The ACIT,(OSD)-1, Range-4, Ahmedabad V. Landmark Automobiles Pvt.Ltd., Ahmedabad

ITA 333/AHD/2011

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 6971 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 10 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-12-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 02-12-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 07-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SONIA KUMAR
• Assessee Lawyers: HARDIK V VORA
• Keywords: Capital asset; Depreciation; Business expenditure; Corroborative evidences; Commercial expediency; Revenue expenditure; Capital expenditure

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD 0 0 , 0 0 , BEFORE SHRI G.C. GUPTA, VICE PRESIDENT AND SHRI N.S. SAINI , ACCOUNTANT MEMBER ./ ITA NO . 333 / AHD/ 201 1 [ [ / ASSESSMENT YEAR : 20 0 7 - 08 THE ACIT (OSD) - I, RANGE - 4, AHMEDABAD VS LANDMARK AUTOMOBILES PVT. LTD., LANDMARK HOUSE, OPP. AEC, NR. GURUDWARA, THALTEJ CROSS ROAD, SG HIGHWAY, AHMEDABAD PAN : AAACL 6150 B / (APPELLANT) / (RESPONDENT) REVENUE BY : SMT. SONIA KUMAR, SR. DR. ASSESSEE(S) BY : SHR I HARDIK V. VORA, AR / DATE OF HEARING : 0 2 / 12 /2014 / DATE OF PRONOUNCEMENT: 12 /1 2 /2014 / O R D E R PER SHRI N.S. SAINI, ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) - VIII , AHMEDABAD DATED 18 . 1 1 .201 0 FOR THE ASSESSMENT YEAR 20 07 - 0 8 . 2. THE SOLE ISSUE INVOLVED IN THIS APPEAL IS THAT THE CIT(A) ERRED IN DELETING THE DISALLOWANCE FOR RS.56,59,254/ - MADE BY THE ASSESSING OFFICER BY TREATING THE EXPENSES ON REPAIRS AS CAPITAL EXPENDITURE. 3. THE BRIEF F ACTS OF THE CASE ARE THAT THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS CLAIMED EXPENDITURE ON BUILDING REPAIRS OF ITA NO. 333 /AHD/2011 LANDMARK AUTOMOBILS PVT LTD FOR AY 2007 - 08 2 RS.1,11,58,688/ - . THE ASSESSEE IN REPLY TO SHOW - CAUSE NOTICE HAS STATED THAT THE COMPANY HAS EXTENDED THE EXISTING SHOWROOM AND WORKSHOP AND AMOUNTS ON IT HAS BEEN CAPITALIZED ON THE RESPECTIVE ASSET HEAD AS PER SCHEDULE - 5 OF FIXED ASSET IN BALANCE SHEET; THE DETAILS OF WHICH ARE AS UNDER: - ADDITIONS TO FIXED ASSETS OPENING BAL (01.04.2006) ADDITIONS T OTAL (31.03.2007) BUILDINGS 5,42,35,839 2,15,52,652 7,57,88,491 ELECTRIC FITTING 26,78,535 35,73,351 62,51,886 FURNITURE & FIXTURE 54,23,36 28,75,878 82,99,204 AIR CONDITIONERS 11,64,636 18,07,364 29,72,000 COMPUTERS 36,29,009 8,44,603 44,73,612 4. ALL EXPENSES IN THE EXISTING SHOWROOM AND WORKSHOP AT AHMEDABAD WERE DEBITED AS BUILDING REPAIRS AND MAINTENANCE. ALL NEW CONSTRUCTION WORK FOR EXTENSION OF SHOWROOM/WORKSHOP WAS CAPITALIZED TO FIXED ASSETS AS MENTIONED ABOVE. THE COMPANY HAS ALL BILLS /VOUCHERS AND SUPPORTING EVIDENCES FOR EXPENSE DEBITED AS BUILDING REP AIRS AND MAINTENANCE. THE ASSESSEE SUBMITTED THAT THE EXPENDITURE CLAIMED AS REPAIRS TO SHOWROOM WAS INCURRED AS PER NORMS/INSTRUCTIONS OF HONDA SIEL CARS INDIA LTD IN ORDER TO INCREASE THE EFFICIENCY IN WORKING AND FOR PROMOTING THE BUSINESS PROSPECTS. HENCE, THE SAME WAS LAID DOWN WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF THE BUSINESS. THE BUSINESS EXPENDITURE WAS INCURRED FOR RUNNING THE PROFIT MAKING COMPANY MORE EFFICIENTLY AND IN A BETTER MANNER. THERE IS NO ADDITION TO THE FIXED CAPITAL OF THE COMPANY BY INCURRING OF THE SAID EXPENDITURE. THE EXPENDITURE WAS INCURRED UNDER A TRANSA CTION WHICH IS CLOSELY RELATED TO THE BUSINESS AND WAS INTEGRAL PART OF THE CONDUCT OF THE BUSINESS. THE REPAIRS AND RENOVATION EXPENDITURE UNDERTAKEN IN RESPECT OF PREMISES ITA NO. 333 /AHD/2011 LANDMARK AUTOMOBILS PVT LTD FOR AY 2007 - 08 3 ARE CONSIDERED TO BE REVENUE IN NATURE AS IT DOES NOT ADD TO THE CAPITAL VALUE OF THE ASSET BEING RENOVATED. THE REVENUE EXPENDITURE IS OPERATIONAL IN ITS PERSPECTIVE AND SOLELY INTENDED FOR THE FURTHERANCE OF THE COMPANY. HERE, THE ASSET ITSELF IS INTACT AND EXPENDITURE IS INCURRED ON THE ASSET. 6. THE ASSESSING OFFICER WAS NOT CONV INCED WITH THE SUBMISSIONS OF THE ASSESSEE AND THEREFORE, HELD THAT THE EXPENDITURE OF RS.24,25,216/ - AS CAPITAL EXPENDITURE. 7. FURTHER, REGARDING THE EXPENDITURE OF RS.71,86,752/ - , THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE WAS CLAIMING THIS EXP ENDITURE AS REVENUE EXPENDITURE AND THE PLEA IS THAT IT IS INCURRED AS PER THE NORMS OF LANDMARK HONDA . HE OBSERVED THAT, WHILE GOING THROUGH THE EXPENSES, IT IS FOUND THAT THEY CANNOT BE HELD AS REVENUE. THE EXPENDITURES ARE FOR FIXING OF ALU SIDING WIND OWS, VARIOUS EXPENSE TOWARDS RENOVATION OF BUILDING AT DIFFERENT PLACES WHICH CANNOT BE HELD AS REVENUE. IT INCLUDES THE ENTIRE RENOVATION INSTEAD OF REPAIR. THE ASSESSEE WAS TRYING TO HIDE THE EXPENDITURE OF CAPITAL NATURE BY CLAIMING IT AS REVENUE REPA IR. THE EXPENDITURE ON TILES, FLOORINGS, NEW SANITARY AND ELECTRICAL FITTINGS CANNOT BE REVENUE EXPENDITURE. THE SAME WILL AMOUNT TO NEARLY 45 TO 50% OF THE TOTAL EXPENDITURE. THEREFORE, HE HELD THAT 45% OF RS.71,86,752/ - IS TO BE DISALLOWED AS CAPITAL EXP ENSES AND THEREFORE MADE DISALLOWANCE OF RS.32,34,038/ - . 8. ON APPEAL, THE CIT(A) ALLOWED THE CLAIM OF THE ASSESSEE FOR ENTIRE EXPENSES OF RS.1, 11,58,689 / - AS REVENUE EXPENDITURE AND WHILE DOING SO, HE HELD AS UNDER: - ITA NO. 333 /AHD/2011 LANDMARK AUTOMOBILS PVT LTD FOR AY 2007 - 08 4 IT IS TO BE APPRECIATED THAT THE APPELLANT IS CARRYING ON THE SAME BUSINESS AT THE VERY SAME PREMISES SINCE 1998. THE EXPENSES WERE INCURRED TO MEET THE STANDARD SPECIFICATION OF THE HONDA COMPANY. NO NEW AREA HAS BEEN ADDED BY INCURRING SUCH EXPENSES. THE COMPLETE DETAILS OF THESE EX PENSES ARE AT PAGES 95 TO 99 OF THE PAPER BOOK WHICH CAN BE SUMMARIZED AS UNDER: - 1 MARBLE, TILES & WOODEN FLOORING 13,79,990/ - 2 STEEL FOR WASHING SHADE, PARTITION AND FOR FLOOR STRENGTHENING AS ALSO RAIL ING FOR STAIR CASE 4,86,951/ - 3 SAN ITARY & HARDWARE FITTINGS 1,74,897 / - 4 PAINT & WOODEN BLINDS & PEST CONTROL 4,36,719/ - 5 GLASS AND ALUMINIUM DOOR / WINDOWS (4026668 13919 ) 40,12,749 / - 6 FEES TO VARIOUS CONSULTANTS 7,48,965 / - 7 BILLS OF DESIGN COUNCIL, SHREEJI CONSTRUCTION AND OTHER LABOUR CHARGES FOR RE - DOING PLASTER, BREAKING/ SHIFTING, ETC. 37,85,257 / - 8 MISC. EXPENSES 1,33,161 / - TOTAL 1,11,58,689 / - IT IS TO BE APPRECIATED THAT BY INCURRING THESE EXPENSES, THE APPELLANT HAS NOT ACQUIRED ANY NEW CAPITAL ASSET. OUT OF THE MAJOR EXPENSES OF RS.71,86,752 / - , ONLY 45% IS DISALLOWED BEING CAPITAL EXPENSES WHICH IS NOT IN ACCORDANCE WITH LAW. UNDER THE SCHEME OF THE INCOME T AX ACT, THE EXPENSES CAN BE EITHER A CAPITAL EXPENDITURE OR REVENUE EXPENDITURE BUT THERE IS NO PROVISION TO HOLD VERY SAME EXPENDITURE PARTIALLY AS CAPITAL AND PARTIALLY AS REVENUE. THE TREATMENT TO 45% EXPENDITURE AS CAPITAL IS PURELY SUBJECTIVE AND WITHOUT ANY BASIS. IF MAJOR PART THEREOF I.E. 55% IS CONSIDERED AS REVENUE EXPENDITURE, IT SUPPORTS THE VIEW OF THE APPELLANT THAT THE ENTIRE EXPENDITURE WHICH IS PURELY FOR RENOVATION OF THE EXISTING BUILDING WITHOUT ADDING ANY FURTHER FLOOR AREA WILL ALWAYS BE REVENUE EXPENDITURE AND NOT CAPITAL ITA NO. 333 /AHD/2011 LANDMARK AUTOMOBILS PVT LTD FOR AY 2007 - 08 5 EXPENDITURE. AS REGARDS THE EXPENSES OF RS.24,25,216 / - CO NSIDERED ENTIRELY AS CAPITAL EXPENDITURE, THE SAME IS BROADLY CLASSIFIED AS UNDER: - 1. EXPENSES ON FLOORING BY REPLACING WITH MARBLE, TILES & WOOD. 13,17,318 / - 2. CONSULTANCY FEES TO ARCHITECT, ENGINEERS, DESIGNERS 6,10,750 / - 3. PCC WORK IN WORKSHOP 1,46,228 / - 4. SS RAILING IN THE STAIRS. 1,37,709 / - 5. SANITARY & HARDWARE FITTINGS 25,193 / - 6. VENETIAN BLINDS 51,857 / - 7. FIBER SHEET SHADE AND M.S.GRILL 39,865 / - 8. MISC. 96,296 / - TOTAL 24,25,216 / - SINCE THE APPELLANT HAS ONLY CHANGED THE EXISTING FLOOR OR RE - LAID THE EXISTING WORKSHOP FLOOR, THE EXPENSES ARE PURELY REVENUE IN NATURE. THE AO AFTER SUMMARIZIN G THE EXPENSES OF RS.24,25,216/ , ON PAGE 10 OF HIS ORDER OBSERVED THAT ' THE ASSESSEE IS SPENDING AMOUNTS IN THE PURCHASE OF TILES, BLIN DS, SANITARY FITTINGS, ELECTRICAL FITTINGS, PARTITION OF FLOOR. ALL THESE EXPENSES CANNOT BE CLAIMED AS REVENUE EXPENSES ' HOWEVER, THE AO LOST SIGHT OF THE FACT THAT ALL THESE EXPENSES ARE INCURRED BY WAY OF REPLACING THE EXISTING FLOOR/FITTINGS. WHAT IS D ISALLOWABLE IS EXPENSES BEING CAPITAL IN NATURE BUT NOT WHICH ARE INCURRED BY REPLACING THE EXISTING ONE. THE RELIANCE OF THE AO ON THE DECISION OF HON'BLE ITAT, DELHI IN THE CASE OF PUNJ HOSPITALITY PVT. LTD. WHICH IN TURN HAS RELIED UPON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF BALLIMAL NAVALKISHORE VS. CIT 224 ITR 414 ON THE CONTRARY SUPPORTS THE CASE OF THE ASSESSEE. IF AS PER THE TEST LAID DOWN BY THE HON'BLE COURT AS NOTED IN THE PAGE 13 OF THE ASSESSMENT ORDER IS 'THE EXPRESSION CURRE NT REPAIRS MEANS - EXPENDITURE FOR THE PURPOSE OF PRESERVING OR MAINTAINING AN ALREADY EXISTING ASSET AND WHICH DOES NOT BRING NEW ASSET INTO EXISTENCE ' THIS TEST IS FULFILLED AS NO NEW ASSET HAS COME INTO EXISTENCE BUT THE EXPENSES INCURRED ARE ITA NO. 333 /AHD/2011 LANDMARK AUTOMOBILS PVT LTD FOR AY 2007 - 08 6 ONLY FOR P RESERVING OR MAINTAINING AN ALREADY EXISTING ASSET. ANOTHER TEST NOTED IN THE SAID DECISION IS THAT 'THEY ARE SUCH REPAIRS AS ARE ATTENDED TO AS & WHEN NEED ARISES WHICH MUST BE BY TEST OF COMMERCIAL EXPEDIENCY.' HERE ALSO, THIS TEST IS COMPLIED WITH. THE EXPENSES ARE INCURRED ON THE BASIS OF DEALER DEVELOPMENT GUIDE SET - UP BY HONDA COMPANY AND SINCE THE ASSESSEE BEING IN THE SOLE BUSINESS OF DEALING IN CARS / SPARES OF HONDA COMPANY CAN LEGITIMATELY THINK IT EXPEDIENT TO PREPARE ITS SHOW ROOM, WORKSHOP IN ACCORDANCE WITH SUCH STANDARDS THE HON'BLE SUPREME COURT IN THE CASE OF ALEMBIC CHEMICAL WORKS CO. LTD. V/S. CIT 177 ITR 377 HELD, 'IT WOULD, IN OUR OPINION, BE UNREALISTIC TO IGNORE THE RAPID ADVANCES IN RESEARCHES IN ANTIBIOTIC MEDICAL MICROBIOLOGY AND TO ATTRIBUTE A DEGREE OF ENDURABILITY AND PERMANENCE TO THE TECHNICAL KNOW - HOW AT ANY PARTICULAR STAGE IN THIS FAST CHANGING AREA OF MEDICAL SCIENCE. THE STATE OF THE ART IN SOME OF THESE AREAS OF HIGH PRIORITY RESEARCH IS CONSTANTLY U PDATED SO THAT THE KN OW - HOW CAN NOT BE SAID TO BE THE ELEMENT OF THE REQUISITE DEGREE OF DURABILITY AND NON - PHEMERALITY TO SHARE THE REQUIREMENTS AND QUALIFICATIONS OF AN ENDURING CAPITAL ASSET. THE RAPID STRIDES AND SCIENCE AND TECHNOLOGY IN THE FIELD SHOULD MAKE US A LITTLE S LOW AND CIRCUMSPECT IN TOO READILY PIGEON HOLING AN OUTLAY, SUCH AS THIS AS CAPITAL.' THE IDEA OF 'ONCE FOR ALL PAYMENT AND 'ENDURING BENEFIT' ARE NOT TO BE TREATED AS SOMETHING AKIN TO STATUTORY CONDITIONS; NOR ARE THE NOTIONS OF 'CAPITAL' OR 'REVENUE A DJUDICIAL FETISN. WHAT IS CAPITAL EXPENDITURE AND WHAT IS REVENUE ARE NOT ETERNAL VARIETIES BUT MUST NEEDS BE FLEXIBLE SO AS TO RESPOND TO THE CHANGING ECONOMIC REALITIES OF BUSINESS. THE EXPRESSION 'ASSET OR ADVANTAGE OF AN ENDURING NATURE' WAS EVOLVED TO EMPHASIZE THE ELEMENT OF A SUFFICIENT DEGREE OF DURABILITY APPROPRIATE TO THE CONTEXT. THERE IS ALSO NO SINGLE DEFINITE CRITERION WHICH BY ITSELF, IS DETERMINATIVE WHETHER A PARTICULAR OUTLAY IS CAPITAL OR REVENUE. THE 'ONCE FOR ALL' PAYMENT TEST IS ALSO INCONCLUSIVE. WHAT IS RELEVANT IS THE PURPOSE OF THE OUTLAY AND ITS INTENDED OBJECT AND EFFECT, CONSIDERED IN A COMMON - SENSE WAY HAVING REGARD TO THE BUSINESS REALITIES. IN A GIVEN CASE, THE TEST OF 'ENDURING BENEFIT' MIGHT BREAK DOWN. IN CIT V. ASSOCIATED CEMENT CO. LTD. JT 282 (2) 287 THIS COURT SAID: ITA NO. 333 /AHD/2011 LANDMARK AUTOMOBILS PVT LTD FOR AY 2007 - 08 7 ...... AS OBSERVED BY THE SUPREME COURT IN THE DECISION IN EMPIRE JUTE CO. LTD. V. CIT [1980] 124 ITR 1 (SC) THAT THERE MAY BE CASES WHERE EXPENDITURE, EVEN IF INCURRED FOR OBTAINING AN ADVANTAGE OF ENDURIN G BENEFIT, MAY, NONETHELESS, BE ON REVENUE ACCOUNT AND THE TEST OF ENDURING BENEFIT MAY BREAK DOWN. IT IS NOT EVERY ADVANTAGE OF ENDURING NATURE ACQUIRED BY AN ASSESSEE THAT BRINGS THE CASE WITHIN THE PRINCIPLES LAID DOWN IN THIS TEST. WHAT IS MATERIAL TO CONSIDER IS THE NATURE 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 APPLICATION OF THIS TEST......'. IN THE CASE OF CIT V/S. BHARAT SURYODAY CO. LTD. 202 ITR 942 THE ASSESSEE WAS REQUIRED TO DEMOLISH ONE SIDE WALL AROUND ITS PREMISES BY THE MUNICIPALITY FOR THE PURPOSE OF WIDENING THE ROAD. THUS, THE EXPENSES INCURRED FOR DEMOLITION OF WALL AND REBUILDING THE SAME WAS HELD TO BE REVENUE EXPENDITURE. THE HON 'BLE GUJARAT HIGH COURT HELD THAT SINCE THE WALL WAS REQUIRED TO BE BUILD AS A NECESSITY FOR RUNNING OF THE BUSINESS, THE EXPENSES WERE INCURRED MORE IN THE NATURE OF REPAIR RATHER THAN CREATION OF A NEW CAPITAL ASSET AND HENCE ALLOWABLE AS REVENUE EXPENSE S. IN THE CASE OF AHMEDABAD MFG. & CALICO PVT. LTD. V/S. CIT 162 ITR 800, THE HON'BLE GUJARAT HIGH COURT WAS CONSIDERING THE CASE AS TO WHETHER THE EXPENSES INCURRED FOR RE CONDITIONING OF THE EXISTING ROOM TO ACCOMMODATE IBM MACHINES WAS CAPITAL OR REVENU E EXPENDITURE. THE AUTHORITIES BELOW OBSERVED THAT THOUGH NEW ROOM HAS BEEN CREATED, SINCE NO NEW ASSET CAME INTO EXISTENCE BUT MERELY TO ACCOMMODATE INSTALLATION OF IBM MACHINE, THE EXPENSES WERE HELD TO BE REVENUE IN NATURE. MOST OF THE DECISIONS OF HON' BLE SUPREME COURT AS WELL AS HON'BLE GUJARAT HIGH COURT SUPPORTS THE CASE OF THE ASSESSEE. SINCE IN THE PRESENT CASE, THE EXPENSES WERE INCURRED FOR EFFICIENTLY USING THE EXISTING SPACE IN A BETTER MANNER AS ALSO TO SUIT THE PRINCIPLES REQUIREMENT, AND SIN CE NO NEW FLOOR AREA HAS BEEN ADDED OR ANY CAPITAL ASSET HAS COME INTO EXISTENCE AND HENCE, THE EXPENSES ON REPAIRS & RENOVATION ARE ALLOWABLE AS REVENUE EXPENDITURE. THE AO WAS ALSO NOT JUSTIFIED IN PARTIALLY TREATING THE MAJOR EXPENSES OF RS.71,86,7527 - TO THE EXTENT OF 45% AS CAPITAL AND BALANCE 55% AS REVENUE. THE EXPENSES BASED ON THE COPIES OF THE BILLS FILED AND THE NATURE OF THE SAME ARE FOUND TO BE REVENUE IN NATURE AND HENCE ALLOWABLE AS SUCH. ACCORDINGLY, THE DISALLOWANCE OF RS.56,59,254 / - IS TO BE DELETED. CONSEQUENTLY, THE DEPRECIATION ALLOWED ON THE SAME IS ALSO TO BE WITHDRAWN. AS SUCH APPELLANT GETS RELIEF OF RS.50,93,329/ - . ITA NO. 333 /AHD/2011 LANDMARK AUTOMOBILS PVT LTD FOR AY 2007 - 08 8 9. THE DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDER OF THE ASSESSING OFFICER AND THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE SUPPORTED THE ORDER OF THE CIT(A). 10. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND MATERIAL AVAILABLE ON RECORD. IN THE INSTANT CASE, WE FIND THAT N O MATERIAL WAS BROUGHT ON RECORD TO SHOW THAT ANY NEW ASSET WAS ACQUIRED BY THE ASSESSEE. WE FIND THAT THE HONBLE GUJARAT HIGH COURT THE CASE OF ACIT VS. DESAI BROS., (1977) 108 ITR 14 (GUJ.), HELD THAT EVEN REPLACEMENT OF THE PETROL ENGINE BY A DIESEL EN GINE WOULD NOT BRING INTO EXISTENCE A NEW ASSET AND WAS ALLOWABLE AS CURRENT REPAIRS. FURTHER, THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS. RAMESHWAR PRASAD KEJRIWAL & SONS (P.) LTD., (1994) 74 TAXMAN 124 (CAL.), HELD THAT REPLACEMENT OF PARTS OF A MACHINE, EVEN IF SUCH REPLACEMENT WAS MORE THAN COST OF THE MACHINE ITSELF, WOULD QUALIFY FOR DEDUCTION AS REVENUE EXPENDITURE AS NO NEW ASSET OR ADVANTAGE OF ENDURING BENEFIT WAS BROUGHT INTO EXISTENCE BY ANY SUCH EXPENDITURE. 11. WE AGREE WITH THE FI NDING OF THE CIT(A) THAT AFTER TREATING 5 5 % OF THE EXPENDITURE OF RS.71,86,752/ - AS REVENUE, THERE WAS NO JUSTIFIABLE BASIS FOR THE ASSESSIN G OFFICER TO ARBITRARILY TREAT 45% OF THE SAME EXPENDITURE AS CAPITAL IN NATURE. THE EXPENDITURE INCURRED CAN BE EIT HER CAPITAL OR REVENUE BUT IT CANNOT BE PARTLY REVENUE AND PARTLY CAPITAL . IN RESPECT OF BALANCE AMOUNT OF RS.24,25,216/ - , THE CIT(A) FOUND THAT THE SAME WAS INCURRED FOR REPLACING THE EXISTING ASSET AND NOT FOR ACQUIRING ANY NEW ASSET . IN ABSENCE OF ANY MATERIAL BROUGHT BEFORE US TO SHOW THAT ANY NEW ASSET WHICH WAS NOT EXISTING EARLIER WAS ACQUIRED BY THE ASSESSEE INCURRING THE EXPENDITURE OF RS. RS.24,25,216/ - , WE DO NOT FIND ANY GOOD REASON TO INTERFERE WITH THE ORDER OF THE CIT(A) WHICH IS ITA NO. 333 /AHD/2011 LANDMARK AUTOMOBILS PVT LTD FOR AY 2007 - 08 9 HEREBY CON FIRMED AND THE GROUND OF APPEAL OF THE REVENUE IS DISMISSED. 12 . IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE CO URT ON F R I D A Y , THE 1 2 T H OF DECEMBER , 2014 AT AHMEDABAD. SD/ - SD/ - ( G.C. GUPTA ) VICE PRESIDENT ( N.S. SAINI) ACCOUNTANT MEMBER AHMEDABAD; DATED 1 2 /1 2 /2014 BIJU T., PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) - VIII , AHMEDABAD 5. , , / DR, ITAT, AHMEDABAD 6. [ / GUARD FILE . / BY ORDER, TRUE COPY / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD