TILES ARE INCLUDED IN THE TOTAL SUM OF RS.65,82,377/-. THE ASSESSEE HAS TAKEN THE PREM ISES ON LEASE AND ARGUED THAT UNLESS THE EXPENDITURE INCURR ED FOR CONSTRUCTION OF ANY STRUCTURE OR IMPROVEMENT, EXTEN SION ETC., IN THE LEASEHOLD PREMISES, IT DOES NOT FALL UNDER E XPLANATION- 1 TO SEC.32 OF IT ACT TO HOLD IT AS ASSET. THE ASS ESSEE HAS FURNISHED THE BILLS FOR PURCHASE OF TILES, WALL PAN ELING, NETWORKING, ELECTRICAL WORKS CARPENTRY ETC., IN THE PAPER BOOK BUT NOT FURNISHED THE EXACT DETAILS OF COMPOSITE WO RK DONE WITH THE ITEMS PURCHASED. THE DIFFERENT INVOICES FO R WOOD, TILES, MODULAR FURNITURE CANNOT ESTABLISH THE COMPO SITE ITEM OF WORK DONE TO CONCLUDE WHETHER THE EXPENDITURE IN QUESTION WAS CAPITAL EXPENDITURE OR NOT. EVEN IF TH E ELECTRICAL WORKS, CARPENTRY WORKS CARRIED OUT IN THE LEASEHOLD PREMISES, THE SAME CAN BE CATEGORIZED AS FURNITURE AND FIXTURES DEPENDING ON THE NATURE OF WORKS CARRIED O UT. THE TERMS OF LEASE, THE DURATION OF LEASE, NAMES AND AD DRESS OF THE LEASEHOLD PREMISES, ETC., WERE NOT FURNISHED BY THE ASSESSEE. AS PER THE ASSESSMENT ORDER, THE ASSESSE E HIMSELF HAS TREATED THE WORKS CARRIED ON IN THE LEA SED PREMISES AS ASSETS AND CLAIMED THE DEPRECIATION @10 0%. THE 100% DEPRECIATION IS ALLOWED ONLY ON TEMPORARY STRUCTURES. THE ASSESSEE HAS NOT ESTABLISHED THAT THE EXPENDITURE INCURRED WAS TOWARDS THE TEMPORARY STRU CTURES BY PROVIDING THE NECESSARY EVIDENCES WITH THE COMPO SITE WORK DONE IN EACH PREMISES. THE TABULATION MADE BY THE LD.CIT(A) INDICATES THAT THE EXPENDITURE INCURRED W AS CAPITAL EXPENDITURE THEREFORE, THE ASSESSEES REQUEST FOR TREATING THE TEMPORARY STRUCTURES CANNOT BE ACCEPTED. HAVIN G CREATED ASSET OF ENDURING NATURE, THE EXPENDITURE C ANNOT BE ALLOWED U/S.37(1) OF IT ACT. THEREFORE, WE HOLD TH AT THE AO HAS RIGHTLY TREATED THE INTERIOR WORKS AS FURNITURE AND FIXTURES AND ALLOWED DEPRECIATION @10%. ACCORDINGLY, WE UPH OLD THE ORDER OF THE LD.CIT(A) AND DISMISS THE ASSESSEES G ROUND OF APPEAL. WE FIND THAT THE TRIBUNAL HAD CONSIDERED THE ISSUE WHETHER EXPENDITURE COULD BE CONSIDERED AS REVENUE OUTGO U /S.37(1) OF THE ACT AT PARAGRAPH 7 OF ITS ORDER. A LOOK INTO BREAK UP OF EXPENDITURE ITA NO.304/MDS/2017. :- 10 -: PLACED BY THE ASSESSEE AT PAGE BOOK PAGES 7 TO 37 INDICATE THAT THERE WERE NUMBER OF ITEMS LIKE CERAMIC TILES, FALSE CEIL ING, FLOORING ETC DONE BY THE ASSESSEE. IN THE CASE OF CIT VS. AYESHA HOSPITALS (P) LTD 292 ITR 266 (MAD) RELIED ON BY THE ASSESSEE, REPLACEMENT OF DAMAGED FLOORING WAS INDEED CONSIDERED AS REVENUE OUTGO. H OWEVER, THERE IS NOTHING ON RECORD TO SHOW THAT CERAMIC FLOORING DON E BY THE ASSESSEE WAS FOR REPLACING A DAMAGED FLOOR. IN SUCH CIRCUMS TANCES, JUDICIAL DISCIPLINE REQUIRES ME TO FOLLOW THE ORDER OF THE T RIBUNAL IN ASSESSEES OWN CASE FOR PRECEDING YEAR WHERE THE FACT SITUATIO N WAS SIMILAR. I DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDERS OF THE LOWER AUTHORITIES. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS DI SMISSED. ORDER PRONOUNCED ON MONDAY, THE 28TH DAY OF AUGUST, 2017, AT CHENNAI. SD/- ( . ) (ABRAHAM P. GEORGE) / ACCOUNTANT MEMBER #$ / CHENNAI %& / DATED: 28TH AUGUST, 2017 KV &' ()*) / COPY TO: 1 . / APPELLANT 3. +,- / CIT(A) 5. )./ 0 / DR 2. / RESPONDENT 4. + / CIT 6. /12 / GF