CITIGROUP GLOBAL MARKETS INDIA P.LTD, MUMBAI V. ASST CIT 4(2), MUMBAI

ITA 320/MUM/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3791 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 1 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 20-01-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 10-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RADHA KATYAL
• Assessee Lawyers: ARVIND SONDE
• Keywords: Revenue expenditure; Capital expenditure
• Section: 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI , , BEFORE SHRI AMIT SHUKLA , JM AND SHRI RAJESH KUMA R , AM ./ I.T.A. NO. 320/MUM / 2013 ( / ASSESSMENT YEAR : 2008 - 09) CITIGROUP GLOBAL MARKETS INDIA PVT.LTD., BAKHTAWAR, 4 TH FLOOR, NARIMAN POINT, MUMBAI - 400021 / VS. ASSTT. COMMISSIONER OF INCOME TAX - 4(2), ROOM NO.642, 6 T H FLOOR, AYAKAR BHAVAN,M.K.ROAD, MUMBAI - 400020 ./ PAN : AAECS7234E ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI ARVIND SONDE / RESPONDENT BY : MS.RADHA KATYAL / DATE OF HEARING : 7.1.2016 / DATE OF PRONOUNCEMENT : 24. 2.2016 / O R D E R PER RAJESH KUMAR , AM : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 1.11.2012 PA SSED BY THE LD.CIT(A) - 8, MUMBAI AND IT RELATES TO THE ASSESSMENT YEAR 2008 - 09. 2. THE SOLE ISSUE RAISED IN THE GROUNDS OF APPEAL IS AGAINST THE CONFIRMATION OF ADDITION OF RS.1,17,93,430/ - BY THE LD.CIT(A) AS MADE BY THE ASSESSING OFFICER ON ACCOUNT OF E XPENDITURE INCURRED ON THE LEASEHOLD PREMISES ON THE GROUND THAT THE BENEFIT OF SAID EXPENDITURE WOULD EXTEND TO THE ASSESSEE OVER A PERIOD OF TIME. ITA NO. 320 / MUM/20 13 2 3. THE FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME ON 30.9.2008 DECLARIN G A TOTAL INCOME OF RS.6 , 94 , 1 2,48,982/ - . THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND THE NOTICES U/S 142(1) AND 143(2) OF THE INCOME TAX ACT, 1961 WAS ISSUED AND SERVED UPON THE ASSESSEE. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO FO UND THAT THE ASSESSEE HAD INCURRED A SUM OF RS.1,17,93,430/ - ON REPAIRS AND MAINTENANCE OF THE LEASEHOLD PREMISES T HE DETAILS WHEREOF WAS INCORPORATED IN PARA 3.2 OF THE ASSESSMENT ORDER. THE AO ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE BY REJEC TING THE PLEA OF THE ASSESSEE THAT THE SAID NATURE OF EXPENDITURE WAS OF REVENUE IN NATURE AND DID NOT RESULT IN C REATION OF ANY A SSET WITH ENDURING BENEFIT OF LONG TERM NATURE . THE SAID EXPENDITURE DID NOT CREATE ANY ASSET OF ENDURING NATURE BUT WAS I NCURRED TO MAKE LEASEHOLD PREMISES MORE HABITABLE AND WORKABLE SO THAT IT C OULD BE PUT TO USE. MOREOVER, THE ASSESSEE SUBMITTED BEFORE THE AO THAT THE TERM OF THE LEASE DID NOT PERMIT THE ASSESSEE COMPANY TO CARRY OUT ANY INFRASTRUCTURAL CHANGES OR INSTAL L ANY PERMANENT FURNITURE OF FITTING. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD.CIT(A), WHO IN TURN DISMISSED THE APPEAL OF THE ASSESSEE. BEING AGGRIEVED BY THE ORDER OF LD.CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US . 4. AT THE OUTSET, THE LD. C OUNSEL APPEARING ON BEHALF OF THE ASSESSEE POINTED OUT THAT THE ISSUE RAISED IN THIS APPEAL IS COVERED BY THE DECISION OF THE CO - ORDINATE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE IN THE EARLIER ASSESSMENT YEAR IN ITA NO.8 29/MUM/2012 (AY - 2007 - 08) DATED 28.9.2015 WHICH WAS NOT OPPOSED BY THE LD. DR. THE LD. COUNSEL FOR THE ASSESSEE FINALLY SUBMITTED THAT A SIMILAR ISSUE BEING COVERED AND THEREFORE T HE ADDITION OF RS.1,17,93,430/ - BE DELETED. 5. WE HAVE HEARD THE RIVAL CON TENTIONS AND PERUSED THE MATERIAL AVAILABLE BEFORE US. WE FIND THAT THE SIMILAR ISSUE OF DISALLOWANCE OF REPAIRS AND MAINTENANCE OF THE LEASEHOLD PREMISES AROSE IN THE ASSESSMENT YEAR 2007 - 08 IN ASSESSEES OWN CASE IN ITA NO. 829/MUM/2012 (SUPRA) AND IT WA S DECIDED BY ITA NO. 320 / MUM/20 13 3 THE CO - ORDINATE BENCH OF THE MUMBAI TRIBUNAL IN FAVOUR OF THE ASSESSEE. FOR THE SAKE OF CONVENIENCE, THE RELEVANT PARA NO. 23 OF THE SAID ORDER IS EXTRACTED BELOW: 23. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND ON PERUSAL OF THE RELEVANT FINDING GIVEN IN THE IMPUGNED ORDER AS WELL AS MATERIAL PLACED ON RECORD, IT IS NOTICED FROM THE DETAILS OF EXPENDITURE INCURRED ON THE LEASEHOLD PREMISES, THAT THESE ARE IN THE NATURE OF ELECTRICAL WORKS, CIVIL WORK AND FEES PAID TO ARCHITECTS AND MUNICIP AL CHARGES. UNDOUBTEDLY THESE EXPENDITURE HAVE BEEN INCURRED ON A LEASED PREMISES WHICH WAS TAKEN FOR SHORT DURATION OF 33 MONTHS. ONCE THESE EXPENDITURES ARE PURELY IN THE NATURE OF REPAIR WORKS FOR MAKING THE OFFICE IN HABITABLE POSITION, SUCH AN EXPENDI TURE CANNOT BE HELD TO BE CAPITAL IN NATURE. SIMPLY BECAUSE A BENEFIT OF REPAIR IS EXTENDED BEYOND THE PERIOD OF 1 YEAR THAT DOES NOT ENTAIL THAT IT IS GIVING ENDURING BENEFIT TO THE ASSESSEE AND HENCE IS CAPITAL EXPENDITURE. THUS, WE AGREE WITH THE CONTEN TION OF LD. COUNSEL THAT THE EXPENDITURE INCURRED ON LEASEHOLD PREMISES IS ALLOWABLE AS REVENUE EXPENDITURE AND ACCORDINGLY, THE FINDING OF THE LD. CIT(A) IS SET ASIDE AND GROUND RAISED BY THE ASSESSEE IS ALLOWED. 6 . WE, THEREFORE, RESPECTFULLY FOLLOWI NG THE DECISION OF THE CO - ORDINATE BENCH OF THE TRIBUNAL DELETE THE ADDITION OF RS.1,17,93,430/ - BY ALLOWING THE PLEA OF THE ASSESSEE. THE AO IS DIRECTED ACCORDINGLY. THE APPEAL OF THE ASSESSEE IS ALLOWED. 7 . IN THE RESULT, THE APPEAL FILED BY THE ASSES SEE STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 24TH FEB, 2016 . SD SD ( AMIT SHUKLA ) ( RAJESH KUMAR ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED 24TH /02/2016 . . ./ SRL , SR. PS ITA NO. 320 / MUM/20 13 4 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CI T 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . / BY ORDER, TRUE COPY / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI