M/s Aspect Research & Management (P) Ltd., New Delhi V. ITO, New Delhi

ITA 3127/DEL/2011

• Counselvise Citation: [2011] 119 COUNSELVISE.COM (IT) 7095 (ITAT-DELHI)
• Duration Of Justice: 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-12-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 29-12-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 13-06-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: T R TALWAR
• Keywords: Principle of natural justice; Additional evidence; Revenue expenditure; Capital expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI DELHI DELHI DELHI BENCH BENCH BENCH BENCH A AA A : NEW DELHI : NEW DELHI : NEW DELHI : NEW DELHI BEFORE SHRI G. BEFORE SHRI G. BEFORE SHRI G. BEFORE SHRI G.D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, VICE PRESIDENT AND VICE PRESIDENT AND VICE PRESIDENT AND VICE PRESIDENT AND SHRI I.P.BANSAL SHRI I.P.BANSAL SHRI I.P.BANSAL SHRI I.P.BANSAL, JUDICIAL MEMBER , JUDICIAL MEMBER , JUDICIAL MEMBER , JUDICIAL MEMBER ITA NO. ITA NO. ITA NO. ITA NO.3127 3127 3127 3127/DEL/201 /DEL/201 /DEL/201 /DEL/2011 11 1 ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR : : : : 200 200 200 2007 77 7- -- -08 0808 08 M/S ASPECT RESEARCH & M/S ASPECT RESEARCH & M/S ASPECT RESEARCH & M/S ASPECT RESEARCH & MANAGEMENT (P) LTD., MANAGEMENT (P) LTD., MANAGEMENT (P) LTD., MANAGEMENT (P) LTD., A AA A- -- -49, MOHAN COOPE 49, MOHAN COOPE 49, MOHAN COOPE 49, MOHAN COOPERATIVE RATIVE RATIVE RATIVE INDUSTRIAL AREA, INDUSTRIAL AREA, INDUSTRIAL AREA, INDUSTRIAL AREA, MATHURA ROAD, MATHURA ROAD, MATHURA ROAD, MATHURA ROAD, NEW DELHI NEW DELHI NEW DELHI NEW DELHI 110 044. 110 044. 110 044. 110 044. PAN : AAFCA5555Q. PAN : AAFCA5555Q. PAN : AAFCA5555Q. PAN : AAFCA5555Q. VS. VS. VS. VS. INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, WARD WARD WARD WARD- -- -2(2), 2(2), 2(2), 2(2), NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI T.R.TALWAR, ADVOCATE. RESPONDENT BY : MRS.ANUSHA KHURANA, SR.DR. OR OROR ORDER DER DER DER PER G. PER G. PER G. PER G.D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, VP VPVP VP : : : : THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF LEARNED CIT(A) DATED 8 TH APRIL, 2011 FOR THE ASSESSMENT YEAR 2007-08. 2. GROUND NO.1 OF THE ASSESSEES APPEAL READS AS UN DER:- ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LE ARNED CIT(A) HAS ERRED :- 1. (A) IN NOT ADMITTING THE ADDITIONAL EVIDENCE IN THE FORM OF TWO LEASE AGREEMENTS FOR THE TWO BUILDINGS TAKEN ON LEASE BY THE ASSESSEE, THOUGH THE FACT OF HAVING TAKEN THE BUILDING ON LEASE HAD BEEN GIVEN IN WRITING. T HIS COULD NOT BE SUBMITTED EARLIER DUE TO THE NEGLIGENCE OF T HE APPELLANTS COUNSEL AND NON AVAILABILITY OF THE DIRE CTOR AT THAT POINT OF TIME. (B) IN NOT ADMITTING THE ABOVE SAID ADDITIONAL EVID ENCE WHEN SUCH EVIDENCE HAD RELEVANCE TO THE GROUNDS OF APPEAL SOUGHT TO BE URGED AND WAS CRUCIAL TO THE DI SPOSAL ITA-3127/DEL/2011 2 OF THE APPEAL HAVING DIRECT BEARING ON THE CLAIM MA DE BY THE APPELLANT. 3. AT THE TIME OF HEARING BEFORE US, IT IS STATED B Y THE LEARNED COUNSEL THAT THE ONLY DISPUTE IN THIS APPEAL BY THE ASSESSEE IS WITH REGARD TO DISALLOWANCE OF REPAIR EXPENSES AMOUNTING TO ` 42,15,041/- WHICH IS MADE BY THE ASSESSING OFFICER TREATING THE SAME AS A CAPITAL EXPENDITURE. HE SUBMITTED THAT THE ASSESSEE DERIVE S INCOME FROM THE BUSINESS OF DESIGNING OF SOFTWARE AND CONSULTANCY. THE ASSESSEES CLIENTS ARE MULTINATIONALS. DURING THE ACCOUNTING YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION, ASSESSEE HIRED TWO PROPERTIES ON LEASE BASIS. THE PROPERTIES WERE VERY OLD AND W ERE NOT BEFITTING FOR HOLDING THE OFFICE OF THE ASSESSEE. THEREFORE, EXT ENSIVE REPAIRS WERE MADE. HOWEVER, THE EXPENDITURE INCURRED WAS ONLY I N THE NATURE OF REPAIR EXPENDITURE AND NOT CAPITAL EXPENDITURE WHIC H WOULD BE EVIDENT FROM THE DETAILS OF SUCH EXPENDITURE GIVEN AT PAGE 4 OF THE ASSESSEES PAPER BOOK. THAT FROM THE LEASE DEED, IT WOULD BE EVIDENT THAT THE PROPERTY WAS VERY OLD AND, THEREFORE, THE ASSESSEE HAD HIRED THE SAME AT A VERY MEAGER ANNUAL RENT. HE STATED THAT BEFOR E THE LEARNED CIT(A), ASSESSEE REQUESTED FOR THE ADMISSION OF THE LEASE AGREEMENT AS AN ADDITIONAL EVIDENCE. THE CIT(A) DID NOT ADMI T SUCH ADDITIONAL EVIDENCE ON THE GROUND THAT ADEQUATE OPPORTUNITIES WERE ALLOWED BY THE ASSESSING OFFICER. HE STATED THAT BEFORE THE A SSESSING OFFICER, THE ASSESSEE EXPLAINED THE NATURE OF THE EXPENDITURE. THE ASSESSING OFFICER NEVER ASKED FOR THE LEASE DEED. HE ALSO ST ATED THAT REFERENCE TO LEASE DEED WOULD BE ESSENTIAL FOR ARRIVING AT A PROPER CONCLUSION WHETHER THE EXPENDITURE IS IN THE NATURE OF CAPITAL FIELD OR REVENUE FIELD. HE, THEREFORE, SUBMITTED THAT THE ADDITIONA L EVIDENCE MAY BE ADMITTED. 4. THE LEARNED DR STRONGLY OPPOSED TO THE ADMISSION OF THE ADDITIONAL EVIDENCE AND SHE STATED THAT THE ASSESSI NG OFFICER HAD ALLOWED ENOUGH OPPORTUNITY TO THE ASSESSEE AND THER EFORE, THE CIT(A) ITA-3127/DEL/2011 3 RIGHTLY REJECTED THE ADMISSION OF ADDITIONAL EVIDEN CE. THE SAME SHOULD NOT BE ADMITTED BY THE ITAT ALSO. 5. WE HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF BO TH THE SIDES AND PERUSED THE MATERIAL PLACED BEFORE US. THE ONL Y DISPUTE IN THIS APPEAL IS WITH REGARD TO THE ALLOWABILITY OF EXPEND ITURE INCURRED ON THE REPAIR OF THE LEASEHOLD PROPERTY, WHETHER THE SAME IS TO BE TREATED AS A REVENUE EXPENDITURE OR CAPITAL EXPENDITURE. IN O UR OPINION, REFERENCE TO THE LEASE DEED WOULD HELP IN ARRIVING AT A PROPER CONCLUSION WITH REGARD TO THE NATURE OF THE EXPENDI TURE. WE, THEREFORE, ADMIT THE ADDITIONAL EVIDENCE IN THE FOR M OF LEASE DEED. HOWEVER, THIS LEASE DEED WAS NOT BEFORE THE ASSESSI NG OFFICER AND, THEREFORE, THE NATURAL JUSTICE DEMANDS THAT THE ASS ESSING OFFICER SHOULD BE GIVEN AN OPPORTUNITY TO EXAMINE THE ISSUE AFRESH IN THE LIGHT OF THE LEASE DEED. WE, THEREFORE, SET ASIDE THE OR DERS OF THE AUTHORITIES BELOW ON THIS POINT AND RESTORE THE MAT TER BACK TO THE FILE OF THE ASSESSING OFFICER. WE DIRECT THE ASSESSEE T O PRODUCE THE LEASE DEED AND ANY OTHER EXPLANATION/EVIDENCES WHICH HE W ANTS TO PRODUCE BEFORE THE ASSESSING OFFICER. THEREAFTER, THE ASSE SSING OFFICER IS DIRECTED TO READJUDICATE THE ISSUE AFRESH IN ACCORD ANCE WITH LAW. 6. IN THE RESULT, ASSESSEES APPEAL IS DEEMED TO BE ALLOWED FOR STATISTICAL PURPOSES. DECISION PRONOUNCED IN THE OPEN COURT ON CONCLUSIO N OF HEARING ON 29 TH DECEMBER, 2011. SD/- SD/- ( (( (I.P.BANSAL I.P.BANSAL I.P.BANSAL I.P.BANSAL) )) ) (G.D.AGRAWAL) (G.D.AGRAWAL) (G.D.AGRAWAL) (G.D.AGRAWAL) JUDICIAL JUDICIAL JUDICIAL JUDICIAL MEMBER MEMBER MEMBER MEMBER VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT DATED : 29.12.2011 VK. ITA-3127/DEL/2011 4 COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR