M/s. Bright Enterprises P.Ltd, Jalandhar V. The Dy. Commissioner of Income-tax, Jalandhar

ITA 432/ASR/2012

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 6085 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-05-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 29-04-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 20-11-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Business income; Depreciation; Revenue expenditure; Capital expenditure
• Section: 43B; 143(3); 37(1); 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P.JAIN, ACCOUNTANT MEMBER I.T.A. NO.531(ASR)/2009 ASSESSMENT YEAR:2006-07 PAN :AAACB9469K M/S. BRIGHT ENTERPRISES (P) LTD; VS. THE DEPUTY COM MR. OF INCOME TAX MBD HOUSE, RAILWAY ROAD, CENTRAL CIRCLE-II, JALAND HAR. JALANDHAR. (APPELLANT) (RESPONDENT) I.T.A. NO.28(ASR)/2010 ASSESSMENT YEAR:2006-07 PAN : AAACB9469K THE DEPUTY COMMR. OF INCOME TAX VS. M/S. BRIGHT EN TERPRISES (P) LTD; CENTRAL CIRCLE-II, JALANDHAR. MBD HOUSE, RAILWAY ROAD, JALANDHAR. (APPELLANT) (RESPONDENT) I.T.A. NO.432(ASR)/2012 ASSESSMENT YEAR:2006-07 PAN :AAACB9469K M/S. BRIGHT ENTERPRISES (P) LTD; VS. THE DEPUTY COM MR. OF INCOME TAX MBD HOUSE, RAILWAY ROAD, CENTRAL CIRCLE-II, JALAND HAR. JALANDHAR. (APPELLANT) (RESPONDENT) ASSESSEE BY: SH.SUDHIR SEHGAL, DEPARTMENT BY:SH.TARSEM LAL, DR DATE OF HEARING: 29/04/2014 DATE OF PRONOUNCEMENT:21/05/2014 ITA NO.531 & 432(ASR)/2009 & 12 ITA NO.28(ASR)/2010 2 ORDER PER BENCH ; THESE TWO APPEALS OF THE ASSESSEE AND ONE CROSS A PPEAL OF THE REVENUE ARISE FROM THE ORDERS OF THE CIT(A), JALAN DHAR, DATED 13.10.2009 & 13.09.2012 FOR THE ASSESSMENT YEAR 2006-07.THE ASS ESSEE IN ITA NO.531(ASR)/2009 HAS RAISED FOLLOWING GROUNDS OF A PPEAL: 1. THAT THE LD. CIT(A) HAS ERRED IN UPHOLDING THE ADDITIONS MADE BY THE AO ON ACCOUNT OF REPAIR & MAINTENANCE EXPENS ES WITHOUT ANY LEGAL JUSTIFICATION. A) M/S. SUVIDHA ENGG. LTD. RS.1,39,66,383/- B) M/S. USHA CRAFT RS. 13,68,375/- C) M/S. S.K.SANITATION RS. 88,12,982/- D) M/S. GENCON INDIA PVT. LTD. RS. 13,32,000/- E) M/S. SAIFY DECORATOR RS. 19,08,637/- 2. THAT THE LD. CIT(A) HAS ERRED IN SUSTAINING DISA LLOWANCE OF LEASE RENT OF RS.66,99,660/- THOUGH THE SAME WAS PA ID IN ACCOUNTING YEAR RELEVANT TO YEAR UNDER CONSIDERATIO N. 3. THAT THE LD. CIT(A) HAS ERRED IN HOLDING THAT AS SESSEE HAD ACQUIRED A BENEFIT TO ENDURING NATURE. THAT THE FAC TS MENTIONED IN THE ASSESSMENT ORDER UPHELD BY THE LD. CIT(A) AR E PATENTLY WRONG AND ARE CHALLENGED. 4. THAT THE LD. CIT(A) OUGHT TO HAVE ALLOWED PROPER OPPORTUNITY BEFORE DECIDING THE ISSUE AGAINST THE ASSESSEE. 5. THAT NO ADDITION WAS CALLED FOR IN VIEW OF THE F ACTS AND CIRCUMSTANCES OF THE CASE. 6. THAT NO ADDITION WAS CALLED FOR IN VIEW OF THE F ACTS AND CIRCUMSTANCES OF THE CASE. ITA NO.531 & 432(ASR)/2009 & 12 ITA NO.28(ASR)/2010 3 7. THAT THE ORDER OF THE LD. CIT(A) IS AGAINST LAW AND FACTS OF THE CASE. 8. THAT PROPER OPPORTUNITY SHOULD HAVE BEEN ALLOWED . 9. ANY OTHER GROUND PRESSED AT THE TIME OF HEARING. 2. IN ITA NO.28(ASR)/2010, THE REVENUE HAS RAISED F OLLOWING GROUNDS OF APPEAL: 1. THE LD. CIT(A) HAS ERRED BOTH IN LAW AND ON FAC TS OF THE CASE IN HOLDING THAT EXPENDITURE OF RS.10,81,561/- WAS OF R EPAIR IN NATURE AND NOT CAPITAL EXPENDITURE, AS HELD BY THE A.O. 2. THE LD. CIT(A) HAS ERRED BOTH IN LAW AND ON FACT S OF THE CASE IN HOLDING THAT EXPENDITURE OF RS.42,41,416/-, ONLY 50 % WAS CAPITAL EXPENDITURE, AS HELD BY THE AO. 3. THAT THE APPELLANT CRAVES LEAVE TO ADD OR AMEND THE GROUNDS OF APPEAL ON OR BEFORE THE APPEAL IS HEARD AND DISPOSE D OFF. 4. IT IS PRAYED THAT THE ORDER OF THE CIT(A) BE SET ASIDE AND THAT OF THE A.O. BE RESTORED. 3. IN ITA NO. 432(ASR)/2012, THE ASSESSEE HAS RAIS ED FOLLOWING GROUNDS OF APPEAL: 1. THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF THE AO IN ASSUMING THE JURISDICTION AND ISSUING NOTICE U/S 153C OF THE ACT. 2. THAT NOTWITHSTANDING ABOVE SAID GROUND OF APPEAL , IT IS SUBMITTED THAT THE LD. CIT(A) HAS ERRED IN UPHOLDIN G THE ACTION OF THE AO IN ASSESSING INCOME OF RS.57,10,19,499/- AGAINST THE RETURNED INCOME OF RS.52,70,52,488/- AS PER ORIGINA L RETURN FILED BY THE ASSESSEE. 3. THAT THE LD. CIT(A) HAS ERRED TO CONSIDER THAT S IMILAR ADDITION AS MADE IN THE RETURNED INCOME BY THE AO HAD ALREAD Y BEEN MADE IN THE ASSESSMENT ALREADY FRAMED U/S 143(3) F OR THE SAME ITA NO.531 & 432(ASR)/2009 & 12 ITA NO.28(ASR)/2010 4 YEAR AND APPEAR FOR WHICH IS PENDING BEFORE ITAT, A MRITSAR AND AS SUCH IT AMOUNT TO DUPLICATE ADDITION IN THE SAME YEAR. 4. THAT THE ADDITION HAS BEEN CONFIRMED AGAINST THE FACTS AND CIRCUMSTANCES OF THE CASE. 5. THAT THE APPELLANT CRAVES LEAVE TO ADD OR AMEND THE GROUNDS OF APPEAL BEFORE THE APPEAL IS FINALLY HEARD OR DISPOS ED OFF. 4. THE REVENUE HAS RAISED THE FOLLOWING ADDITIONAL GROUND: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS WRONGLY NOT ENHANCED THE INCOME BY DISALLOWING THE LEASE RENT AT RS.1,33,99,320/- PERTAINING TO YEARS PRIOR TO THE A SSESSMENT YEAR UNDER CONSIDERATION INN HIS CO-TERMINUS JURISDICTION WITH THAT OF THE A.O. 5. THE ADDITIONAL GROUND RAISED BY THE REVENUE BEIN G LEGAL GROUND, GOES INTO THE ROOT OF THE MATTER AND THEREFORE, IS ADMIT TED IN VIEW OF THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF NATIONA L THERMAL POWER CO. LTD. VS CIT REPORTED IN 229 ITR 383. 6. NOW, WE TAKE UP APPEAL OF THE ASSESSEE IN ITA NO .531(ASR)/2009. AS REGARDS GROUND NO.1, THE BRIEF FACTS OF THE CASE AR E THAT THE ASSESSEE HAD CLAIMED CERTAIN EXPENDITURE TOTALING RS.3,35,67,415 /- AS HAVING BEEN INCURRED TOWARDS REPAIR AND MAINTENANCE. THE AO ASK ED THE ASSESSEE TO SUBMIT BILLS AND VOUCHERS AND COPY OF AGREEMENT TOW ARDS REPAIRS AND MAINTENANCE OF FIVE OF THE SIX PARTIES TO WHOM PAYM ENTS WERE MADE. AFTER EXAMINING THE BILLS, THE AO CAME TO A PRELIMINARY F INDING THAT THE EXPENDITURE WAS NOT IN THE NATURE OF CURRENT REPAIR S BUT WAS CAPITAL EXPENDITURE. THE ASSESSEE SUBMITTED BEFORE THE AO T HAT NO NEW ASSETS OF ITA NO.531 & 432(ASR)/2009 & 12 ITA NO.28(ASR)/2010 5 ENDURING NATURE WERE ACQUIRED. THE BILL OF M/S. SUV IDHA ENGG. (P) LTD. WAS STATED TO BE IN RESPECT OF REPAIR AND MAINTENANCE O F EXISTING SYSTEM OF AIR CONDITIONING IN THE HOTEL AND NO NEW AIR-CONDITIONE R WAS PURCHASED BY THE ASSESSEE. THE BILLS OF OTHER PARTIES WERE STATED TO BE FOR REPAIR/REPLACEMENT OF INTERIOR DECORATION AND REPAIR TO EXISTING BUILD ING DECORATION. THE AO EXAMINED THE DIFFERENT CASE LAWS ON THE SUBJECT, IN CLUDING THAT OF HONBLE SUPREME COURT IN THE CASE OF BALLIMAL NAVAL KISHORE AND OTHERS VS. CIT 224 ITR 414 (SC) AND SUMMARIZED HER CONCLUSIONS BA SED ON THESE DECISIONS IN PARA 5.6 OF THE ASSESSMENT ORDER. SHE EXAMINED THE NATURE OF WORK DONE BY EACH OF THESE PARTIES IN LIGHT OF THE CONCLUSION DRAWN BY HER. IN RESPECT OF BILL OF M/S. SUVIDHA ENGG. (P) LTD. S HE NOTED THAT CONTRACT FOR THE WORK WAS NOT SUBMITTED THOUGH ASKED FOR. FROM T HE DESCRIPTION OF THE WORK UNDERTAKEN AS PER THE BILLS, SHE CAME TO THE C ONCLUSION THAT THE EXPENDITURE WAS NOT FOR THE REPAIR AND MAINTENANCE OF EXISTING SYSTEM OF AIR CONDITIONER BUT FOR THE SUPPLY, INSTALLATION, TESTI NG AND COMMISSIONING OF HIGH CAPACITY CENTRALIZED AIR CONDITIONING FOR HOTE L BUILDING AND THAT COMPLETE WORK IN THIS REGARD INCLUDING THAT OF COOL ING TOWER, DUCTS FOR AIR DISTRIBUTION, A.C. PLANT ROOM ETC. HAD BEEN PROVIDE D. SHE HELD THAT THIS WAS NOT REPAIR EXPENDITURE BUT FOR PROVIDING NEW SYSTEM WHICH WAS ENDURING IN NATURE. IN RESPECT OF BILL OF M/S. S.K. SANITATION (P) LTD., THE AO NOTED THAT ITA NO.531 & 432(ASR)/2009 & 12 ITA NO.28(ASR)/2010 6 THOUGH THE FINAL RUNNING BILL ONLY WAS SUBMITTED, T HE WORK CONTRACT WAS NOT SUBMITTED. SHE NOTED THAT FROM THE BILL AND LEDGER ACCOUNT, IT APPEARED THAT FIRE AND SAFETY EQUIPMENT WERE PROVIDED AND INSTALL ED BY THE CONTRACTORS AND SHE HELD THE EXPENDITURE TO BE CAPITAL IN NATURE. SHE ALSO NOTED THAT THE BILL ITSELF MENTIONED THAT IT WAS FOR ALTERATION WORK, W HICH COULD NOT BE CURRENT REPAIRS. SHE ALSO NOTED THAT COMPLETE BILLS WERE NO T SUBMITTED. IN RESPECT OF BILL OF USHA CRAFT, THE AO NOTED THAT THE ASSESSEE HAD FAILED TO SUBMIT THE COPY OF AGREEMENT. FROM THE BILLS, IT WAS FOUND THA T EXPENDITURE WAS INCURRED FOR PROVIDING AND FIXING WOODEN WARDROBE, MIRROR, TEAK WOOD SHUTTER, SKIRTING OF TEAK WOOD, PELMET ETC. THE AO HELD THE EXPENDITURE TO BE TOWARDS PURCHASE OF FURNITURE AND FIXTURE AND DOORS AND WINDOWS WHICH COULD NOT BE ALLOWED AS CURRENT REPAIRS OR AS REVEN UE EXPENDITURE. IN RESPECT OF BILL OF M/S. INTERIOR PLUS, THE AO NOTED THAT CO PY OF WORK CONTRACT WAS NOT GIVEN. AS PER THE BILLS, THE ALTERATION WAS FOR WOO DEN CEILING, MARBLE FLOORING AND WALL PANELING FOR RESTAURANT AND FOR C EILING, WALL PANELING, POP CEILING AND FREE STANDING COLUMN. SHE HELD THAT EXP ENDITURE WAS NOT FOR REPAIRS BUT WAS CAPITAL IN NATURE. IN RESPECT OF BI LL OF M/S. SAIFY INTERIOR DECORATOR THE BILLS SHOWED THE EXPENDITURE WAS IN R ESPECT OF POP FALSE CEILING, WALL PANELING, WOODEN BORDER, FREE STANDIN G COLUMN ETC. WHICH THE AO HAS HELD TO BE CAPITAL IN NATURE. THE BILLS OF M /S. GENCON INDIA (P) LTD. ITA NO.531 & 432(ASR)/2009 & 12 ITA NO.28(ASR)/2010 7 IN RESPECT OF WORK ON MARBLE FLOORING, THICK CEMENT FLOORING, POP FALSE CEILING, PROVIDING AND FIXING DOOR FRAMES, WOODEN P ANELING, MIRROR PANELING, STORAGE, DISPLAY BOX ETC WAS ALSO HELD TO BE CAPITA L EXPENDITURE AND NOT REPAIRS. 7. THEREAFTER, THE ASSESSEE MADE THE SUBMISSIONS WH ICH WERE SENT TO THE AO FOR COMMENTS. THE LD. CIT(A) AFTER CONSIDERING T HE COMMENTS OF THE AO AND SUBMISSIONS OF THE ASSESSEE. CONFIRMED THE A CTION A.O. WITH REGARD TO DISALLOWANCE OF RS.1,64,31,039/- IN RESPECT OF P AYMENT TO M/S. SUVIDHA ENGG. LTD. . AS REGARDS THE EXPENDITURE /PAYMENT MA DE TO M/S. USHA CRAFT , THE AOS ACTION IN TREATING THE SAME CAPITAL IN NAT URE WAS UPHELD BY THE LD. CIT(A) ALONGWITH THE PAYMENT MADE TO M/S. S.K. SANI TATIAONS (P) LTD., WHICH ACTION WAS ALSO UPHELD BY THE LD. CIT(A). THE EXPENDITURE MADE WITH REGARD TO SAIFY INTERIOR DECORATORS, THE LD. CIT(A) ESTIMATED THE EXPENDITURE AT 50% AS BEING ON SUPPLY OF NEW FIXTURES IN THE F ORM OF COLUMNS, DOORS, TEAK WOOD WITH ARCHITECTURE ETC. AS CAPITAL IN NATU RE AND BALANCE 50% EXPENDITURE IN THE NATURE OF CURRENT REPAIRS. THE EXPENDITURE WITH REGARD TO M/S. GENCON INDIA (P) LTD. WAS ALSO CONFIRMED BY THE LD. CIT(A). 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. THE ASSESSEE IS RUNNING A FIVE STAR HOTEL AT NOIDA AND CONSTRUCTION OF WHICH WAS COMPLETED IN THE YEAR 2002. IT WAS STATED THAT THE RECEIPTS FROM THE HOTEL ITA NO.531 & 432(ASR)/2009 & 12 ITA NO.28(ASR)/2010 8 FOR THE YEAR ENDING 31.03.2004, 31.03.2005 & 31.03. 2006 RELEVANT TO ASSESSMENT YEARS 2004-05, 2005-06 & 2006-07 ARE AT RS.5,30,81,843/-, RS.25,34,69,809/- & RS.36,82,49,985/- RESPECTIVELY. THE ASSESSEE HAS CLAIMED REPAIR AND MAINTENANCE EXPENDITURE OF RS.33 ,567,415/-. IT WAS STATED THAT THE PROJECT ENGINEER OF THE ASSESSEE V IDE HIS LETTER DATED 15.12.2004, COPY PLACED AT PB ADDRESSED TO THE DIRE CTOR FINANCE SUBMITTED DETAILED REPORT REGARDING THE MAL-FUNCTIONING OF HV AC SYSTEM OF ORIENTAL RESTAURANT AND THE KITCHEN AREA AND IT WOULD BE DI FFICULT TO COPE UP WITH ANY ACCIDENT OR FIRE AND POINTED OUT THE SPECIFIC D EFECTS IN THE BUILDING AND MAL-FUNCTIONING OF THE VARIOUS SYSTEMS, EQUIPMENTS ETC. IT WAS STATED THAT SINCE INCEPTION THE TURNOVER OF THE ASSESSEE HAS AR ISEN FROM RS.5.30 CRORES TO RS.36,82,49,985/- AND NO FORMAL TENDERS WERE CALLED FOR THE REPAIR WORK., SINCE THE CONSTRUCTION OF HOTEL WAS COMPLETED ONLY THREE YEARS BEFORE AND THE ASSESSEE KNEW THE PARTIES WHO COULD UNDERTAKE T HE DESIRED REPAIRS AS POINTED OUT BY THE PROJECT MANAGER. THE AO MADE NO ENQUIRIES WITH THE PARTIES WHO UNDERTOOK SUCH WORKS. IT WAS STATED THA T AO AND THE LD. CIT(A) HAS NOT DISCUSSED AS TO WHICH NEW ASSET HAS COME IN TO EXISTENCE AND IN WHAT MANNER THE ASSESSEE HAS OBTAINED ENDURING BENEFIT. ON THE CONTRARY, NO NEW ASSET HAD COME INTO EXISTENCE. REGARDING VARIOUS EX PENDITURE, IT WAS SUBMITTED BY THE LD. COUNSEL FOR THE ASSESSEE PART Y-WISE AS UNDER: ITA NO.531 & 432(ASR)/2009 & 12 ITA NO.28(ASR)/2010 9 A) M/S. SUVIDHA ENGINEERS INDIA LTD. REPAIR BILL OF RS .1,64,31,039/- 1. THE AO HAS WRONGLY INFERRED IN RESPECT OF BILLS OF M/S. SUVIDHA ENGINEERS INDIA LTD. THAT THE ENTIRE EXPENDITURE OF RS.1,64,31,039/- RELATED TO REPLACEMENT AND INSTALLATION OF HVAC (AI R CONDITIONING SYSTEM).. IN FACT, THE PARTY WISE DETAILS OF THE EX PENDITURE INCURRED ARE GIVEN IN THE ABOVE TABLE. IT MAY BE SEEN THERE FROM THAT EXPENSES OF RS.65,99,300/- ONLY WERE INCURRED ON RE PAIRS TO AIR CONDITIONERS FOR WHICH WORK WAS UNDERTAKEN BY M/S. SUVIDHA ENGINEERS INDIA LIMITED. EXPENDITURE OF RS.5,58,950 /-, 16,53,930/- , 14,28,136/-, 19,17,500/-, 42,68,730/- AND 4,493/- PAID TO SUVIDHA ENGINEERS INDIA LIMITED RELATED TO COST OF REPAIR A ND REPLACEMENT OF ELECTRICAL BULBS, REPAIR TO LAUNDRY EQUIPMENTS, REPAIR TO PLUMBING AND HEATING, REPAIR OF POOR AND GENERAL RE PAIR RESPECTIVELY. THUS, THE AO WAS NOT CORRECT IN ASSUM ING THAT THE ENTIRE EXPENDITURE OF RS.1.64 CRORES IN RESPECT OF WORK UNDERTAKEN BY SUVIDHA ENGINEERING INDIA LIMITED WAS FOR HVAS A IR- CONDITIONING SYSTEM. 2. THE LD. CIT(A) WHILE CONFIRMING THE ADDITION OF RS. 1.64 CRORE, MENTIONED ALMOST EACH AND EVERY ITEM OF THE BILL OF THE SUVIDHA ENGINEERS AND LASTLY MENTIONED THAT THE DESCRIPTION OF THE WORK CARRIED OUT IN THE BILLS INDICATE THAT A COMPLETE A IR CONDITIONING SYSTEM HAS BEEN INSTALLED. THE CIT(A)S WHILE MENT IONING HIS COMMENTS DID NOT GIVE ANY FACTUAL FINDING THAT SHOW THESE PARTS WHICH ARE SHOWN IN THE BILL WILL MAKE THE WHOLE ANO THER AIR CONDITIONING SYSTEM AND INSTALLED THEREIN. THUS, IT IS TOTALLY WRONG IN SAYING THAT THE ASSESSEE HAS ESTABLISHED ANOTHER AIR CONDITION UNIT. 3. THE LD. CIT(A) HAD REASONED WHILE CONFIRMING THE AD DITION THAT THE ASSESSEE HAS REPLACED THE PARTS OF AIR CONDITIONING SYSTEM AND RELYING ON THE JUDGMENT OF HONBLE APEX COURT IN TH E CASE OF CIT VS. SRI MANGAYARKARASI MILLS (P) LTD. (2009) 224 CT R (SC) 513 HELD THAT THE REPLACEMENT IS NOT COVERED UNDER THE CURRENT REPAIRS. 4. RELIANCE IN THIS REGARD IS ALSO PLACED ON THE FOLLO WING JUDGMENTS BY THE LD. CIT(A). - CIT VS. LOYAL TEXTILE MILLS LTD. (2006) 284 ITR 658 (MAD) - CIT VS. KANDAGIRI SPINNING MILLS LTD. (2008) 6 DTR (MAD) 123 - CIT VS. RAJARAM MILLS (P) LTD. (2008) 3012 ITR 10 ITA NO.531 & 432(ASR)/2009 & 12 ITA NO.28(ASR)/2010 10 - CIT VS. GITANJALI MILLS LTD. 265 ITR 681 (2004) - COMSAT MAX LTD. 124 TTJ 86 - CIT VS. LAKE PALACE HOTELS AND MOTELS P. LTD. 258 I TR 562 (RAJ.) 5. FURTHER, THE LD. CIT(A) MAJORLY RELYING ON THE J UDGMENT OF HONBLE APEX COURT IN THE CASE OF CIT VS. SRI MANGA YARKARASI MILLS (P) LTD. (SUPRA). IN THIS REGARD IT IS SUBMITTED T HAT THIS JUDGMENT IS NOT APPLICABLE TO THE CASE OF THE ASSESSEE ON THE FOLLO WING POINTS: IN THIS CASE, THE RESPONDENT DOING BUSINESS IN THE TEXTILE INDUSTRY IN OUR CASE THE ASSESSEE IS IN THE BUSINESS OF FIVE STAR HOTEL ESTABLISHED WHICH IS ESTABLISHED IN 2002 THE RESPONDENT HAD INCURRED THE EXPENDITURE ON THE REPLACEMENT OF THE MACHINERY WHICH FORMS PART OF THE CHAIN OF PRODUCTION PROCESS. THE ASSESSEE HAS MADE EXPENDITURE IN REPAIRS AND MAINTENANCE OF AIR CONDITIONER SYSTEM IN THE KITCHEN AREA OF HOTEL BUILDING WHICH IS REQUIRED TO MAINTAIN THE FIVE STAR STANDARD OF THE HOTEL. THE HONBLE COURT WHILE DECIDING THE ISSUE CONSIDERED THAT THE EACH MACHINE IS A TEXTILE MILL IS PART OF THE INTEGRATED PROCESS OF MANUFACTURE OF YARN AND IS INTEGRALLY CONNECTED TO THE OTHER MACHINES IN THE MILL FOR PRODUCTION OF THE FINAL PRODUCT. THE LD. CIT(A) AFFIRMED THE ADDITION MADE BY THE AO ON THE FACT THAT THE ASSESSEE HAD REPLACED THE OLD PARTS OF THE AIR CONDITIONING SYSTEM AND THE REPLACEMENT DOES NOT AMOUNT INTO THE CURRENT REPAIRS. THUS, EACH MACHINE IN A TEXTILE MILL SHOULD BE TREATED INDEPENDENTLY AS SUCH AND NOT AS A MERE PART OF AN ENTIRE COMPOSITE MACHINERY OF THE SPINNING MILL AND DECIDED THAT THE EXPENDITURE IS CAPITAL EXPENDITURE. THUS, DISALLOWED THE EXPENDITURE OF RS.1,64,31,039/- ON THE ABOVE FINDING. REASON FOR NON-APPLICABILITY OF ABOVE JUDGMENT OF C IT MADURAI VS. SRI MANGAYARKARASI MILLS P. LTD. IN THE CASE OF THE ASSESSEE. ITA NO.531 & 432(ASR)/2009 & 12 ITA NO.28(ASR)/2010 11 1. FIRSTLY, THE BASIS FOR NON-APPLICABILITY OF THE JUD GMENT IS INDUSTRY I.E. THE ASSESSEE IS IN THE HOTEL INDUSTRY AND THE JUDGMENT IS PURELY BASED ON THE TEXTILE INDUSTRY. 2. A HOTEL ROOM AS A COMPLETE PACKAGE. WHEN A PERSON BOOKS A HOTEL ROOM, HE BOOKS IT IN A PERFECT CONDIT ION WITH PROPER ACS, FURNITURE AND OTHER FACILITIES LIK E LAUNDRY, POOL ETC. THE HOTEL INDUSTRY HAS TO REGULA RLY MAINTAIN THE AIR CONDITIONING , FURNITURE & DECORAT IONS REQUIREMENTS AND PROPER CARE IS REUIRED FOR THE FIR E & SAFETY EQUIPMENTS. AS THE ASSESSEE IS A FIVE STAR H OTEL, THEN THE HIGH STANDARD SERVICES ARE MUST REQUIREMEN T FOR THE ASSESSEE FOR THAT REASON THE REPAIR EXPENDITURE HAD BEEN MADE. 3. HERE IN THE HOTEL INDUSTRY, THE REPLACEMENT ONCE MA DE ARE NOT FOR A LONG TIME BECAUSE IMPROVEMENTS WILL BE REQUIRED IN LESS THAN A DECADES TIME BECAUSE OF CH ANGING FASHIONS & TECHNOLOGY. 4. AS AGAINST THE NATURE OF OUR INDUSTRY, THE LD. CIT( A) RELIED THE CASE OF THE APEX COURT WHICH IS TOTALLY DIFFERENT FROM THE BUSINESS OF THE ASSESSEE. THE C ASE RELIED BY THE LD. CIT(A) IS SQUARELY ON THE TEXTILE MILL. THE HONBLE APEX COURT WHILE DECIDING THE ISSUE SPECIFICALLY MENTIONED THAT EACH MACHINE IN A TEXTI LE MILL IS A PART OF THE INTEGRATED PROCESS OF MANUFACTURE OF YARN AND REPLACEMENT OF SUCH OLD MACHINE WITH THE NEW AMOUNT TO BRINGING A NEW ASSET INTO EXISTENCE. THU S, HELD CAPITAL EXPENDITURE FOR SUCH REPLACEMENT. THIS JUDGMENT CANNOT BE RELIED IN OUR CASE OF THE ASSESS EE WHICH IS IN THE HOTEL INDUSTRY AND THE JUDGMENT GIV EN BY THE HONBLE APEX COURT IS ONLY APPLIED TO THE TEXT ILE INDUSTRY. 5. IN OUR CASE, SOME PORTION OF THE AIR CONDITIONER HA D MALFUNCTIONING BUT IT DID NOT AFFECT THE ENTIRE WOR KING OF THE HOTE. THE REPAIRS WERE CARRIED ON WHILE THE HOT EL WAS BEING RUN AND WHEREAS IN THE CASE BEFORE THE HONBL E SUPREME COURT, THE TOTAL PRODUCTION HAS STOPPED DUE TO INTEGRATED PROCESS AND THUS, THE JUDGMENT IS NOT APPLICABLE. 6. IN VIEW OF THE ABOVE FINDING, THE JUDGMENT OF THE HONBLE APEX COURT IN THE CASE OF CIT MADURAI VS. S RI ITA NO.531 & 432(ASR)/2009 & 12 ITA NO.28(ASR)/2010 12 MANGAYARKARASI MILLS P. LTD. (SUPRA) IS NOT APPLICA BLE TO THE CASE OF ASSESSEE. 6. LASTLY WE ARE RELYING ON THE JUDGMENT OF THE HON BLE DELHI HIGH COURT WHOSE FACTS ARE VERY SIMILAR TO THE FAC TS IN OUR CASE. THE RELEVANT PART OF THE DECISION OF THE JUDGMENT IS E XTRACTED AS FOLLOWS: IN THE CASE OF CIT VS. M/S. VOLGA RESTAURANT WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS URGED ON BOTH SIDES AND PERUSED THE PAPERS PLACED BEFORE US IN TH E LIGHT OF THE AUTHORITIES REFERRED TO ABOVE. FROM THE DETAILS PLA CED BEFORE US, IT IS CLEAR THAT THE ASSESSED HAD ENTRUSTED THE JOB OF RE-STARTING ITS AIR CONDITIONING PLANT TO VOLTAS LTD BUT AT THE SAME TIME IT HAD NOT GIVEN THE ENTIRE WORK TO VOLTAS LTD. RS., 7 5804/- WAS PAID TO VOLTAS LTD FOR REPAIRING AND REPLACING THE AIR CONDITIONING PLANT AND RESTARTING IT. THE OTHER EQU IPMENTS REQUIRED FOR RESTARTING THE AIR CONDITIONING PLANT WERE ACQUIRED BY THE ASSESSED ITSELF SUCH AS TWO ELECTRIC MOTORS FROM M/S SEIMENS INDIA LTD FOR RS. 9838/- THREE PUMPING SETS FOR RS.6465/- FROM M/S RAJASTHAN KRISHI UDYOG, SIX STAR TERS FOR RS.6122 FROM NAVAL ELECTRIC & MACHINERY STORES. APA RT FROM THE ABOVE THE ASSESSED HAD SPENT A SUM OF RS. 2792 FOR ELECTRIC WIRING ETC RS. 17656 WAS SPEND FOR REPAIRING THE FU RNISHINGS AS COULD BE SEEN FROM THE AMOUNT PAID TO M/S. CONTINEN TAL FURNISHERS. THE ASSESSED HAD ALSO PAID RS. 4283/- T O BEHARI LAL SONS CO FOR PIPES SUPPLIED BY THEM AND IT ALSO SPEN T A SUM OF RS. 1041/- ON PLASTERING AND RS. 1523/- FOR WALL PH OTOGRAPHS. THUS, IT WOULD BE SEEN THAT THE VARIOUS ITEMS OF EX PENDITURE WERE INCURRED BY THE ASSESSED BY WAY OF REPLACEMENT AND REPAIRS OF THE DAMAGED PARTS OF THE AIR CONDITIONIN G PLANT OF ITS RESTAURANT WHERE SOME OF THE PARTS OF THE AIR CONDI TIONING PLANT, SUCH AS ELECTRIC MOTORS, PUMPING SETS ETC WERE COMP LETELY DAMAGED, THE ASSESSED HAD TO REMOVE THEM AND REPLAC E THEM WITH NEW MOTORS AND NEW PUMPING SETS, STARTERS ETC. BUT THAT DOES NOT MEAN THAT WHAT THE ASSESSED PUT UP WAS AN ENTIRELY NEW AIR CONDITIONING PLANT AFTER SCRAPING THE OLD P LANT WHICH WAS DAMAGED IN THE FIRE AS A TOTAL LOSS. ITA NO.531 & 432(ASR)/2009 & 12 ITA NO.28(ASR)/2010 13 THE JUDGMENT PLACED BEFORE US CLEARLY ESTABLISH TH AT THE ASSESSEE HAD TRIED TO RESTORE THE SAME BY REPLACING THE DAMAGED PARTS OF THE PLANT WITH NEW PARTS OF MACHINERY OF THE PLANT. THE ORDER OF THE CIT(A) SHOWS THAT THE COST OF PROVIDING A NEW AIR CONDITI ONING PLANT OF 27.5 TONS WOULD APPROXIMATELY BE RS.2,15,000/-. IN THE LIGHT OF THE ABOVE FACT, IT WOULD BE CLEAR THAT THE EXPENSES INCURRED BY THE ASSESSEE WERE ONLY IN THE NATURE OF REVENUE EXPENDITURE INCURRED FOR THE PURPOSE OF REPAIRING AND RESTORING ITS DAMAGED AIR CONDITIONIN G PLANT TO ITS ORIGINAL WORKING CONDITION. B. S.K. SANITATION) REPAIR EXPENSES OF RS.88.1 LACS 1. DURING THE YEAR, THE ASSESSEE HAD INCURRED THE EXPE NDITURE OF RS.88.1 LACS ON REPAIR TO BUILDING, FIRE & SAFETY W ASTE REMOVAL & GENERAL REPAIRS. 2. THE ENTIRE EXPENDITURE INCURRED WAS RELATED TO THE EXISTING ASSETS ALREADY INSTALLED ON THE ASSESSEE FOR THE LA ST THREE YEARS. IN FACT, THE VALUE OF THE BUILDING OWNED BY THE ASS ESSEE BEFORE THE BEGINNING OF THE ACCOUNTING YEAR UNDER REFERENC E WAS RS.11,18,00,000/-. 3. AS ALREADY MENTIONING IN THE POINT NO.1, THE ASSESS EE HAS INCURRED THE EXPENDITURE ON REPAIRS OF BUILDING, FI RE & SAFETY, WASTE REMOVAL & GENERAL REPAIR OF RS.42,48,324/-, 2 7,00,021/-, 4,00,161/- & 14,64,476/- RESPECTIVELY IN RESPECT OF THE REPAIR OF BUILDING OF RS.42,48,324/- IS CONCERNED, IT IS SUBM ITTED THAT NO HOTEL CAN START ITS BUSINESS OPERATIONS UNTIL IT E STABLISHED AN SUPER STRUCTURE I.E. BUILDING . THESE EXPENDITURE H AS BEEN INCURRED ON THE ALREADY EXISTING BUILDING ASSET OF RS.11,18,00,000/- STANDING IN THE BALANCE SHEET OF THE ASSESSEE. IT IS TOTALLY WRONG ON SAYING THAT THE EXPENDITURE NOW INCURRED WAS CAPITAL. 4. WITH RESPECT TO THE FIRE & SAFETY EXPENDITURE IT IS SUBMITTED THAT IT IS ENTIRELY UNREASONABLE TO ASSUME THAT THERE WA S NO EXISTING FIRE AND SAFETY EQUIPMENT IN A FIVE STAR HOTEL WHIC H IS A MANDATORY REQUIREMENT FOR RUNNING A HOTEL. IN THIS CONNECTION, WE WOULD LIKE TO REFER TO REPORT DATED 7.7.2003 OF THE STATION, PHASE-1, NOIDA, CERTIFYING THAT FIRE FIGHTING SYSTE M WAS IN PLACE AND WAS REGULARLY BEING MAINTAINED. 5. AS REGARDS TO THE WASTE REMOVAL EXPENSES & GENERAL EXPENSES, IT IS SUBMITTED THAT THE WASTE REMOVAL EXPENSES ARE INCURRED IN ITA NO.531 & 432(ASR)/2009 & 12 ITA NO.28(ASR)/2010 14 RELATION TO REMOVAL OF THE WASTE ARISING DURING THE REPAIR WORK AND THE GENERAL EXPENSES ARE INCURRED WITH RESPECT TO THE EXISTING ASSETS WHICH WERE ALREADY IN PLACE. 6. LASTLY, THE CIT(A) HAD CONFIRMED THE DISALLOWANCE J UST ON THE FACT THAT THE BILL OF S.K. SANITATION IS FOR THE AL TERATION WORK DONE IN THE HOTEL AND THE ALTERATION WORK DOES NOT AMOUNT TO REPAIRS. THE CIT(A) HAD MENTIONED HIS VIEWS WITHO UT PROVIDING ANY EXPLANATION AND SUPPORT OF ANY JUDGME NT TO HOLD HIS OPINION ABOUT THE ALLOWABILITY OF ALTERATION WO RK EXPENDITURE. THERE ARE VARIOUS JUDGMENTS WHICH SUPP ORTS OUR VIEW THAT THE ALTERATION WORK IS IN THE NATURE OF R EVENUE EXPENDITURE, RELIANCE IN THIS REGARD IS PLACED ON T HE FOLLOWING JUDGMENTS: - CIT VS. I.C.I. (INDIA ) LTD. (19830 139 ITR 105 (CA L.) - CIT VS. HINDUSTAN ZINC LTD. (2010) 322 ITR 478 - HERBALIFE INTERTIONAL INDIA (P) LTD. VS. ACIT (200 6) 101 ITD 450 (DEL.) - ITO VS. I.B.P. LTD. 91987) 28 TTJ (CAL) 400 - DCIT VS. PARAMOUNT HOTELS LTD. (2001) 76 ITD 25 (MU MBAI) C. M/S. USHA CRAFTS (REPAIR EXPENDITURE OF RS.15,20 ,417/- 1. THE ASSESSEE HAD GOT THE WORK OF REPAIR OF RS.15,20 ,417/- DONE THROUGH THE PARTY NAMELY M/S. USHA CARAFTS UNDER TH E VARIOUS HEADS THAT ARE REPAIRS OF BUILDING, PAINTING & DECO RATION, FURNITURE & GENERAL REPAIRS OF RS.1,63,230/-, 2,79, 640/-, 1,52,702.85 & 9,24,844.15 RESPECTIVELY. 2. THE ENTIRE EXPENDITURE INCURRED WAS RELATED TO T HE EXISTING ASSETS ALREADY INSTALLED ON BY THE ASSESSEE FOR THE LAST THREE YEARS. THE VALUE OF THE BUILDING OWNED BY THE ASSESSEE AT THE BEGINNING OF THE YEAR IS ALREADY BEEN MENTIONED. THE ASSESSEE OWNED THE FURNITURE WORTH OF RS.2.94 CRORES. THEREFORE, THE EXPENDITUR E INCURRED BY THE ASSESSEE FOR REPAIRS OF EXISTING ASSETS WAS IN THE NATURE OF CURRENT REPAIRS. D. M/S. SAFETY INTERIOR DECORATORS (REPAIR EXPENDIT URE OF RS.42,41,416/-) ITA NO.531 & 432(ASR)/2009 & 12 ITA NO.28(ASR)/2010 15 1. THE ASSESSEE HAD GOT THE WORK OF REPAIR OF RS.42,41 ,416/- DONE THROUGH THE PARTY NAMELY M/S. SAFETY INTERIOR DECOR ATOR UNDER THE HEADS THAT ARE PAINTING AND DECORATION & GENERA L REPAIRS OF RS.42,34,874/- & 6,542.20/- RESPECTIVELY. 2. THE EXPENDITURE HAD BEEN INCURRED ON POP FALSE CEIL ING WALL PANELING, WALL COVERING, TEAK WOOD WORK ETC. 3. THESE EXPENDITURES BECAME NECESSARY WHILE CARRYING OUT THE WORK OF HVAC AIR CONDITIONING SYSTEM AND OTHER EQUI PMENTS ETC. 4. THERE IS NO STRUCTURAL CHANGE IN THE ASSET EXCEPT W HAT WAS REQUIRED TO THE EXISTING STRUCTURE DUE TO THE DAMAG E TO THE PROPERTY WHILE CARRYING OUT THE OTHER REPAIRS. NO N EW ASSET HAS BEEN COME INTO EXISTENCE. 5. THE LD. CIT(A) HAD WRONGLY RELIED ON THE JUDGMENT O F HONBLE APEX COURT IN THE CASE OF CUT MADURAI VS. SRI MANGA YARKARASI MILLS P. LTD. (SUPRA), AS PER THE ABOVE DETAILED DI SCUSSION MADE REGARDING THIS JUDGMENT. 6. FURTHER, RELIANCE IN THIS REGARD IS PLACED ON THE J UDGMENT OF THE HONBLE TRIBUNAL IN THE CASE OF NIRULA & CO. (P) LT D. VS. ITO (1992) (DEL) (TM) WHEREIN IT IS DECIDED THAT THE IN TERIOR DECORATION EXPENSES ARE COVERED AS A REVENUE EXPEND ITURE 43 ITD 21 (TM). E. M/S. GENCON INDIA (P) LTD. (REPAIR EXPENDITURE O F RS.14,80,000/-) 1. THE ASSESSEE HAD GOT THE WORK OF REPAIR OF RS.14,80 ,000/- DONE THROUGH THE PARTY NAMELY M/S. GENCON INDIA (P) LTD. UNDER THE HEADS REPAIR TO BUILDING OF RS.14,80,000/- 2. THE EXPENDITURE HAD BEEN INCURRED ON MARBLE FLOORIN G, THICK CEMENT FLOORING AND FIXING POP, FALSE CEILING WOODE N DOOR FRAMES, WOODEN PANELING, MIRROR PANELING, MIRROR PA NELING, STORAGE DISPLAY BOX AND SHUTTERS ETC. 3. THESE EXPENDITURE BECAME NECESSARY WHILE CARRYING O UT THE WORK OF HVAC AIR CONDITIONING SYSTEM AND OTHER EQUI PMENT ETC. 4. THE LD. CIT(A) HAD CONFIRMED THE ADDITION WITH THE FINDING THAT THE ASSESSEE HAD INCURRED THE EXPENDITURE ON T HE ENTIRE FLOORING CEILING ETC. THIS FINDING OF THE LD. CIT(A & THE A.O. ITA NO.531 & 432(ASR)/2009 & 12 ITA NO.28(ASR)/2010 16 THAT THE ENTIRE FLOORING AND CEILING HAD BEEN DONE, IS NOT SUPPORTED BY ANY COGENT MATERIAL ON RECORD. 5. CIVIL MARBLE WORK AND CEILING WORK IS ONE OF THE AF FECTED AREA DUE TO THE REPAIR WORK AS IT IS MENTIONED IN THE R EPORT OF THE PROJECT ENGINEER IN POINT NO. 6 OF ITS REPORT. 6. THESE REPAIRS WERE NECESSITATES BECAUSE WHILE CA RRYING OUT OTHER REPAIRS TO HVAC, BUILDING ETC. THESE PORTIONS WERE AFFECTED 7 DAMAGED. ONE OF THESE ITEMS RELATED TO A NY NEW ASSET. SUCH REPAIRS RELATED TO THE ALREADY EXISTING ASSETS. 9. THE SUBMISSIONS OF THE ASSESSEE ARE FOUND TO BE CONVINCING. AS REGARDS M/S.SUVIDHA ENGINEERS INDIA LTD, THE SAME I S RELATED TO THE COST OF REPAIR AND REPLACEMENT OF ELECTRICAL BULBS, REPAIR TO LAUNDRY EQUIPMENTS, REPAIR TO PLUMBING AND HEATING, REPAIR OF POOL AND GENERAL REPAIR AND THE AO WAS NOT JUSTIFIED IN ASSUMING THAT THE ENTIRE EXPE NDITURE OF RS.1,64,31,039/- WAS FOR HVAC AIR CONDITIONING SYSTEM. THERE IS NO F INDING HOW THE SAID PARTS REPLACED WHICH ARE SHOWN IN THE BILL WILL M AKE THE WHOLE AIR CONDITIONING UNIT OF SUCH A BIG HOTEL WEREHIN AR OUND 2.5 CRORES ARE ALREADY INVESTED ON THE AIR CONDITIONING SYSTEM AND ACCORDI NGLY NO NEW AIR CONDITIONING UNIT COMES INTO BEING. THE RELIANCE PL ACED BY THE LD. CIT(A) ON THE DECISION OF VARIOUS COURTS OF LAW IS NOT APP LICABLE, AS DISCUSSED HEREINABOVE. THEREFORE, THE ADDITION SO MADE IS DIR ECTED TO BE DELETED. 10. AS REGARDS THE EXPENDITURE RELATING TO M/S. S. K. SANITATION AMOUNTING TO RS.88.1 LACS ON REPAIR TO BUILDING, FIRE & SAFET Y, WASTE REMOVAL & GENERAL ITA NO.531 & 432(ASR)/2009 & 12 ITA NO.28(ASR)/2010 17 REPAIRS, ON PERUSAL IT WAS FOUND THAT EXPENDITURE W AS INCURRED ON EXISTING ASSETS ALREADY INSTALLED ON BY THE ASSESSEE FOR THE LAST THREE YEARS AND THEREFORE, THE LD. CIT(A) WAS NOT JUSTIFIED IN CONF IRMING THE ACTION OF THE A.O. THE ADDITION SO MADE IS DIRECTED TO BE DELETE D. 11. WITH REGARD TO PAYMENT MADE AND EXPENDITURE IN CURRED OF RS.15,20,417/- RELATING TO M/S. USHA CRAFTS, WHICH HAS BEEN INCURRED ON VARIOUS HEADS LIKE REPAIRS OF BUILDING, PAINTING & DECORATION, FURNITURE & GENERAL REPAIRS, WE ARE OF THE VIEW THAT THE EXPEND ITURE HAS BEEN INCURRED ON EXISTING ASSETS. THE ASSESSEE OWNED THE FURNITURE W ORTH RS. 2.94 CRORES AND THE LD. CIT(A) IS NOT JUSTIFIED IN CONFIRMING THE A CTION OF THE A.O. IN THE FACTS AND CIRCUMSTANCES, THE LD. CIT(A) IS NOT JUST IFIED IN CONFIRMING THE ACTION OF THE A.O. AND THE ADDITION SO MADE IS DIRE CTED TO BE DELETED. 12. WITH REGARD TO THE EXPENDITURE AND PAYMENT OF R S.42,41,416/- TO M/S. SAIFY INTERIOR DECORATORS AND M/S. GENCON INDIA (P) LTD. OF RS.14,80,000/-, IT WAS SUBMITTED THAT THESE ARE CURRENT REPAIRS ON THE EXISTING ASSETS AND NO NEW ASSET HAS COME INTO EXISTENCE. THUS, THE ADDITI ONS SO MADE ARE DIRECTED TO BE DELETED. 13. AS REGARDS GROUND NO.2, THE BRIEF FACTS OF THE CASE ARE THAT THE A.O. DISALLOWED A LEASE RENT OF RS.66,99,660/- BEING ADV ANCE AND NO PAYMENT MADE DURING THE ASSESSMENT YEAR. BEFORE THE LD. CIT (A), THE ASSESSEE MADE ITA NO.531 & 432(ASR)/2009 & 12 ITA NO.28(ASR)/2010 18 THE SUBMISSIONS, WHICH WERE SENT TO THE A.O. FOR CO MMENTS. THE LD. CIT(A) AFTER TAKING INTO CONSIDERATION THE COMMENTS OF THE A.O. AND SUBMISSIONS OF THE ASSESSEE CONFIRMED THE ACTION OF THE A.O. 14. THE LD. DR IN ADDITIONAL GROUND AS SUBMITTED TH AT IN THIS CASE, AN ADDITION OF RS.66,99,660/- HAD BEEN MADE BY THE AO. THE ADDITION WAS MADE ON THE ISSUE THAT THE ASSESSEE HAD ENTERED INT O A LEASE AGREEMENT AS LESSEE ON 24.03.2011 WITH NODIA AND IN TERMS OF THI S LEASE HAS AGREED TO PAY RS.8,12,08,000/- AS PREMIUM AND FURTHER AGREED TO PAY LEASE RENT OF RS.11/- PER SQ. METER FOR FIRST TWO YEARS AND @ 2.5 % OF THE PREMIUM AMOUNT FOR THE NEXT 8 YEARS. OUT OF THE TOTAL PREMIUM AMOU NT OF RS.8,12,08,000/- A SUM OF RS.2,03,02,000/- WAS PAID BY THE ASSESSEE TO THE LESSOR AT THE TIME OF EXECUTING OF LEASE DEED AND THE REMAINING SUM OF P REMIUM WAS PAYABLE IN SIX MONTHLY INSTALLMENT OF RS.76,13,250/- W.E.F. FR OM 25.05.1999 TILL 25.11.2002.. DURING THE A.Y. 2006-07 YEAR, THE ASSE SSEE HAD CLAIMED A SUM OF RS.2,23,32,220/- ON ACCOUNT OF LEASE RENT AND TH E SAME HAS BEEN CLAIMED IN THE P & L ACCOUNT DURING THE ASSESSMENT PROCEEDI GNS. THE AO IN THE ASSESSMENT ORDER STATED THAT THE AMOUNT IS ON ACCOU NT OF LEASE OF 10 YEARS AND HENCE HAS DISALLOWED A SUM OF RS.66,99,660/- ON LY ON ACCOUNT OF RENT PAID IN ADVANCE FOR 3 YEARS, WHILE THE LEASE WAS FA CTUALLY FOR 10 YEARS. ITA NO.531 & 432(ASR)/2009 & 12 ITA NO.28(ASR)/2010 19 14.1 THE LD. DR FURTHER SUBMITTED THAT THE LD. CI T(A) IN PARA 4.5 OF HIS ORDER HAS NOTED THAT THE ASSESSEE DID NOT PAY ANY L EASE RENT TILL MAY, 2006, WHEN IT WAS ASKED TO PAY A ONE TIME PAYMENT IN TERM S OF NOIDAS LETTER DATED 07.03.2006 ASKING THE ASSESSEE TO PAY THE LEA SE RENT OF RS.2,23,32,200/-. THE LD. CIT(A) HAVING NOTICED THA T THE ASSESSEE HAS NOT PAID LEASE RENT FOR PREVIOUS SIX YEARS BUT HAD CLAI MED THE ENTIRE LIABILITY OF 10 YEARS DURING THE YEAR UNDER CONSIDERATION, OUGHT TO HAVE ALLOWED LEASE RENT OF RS.22,33,220/- RELEVANT TO THE A.Y. 2006-07 ONLY. IN DOING SO, THE LD. CIT(A) SHOULD HAVE ENHANCED THE INCOME OF THE A SSESSEE BY A SUM OF RS.1,33,99,120/- (RS.22332000-RS.6699660-RS.2233220 )..IN THIS CONTEXT, IT IS PERTINENT TO MENTION HERE THAT A LIABILITY OF AN Y OTHER ASSESSMENT YEAR CAN BE CHARGED TO THE PROFITS OF ANOTHER YEAR ONLY IN O NE EXCEPTION BEING THAT SUCH LIABILITY SHOULD BE ASCERTAINED FOR SUCH YEAR. THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. SWADESHI AND FLOUR MIL LS PRIVATE LTD. REPORTED AT 53 ITR 134 HAD HELD THAT BONUS PAYABLE TO THE EM PLOYEES WAS SETTLED BY AN AWARD OF THE INDUSTRIAL TRIBUNAL, THE LIABILITY ON ACCOUNT OF BONUS GETS ASCERTAINED IN THE YEAR IN WHICH THE DISPUTE IS SET TLED BY THE INDUSTRIAL TRIBUNAL. THE HONBLE KERALA HIGH COURT IN THE CASE OF CIT VS. PARSHOTAM GOKULDAS REPORTED AT 237 ITR 115 HAS HELD THAT A CO NTRACTUAL LIABILITY STEMS FROM CONDITIONS OF AGREEMENT.THE SAID LIABILITY COU LD BE CLAIMED AS ITA NO.531 & 432(ASR)/2009 & 12 ITA NO.28(ASR)/2010 20 DEDUCTION WHEN THE DISPUTE IS SETTLED WHICH IS NOT SO, IN THIS CASE. LIABILITY WAS NOT TO BE DEDUCTED IN THE ASSESSMENT YEAR IN QU ESTION DURING WHICH THE DISPUTE WAS PENDING. IN CASE OF THE PRESENT ASSESSE E, THERE IS NOTHING ON RECORD TO SUGGEST THAT THE ASSESSEE HAD NOT PAID TH E LEASE RENT DUE TO ANY DISPUTE BETWEEN THE ASSESSEE AND THE LESSOR. THUS, THE CONTRACTUAL LIABILITY FOR LEASE RENT FOR THE PREVIOUS YEAR RELEVANT TO TH E ASSESSMENT YEAR UNDER CONSIDERATION AT RS.22,33,220/- COULD ONLY BE CHARG ED TO PROFIT OF THE YEAR. 15. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. WITH REGARD TO GROUND NO.2 OF THE ASSESSEE AND ADDI TIONAL GROUND OF THE REVENUE, WE CONCUR WITH THE VIEWS OF THE LD. CIT(A) , WHOSE ORDER IS WELL REASONED. FOR THE SAKE OF CONVENIENCE, WE REPRODUCE PARA 4.6 & 4.7 OF THE ORDER OF THE CIT(A) AS UNDER: 4.6. THE FIRST ISSUE TO BE DECIDED IS WHETHER THE PAYMENT OF LEASE RENT MADE BY THE ASSESSE IS COVERED UNDER THE PROVI SIONS OF SECTION 43B(A) OF THE I.T. ACT. THIS CLAUSE COVERS ANY SUM PAYABLE BY THE ASSESSEE BY WAY OF TAX, DUTY, CESS OR FEE BY WHATEV ER NAME CALLED, UNDER ANY LAW FOR THE TIME BEING IN FORCE. THE ASSE SSEE HAS INCURRED LIABILITY TO PAY LEASE RENT UNDER THE AGREEMENT ENT ERED INTO WITH NOIDA. IN MY OPINION, LEASE RENT FOR THE LAND TAKEN ON 90 YEARS LEASE BY THE ASSESSEE IS NOT OF THE NATURE OF TAX, DUTY, CESS OR FEE. LEASE RENT IS PAYABLE BY THE ASSESSEE UNDER A CONTRACTUAL AGRE EMENT WITH AN AUTHORITY CREATED BY THE GOVT. IT IS A COMMERCIAL A GREEMENT AND THOUGH PAYABLE TO A SEMI-GOVT. BODY, IS NOT A CHARG E PAID UNDER THE FORCE OF LAW BUT IS PAID FOR UTILIZATION OF PROPERT Y UNDER CONTROL OF THE AUTHORITY. IN THE CASE OF CIT VS. SRI BALAJI & CO 246 ITR 750 (KAR), THE ISSUE BEFORE THE HONBLE HIGH COURT WAS WHETHER LIST PAYABLE TO THE GOVT. BY THE ASSESSEE COULD BE CONSIDERED WITHI N THE PURVIEW OF PROVISIONS OF SECTION 43B OF THE I.T. ACT, 1961. TH E HONBLE HIGH ITA NO.531 & 432(ASR)/2009 & 12 ITA NO.28(ASR)/2010 21 COURT EXAMINED THE VARIOUS WORDS USED IN CLAUSE (A) TO SECTION 43B. REFERENCE WAS MADE IN THIS DECISION TO THE JUDGMENT IN THE CASE OF HARSHANKAR AND ORS. VS. DY. EXCISE AND TAXATION COM MISSIONER AND ORS. (1975) SC 1121 IN WHICH IT WAS OBSERVED THAT A TAX WAS COMPULSORY EXACTION OF MONEY BY PUBLIC AUTHORITY FO R PUBLIC PURPOSES ENFORCEABLE BY LAW AND WAS NOT A PAYMENT FOR SERVI CES RENDERED. IT WAS FURTHER NOTED THAT IN THE CASE OF OMPARKASH AGG ARWAL VS. GIRI RAJ KISHORE AND ORS 164 ITR 376 (SC), THE ESSENTIAL CHA RACTERISTICS OF A TAX AS DISTINGUISHED FROM OTHER FORMS OF IMPOSITIO N WHICH, IN A GENERAL SENSE ARE ENCLOSED WITHIN IT, WERE OBSERVED . THE ESSENCE OF TAXATION IS COMPULSION, THAT IS TO SAY, IT IS IMPOS ED UNDER STATUTORY POWER WITHOUT THE TAXPAYERS CONSENT AND THE PAYMEN T IS ENFORCED BY LAW. THE SECOND CHARACTERISTIC OF TAX WAS LAW THAT IT WAS AN IMPOSITION MADE FOR PUBLIC PURPOSES WITHOUT REFERENCE TO ANY S PECIAL BENEFIT TO BE CONFERRED ON THE PAYER OF THE TAX. THERE IS NO E LEMENT OF QUID PRO QUO BETWEEN THE TAX PAYER AND PUBLIC AUTHORITY IN C OLLECTION OF TAX. ANOTHER FEATURE OF TAXATION NOTED WAS THAT IT WAS A PART OF THE COMMON BURDEN, THE QUANTUM OF IMPOSITION DEPENDING UPON CAPACITY OF TAX PAYER TO COMMON BURDEN, THE QUANTUM OF IMPOS ITION DEPENDING UPON CAPACITY OF TAX PAYER TO PAY. IN RESPECT OF FE ES, IT WAS OBSERVED THAT IT WAS A CHARGE FOR A SPECIAL SERVICE RENDERED TO INDIVIDUALS BY SOME GOVT. AGENCIES, THOUGH IN MANY CASES THE COSTS WERE ARBITRARILY ASSESSED. REFERENCE WAS MADE TO THE DECISION IN THE CASE OF CIT VS. VARAS INTERNATIONAL (P) LTD. 225 ITR 831 (KAL) IN W HICH IT WAS OBSERVED THAT PERIODICAL LICENSE FOR RELATION VEND OF FOREIGN LIQUOR GRANTED ON THE BASIS OF LICENSE FEE MEANS CONSIDERA TION RECEIVED BY THE GOVT. FOR PARTING WITH ITS EXCLUSIVE PRIVILEGE TO DEAL IN INTOXICANTS AND SUCH FEE WAS NEITHER A TAX NOR A DUTY NOR A FEE , NOR CESS. THIS VIEW HAS BEEN AFFIRMED IN A RECENT DECISION OF THE HONB LE SUPREME COURT IN THE CASE OF CIT VS. BOWELL & CO. LTD 180 TAXMAN 514 (SC). IN THIS DECISION THE HONBLE APEX COURT HAVE NOTED THA T S. 43B(A) CONTAINED THE WORDS TAX, DUTY, CESS OR FEE AND THE EXPENSES BY WHATEVER NAME CALLED FOLLOWING THESE WORDS HA D TO TAKE COLOUR THESE FOUR WORDS AND IN THE GENUS OF TAXATION. TA XATION WAS COMPULSORY EXACTION IN THE EXERCISE OF STATES POWE R OF TAXATION WHERE LEVY AND COLLECTION WAS DULY AUTHORIZED BY LAW. IT WAS FURTHER HELD THAT A LIABILITY FOUNDED ON PRINCIPLE OF CONTRACT C OULD NOT BE A TAX IN ITS TECHNICAL SENSE AS AN IMPOST (A COMPULSORY LEVY ), GENERAL, LOCAL OR SPECIAL. LICENSE FEE UNDER STATE EXCISE LAWS REL ATING TO PERMISSION TO DO TRADE IN INTOXICANTS WAS HELD BY THE HONBLE APEX COURT AS NOT ITA NO.531 & 432(ASR)/2009 & 12 ITA NO.28(ASR)/2010 22 FALLING WITHIN THE MEANING OF TAX ETC. U/S 43B, A S IT WAS THE PRICE OR CONSIDERATION WHICH THE GOVT. CHARGED TO THE LICENS EES FOR PARTING WITH ITS EXCLUSIVE PRIVILEGE AND GRANTING THEM TO T HE LICENSEES. IN MY VIEW, THE PAYMENT OF LEASE RENT BY THE ASSESSEE BEI NG FOR THE USE OF LAND DOES NOT PAR TAKE THE CHARACTER OF TAX, DUTY, CESS OR FEE. IT IS NOT AN IMPOST LEVIED BY THE STATE GOVT. UNDER AUTHORITY OF LAW. EVERY LIABILITY PAYABLE TO THE GOVT./SEMI GOVT. AGENCY DO ES NOT COME WITHIN THE PURVIEW OF SECTION 43B OF THE ACT. THE PAYMENT SHOULD BE OF THE NATURE OF TAX, DUTY ETC. TO FALL WITHIN THE PURVIEW OF SECTION 43B . PAYMENT OF LEASE RENT, NOT BEING IN THE NATURE OF T AX, DUTY, ETC., IS HELD NOT TO BE COVERED BY THE PROVISIONS OF SECTION 43B. 4.7. THE NEXT QUESTION IS WHETHER THE PAYMENT IS AL LOWABLE AS DEDUCTION U/S 37 SINCE THE EXPENDITURE IS UNDOUBTED LY REVENUE IN NATURE AND HAS EVEN BEEN CONSIDERED AS SUCH BY THE AO. THE APPELLANT HAS NOT DISPUTED THE AOS CONTENTION THAT THE SUM O F RS.66,99,660/- WAS IN RELATION TO THE LEASE RENT FOR THE SUBSEQUEN T THREE YEARS. THE PAYMENT HAS BEEN MADE PURSUANT TO A DEMAND NOTICE I SSUED BY THE AUTHORITY ASKING THE ASSESSEE TO MAKE A ONE TIME L EASE RENT PAYMENT . IN MY OPINION, EVEN THOUGH THE PAYMENT HA S BEEN MADE AS A ONE TIME PAYMENT, DEDUCTION CANNOT BE ALLOWED FOR THE PAYMENT OF FUTURE LEASE RENT INCLUDED IN THE PAYMENT. THIS IS FOR THE REASON THAT AS PER THE CONTRACT BETWEEN THE ASSESSEE AND NOIDA, LE ASE RENT WAS PAYABLE ON AN ANNUAL BASIS. THE PAYMENT MADE BY THE ASSESSEE IS NOT A ONE TIME PAYMENT FOR THE DURATION OF ENTIRE LEASE PERIOD OF 90 YEARS. THE ASSESSEE HAS STATED THAT THE CONTRACT WAS TO BE RENEWED EVERY TEN YEARS. HOWEVER, THAT DOES NOT APPEAR TO BE FACTUALL Y CORRECT SINCE THE AGREEMENT WITH NOIDA ONLY PROVIDES FOR MODIFICATIO N IN THE LEASE RENT EVERY TEN YEARS. THE ONE TIME PAYMENT MADE BY THE ASSESSEE HAS BEEN IN THE FORM OF PREMIUM PAID OR INCURRED AT THE TIME OF ENTERING INTO THE CONTRACT. THE SUBSEQUENT PAYMENTS ARE ANNU AL LEASE RENT. DEBITING OF THE ANNUAL LEASE RENT FOR SEVERAL YEARS TOGETHER IN ONE YEAR WILL GIVE AN INACCURATE PICTURE OF THE PROFITS OF T HE ASSESSEE IN ONE YEAR. THERE IS NOTHING TO SHOW THAT THE CONTRACT BE TWEEN NOIDA AND THE ASSESSEE HAS BEEN CHANGED TO PROVIDE FOR A ONE TIME PAYMENT FOR THE ENTIRE TEN YEARS. A LESSOR MAY REQUIRE THE LEAS SEE TO PAY RENT FOR SEVERAL MONTHS OR YEARS AT ONE TIME, AND THE LESSEE MAY, AGREE TO MAKE SUCH PAYMENTS. HOWEVER, IN THE MERCANTILE SYST EM OF ACCOUNTING WHICH THE ASSESSEE IS FOLLOWING- IT IS T HE INCOME AND EXPENDITURE OF EVERY YEAR WHICH NEEDS TO BE CONSIDE RED TO ARRIVE AT ITA NO.531 & 432(ASR)/2009 & 12 ITA NO.28(ASR)/2010 23 THE BUSINESS INCOME FOR AN ASSESSMENT YEAR, THE LEA SE RENT PAID FOR SEVERAL YEARS NEEDS TO BE SPREAD OVER EQUALLY BETWE EN THE DIFFERENT ASSESSMENT YEARS INVOLVED. THERE IS NO INDICATION THAT ANY SPECIAL DISCOUNT HAS BEEN RECEIVED BY THE ASSESSEE FOR MAKI NG THE ONE TIME PAYMENT. THE PAYMENT IS NOT IN THE NATURE OF, SAY, A ONE TIME REGISTRATION TAX OF ROAD TAX LEVIED ON MOTOR CARS F OR THE LIFE OF THE VEHICLE. IT IS SIMPLY A ONE TIME PAYMENT OF ANNUAL LEASE RENT. IN MY OPINION, EVEN THOUGH THE PAYMENT HAS BEEN MADE BY T HE ASSESSEE PURSUANT TO THE DEMAND BY NOIDA, IT MERELY REPRESEN TS A COLLECTIVE PAYMENT OF ANNUAL LEASE RENT WHICH SHOULD BE CONSID ERED FOR ALLOWANCE ANNUALLY. THE PAYMENT FOR SUBSEQUENT RENT CAN ONLY BE CONSIDERED AS ADVANCE RENT. THE DISALLOWANCE OF RS. 66,99,660/- MADE BY THE AO IS, THEREFORE, UPHELD. 15.1 IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT THE ORDER OF THE LD. CIT(A) IS QUITE REASONED ONE AND ACCORDINGLY, W E DISMISS THE ADDITIONAL GROUND RAISED BY THE LD. DR AND THAT OF THE ASSESSE E CONFIRMING THE VIEWS OF THE LD. CIT(A). THUS, GROUND NO.2 OF THE ASSESSEE A ND ADDITIONAL GROUND RAISED BY THE DEPARTMENT ARE DISMISSED. 16. GROUNDS NO. 3 TO 9 OF THE ASSESSEE ARE GENERAL IN NATURE AND THEREFORE, DID NOT REQUIRE ANY ADJUDICATION. 17. THUS, APPEAL OF THE ASSESSEE IN ITA NO.531(ASR /2009 IS PARTLY ALLOWED. 18. NOW, WE TAKE UP THE APPEAL OF THE REVENUE IN IT A NO.28(ASR)/2010. AS REGARDS GROUND NO.1 OF THE REVENUE, THE BRIEF FA CTS OF THE CASE ARE THAT THE ASSESSEE ENGAGED M/S. INTERIOR PLUS FOR THE AL TERATION WORK OF RESTAURANT ITA NO.531 & 432(ASR)/2009 & 12 ITA NO.28(ASR)/2010 24 AND BUSINESS CENTRE AT HOTEL. THE ASSESSEE HAS FAIL ED TO SUBMIT THE COPY OF WORK CONTRACT. THE BILL SPECIFIED ALTERATION WORK A ND ITEM WISE DESCRIPTION IS MENTIONED AS UNDER: I) WOODEN CEILING FOR RESTAURANT II) MARBLE FLOORING FOR RESTAURANT III) WALL PANELING FOR RESTAURANT IV) POP CEILING FOR BUSINESS CENTRE V) WALL PANELING FOR BUSINESS CENTRE VI) FALSE CEILING VII) FREE STANDING COLUMN THE ALTERATION WORK IS NOT IN NATURE OF CURRENT REP AIR AND IS HENCE NOT ALLOWABLE U/S 30(A) OF I.T.ACT. FURTHER, IT IS A ON E TIME EXPENDITURE AND AN ADVANTAGE OF ENDURING BENEFIT HAS BEEN DERIVED BY T HE ASSESSEE. FURTHER, STRUCTURAL CHANGES IN THE BUILDING BY CREATING THE CEILING, FLOORING, WALL AND FREE STANDING COLUMN HAD BEEN MADE. THE EXPENSE IS NOT ALLOWABLE U/S 37(1) OF I.T.ACT. RS.10,81,561/- IS HENCE ADDED TO THE RE TURNED INCOME AND DEPRECIATION @ 10% OF RS.1,81,156/- IS ALLOWED. 19. THE LD. CIT(A) DELETED THE ADDITION SO MADE FO R THE REASONS MENTIONED IN HIS ORDER. 20. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. WE CONCUR WITH THE VIEWS OF THE LD. CIT(A) THAT THE EXPENDITURE WAS NECESSITATED BY THE DAMAGE CAUSED DUE TO THE AIR CO NDITIONING WORK ITA NO.531 & 432(ASR)/2009 & 12 ITA NO.28(ASR)/2010 25 UNDERTAKEN AND ON EXAMINATION OF THE BILL, WHICH SH OWS DIFFERENT AREAS FOR WHICH ALTERATION WORK HAD BEEN DONE, WHICH INCLUDES THE WOODEN CEILING, COVE LIGHTING, BUSINESS CENTRE AND SOME EXTRA ITEMS , WHICH MENTIONS THE PERCENTAGE FROM 10% TO 90% AND FOR A FEW ITEMS 100% . WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) THAT THESE ARE CURRENT REPAIRS . THE LD. CIT(A) HAS RIGHTLY DELETED THE ADDITION. THUS, GROUND NO.1 OF THE REVENUE IS DISMISSED. 21. IN GROUND NO.2, THE REVENUE HAS CONTENDED THAT THE LD. CIT(A) ERRED IN HOLDING THAT OUT OF EXPENDITURE OF RS.42,41,416/ -, ONLY 50% WAS CAPITAL EXPENDITURE AND THE BALANCE 50% WAS REVENUE EXPENDI TURE WITHOUT APPRECIATING THAT WHOLE OF THE EXPENDITURE OF RS.42 ,41,416/- WAS CAPITAL EXPENDITURE.. AS DISCUSSED ABOVE, AS PER BILL OF M/ S. SAIFY INTERIOR DECORATOR DATED 25.1.2006, IT WAS STATED TO BE FOR ALTERATION WORK. AND THE BILL FOR POP WORK WAS FOR FALSE CEILING ON FLAT AND VERTICAL SU RFACE, PLASTIC PAINT, WALL PANELING, WALL COVERING, SUPPLY OF TEAK WOOD ALONGW ITH ARCHITECTURE, WOODEN BORDER, FREE STANDING COLUMN, MAIN DOOR ETC. AND WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A). WE HAVE A LREADY HELD AND ALLOWED EXPENDITURE AT 100% IN ASSESSEES APPEAL HEREINABO VE AND ACCORDINGLY GROUND NO.2 OF THE REVENUE IS DISMISSED. ITA NO.531 & 432(ASR)/2009 & 12 ITA NO.28(ASR)/2010 26 22. GROUNDS NO. 3 & 4 OF THE REVENUE ARE GENERAL IN NATURE AND THEREFORE, REQUIRE NO ADJUDICATION. THUS, THE APPEAL OF THE RE VENUE IN ITA NO.28(ASR)/2010 IS DISMISSED. 23. NOW, WE TAKE UP THE APPEAL OF THE ASSESSEE IN I TA NO.432(ASR)/2012 FOR THE A.Y. 2006-07. THE ASSESSEE HAS ALSO FILED A PPEAL AGAINST THE ORDER DATED 13.09.2012 OF LD. CIT(A)-I, LUDHIANA FOR THE ASSESSMENT YEAR 2006- 07 IN WHICH SAME ADDITIONS HAVE BEEN MADE UNDER SEC TION 143(3) OF THE ACT BY THE A.O. WHICH ARE CLAIMED TO BE DUPLICATE ADDI TIONS, THOUGH THE ASSESSEE HAS RAISED GROUNDS OF APPEAL, WHICH ARE R EPRODUCED HEREINABOVE. 24. GROUND NO.1 OF THE ASSESSEE IS NOT PRESSED AND THE SAME IS DEMISED AS NOT PRESSED. 25. IN GROUNDS NO. 2 & 3, IT HAS BEEN CLAIMED THAT DUPLICATE ADDITIONS HAVE BEEN MADE BY THE AO UNDER ASSESSMENT MADE U/S 153C OF THE ACT, WHICH HAS BEEN MADE UNDER SECTION 143(3) OF THE ACT DATED 15.12.2008 FOR THE ASSESSMENT YEAR 2006-07. SINCE THE APPEAL HAVIN G BEEN DECIDED AGAINST THE ORDER OF THE A.O. BY THE LD. CIT(A) VIDE ORDER DATED 13.10.2009 HEREINABOVE AND WE HAVE DECIDED THE APPEAL AGAINST THE SAID ADDITIONS SUSTAINED OR DELETED BY THE LD. CIT(A) HEREINABOVE. THEREFORE, THIS APPEAL HAS BECOME INFRUCTUOUS AND IS DISMISSED. ITA NO.531 & 432(ASR)/2009 & 12 ITA NO.28(ASR)/2010 27 26. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN IT A NO.531(ASR)/2009 IS PARTLY ALLOWED AND APPEAL OF THE REVENUE IN ITA NO. 28(ASR)/2010 IS DISMISSED WHEREAS THE APPEAL OF THE ASSESSEE IN ITA NO.432(ASR)/2012 IS DISMISSED AS INFRUCTUOUS. ORDER PRONOUNCED IN THE OPEN COURT ON 21ST MAY, 2014. SD/- SD/- (H.S. SIDHU) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 21ST MAY, 2014 /SKR/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:M/S. BRIGHT ENTERPRISES (P) LTD; MBD H OUSE, RAILWAY ROAD, JALANDHAR. 2. THE DCIT C.C.II, JALANDHAR. 3. THE CIT(A), JALANDHAR/LUDIANA-I 4. THE CIT, JALANDHAR. 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR