Amneal Pharmaceuticals Pvt. Ltd., Ahmedabad V. The Dy.CIT, Circle-1(1)(1), Ahmedabad

ITA 450/AHD/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 8582 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 6 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-09-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 25-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DEEPAK SUTARIA
• Keywords: Capital expenditure

Judgement Text

, .. , IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD , , BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER & SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER ./ I.T.A. NO.450/AHD/2016 ( / ASSESSMENT YEAR : 2011-12) AMNEAL PHARMACEUTICALS PRIVATE LIMITED [ FORMERLY KNOWN AS AMNEAL PHARMACEUTICALS INDIA (PRIVATE) LIMITED ] 871/872, VILLAGE RAJODA NR.HOTEL KARNAVATI AHMEDABAD / VS. THE DY.CIT CIRCLE-1(1)(1) AHMEDABAD # ./ ./ PAN/GIR NO. : AAGCA 0781 K ( #% / APPELLANT ) .. ( &#% / RESPONDENT ) #%' / APPELLANT BY : SHRI DHINAL SHAH, AR &#%(' / RESPONDENT BY : SHRI DEEPAK SUTARIA, SR.DR )*(+ / DATE OF HEARING 23/08/2017 ,-./(+ / DATE OF PRONOUNCEMENT 06 /09/2017 / O R D E R PER PRADIP KUMAR KEDIA - AM: THE CAPTIONED APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-1, AHMED ABAD [CIT(A) IN SHORT] DATED 30/12/2016 FOR THE ASSESSMENT YEAR (AY) 2011-12. ITA NO.450/AHD/ 2014 AMNEAL PHARMACEUTICALS PVT LTD VS. DCIT ASST.YEAR 2011-12 - 2 - 2. IN THE CAPTIONED APPEAL, THE ASSESSEE HAS ASSA ILED THE ORDER OF THE CIT(A) IN CONFIRMING THE DISALLOWANCE OF REPAIRS AN D MAINTENANCE EXPENDITURE BY THE ASSESSING OFFICER (AO) OF RS.6,9 8,706/- IN RESPECT OF WATER PROOFING OF TERRACE, PURCHASE OF ELECTRIC FIT TINGS AND PURCHASE OF PVC COVERS ETC. BY CONSIDERING THE SAME AS CAPITAL IN NATURE. 4. THE SHORT QUESTION INVOLVED IN THE PRESENT APPEA L IS WHETHER THE EXPENDITURE INCURRED BY THE ASSESSEE IN THE NATURE OF WATER PROOFING, PURCHASE OF UTILITY PIPE AND FITTING ITEMS, ELECTRI C FITTINGS ETC ARE REVENUE IN NATURE OR A CAPITAL EXPENDITURE. IT IS THE CASE OF THE ASSESSEE THAT THE EXPENDITURE HAS BEEN INCURRED WHOLLY AND EXCLUSIVEL Y FOR THE PURPOSE OF BUSINESS AND ARE NOT IN THE NATURE OF CAPITAL EXPEN DITURE BUT THE EXPENDITURE INCURRED ARE IN THE NATURE OF CURRENT R EPAIRS AND MAINTENANCE AND THUS QUALIFIES FOR DEDUCTION UNDER S.30(A)(III) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS 'THE ACT'). WE, A T THE FIRST INSTANCE, FIND THAT THE EXPENDITURE HAS BEEN FURNISHED TO PRESERVE AND MAINTAIN AND ALREADY EXISTING ASSET AND NO NEW ASSET HAS BEEN B ROUGHT INTO EXISTENCE PER SE . WE NOTE THAT THE AO HAS MISDIRECTED HIMSELF BY HOLDING THAT SUCH EXPENDITURE BRINGS NEW ADVANTAGE OF ENDURING N ATURE. PERTINENT HERE TO SAY THAT ENDURING BENEFIT DOES NOT MEAN EVE RLASTING BENEFIT. THE TEST OF ENDURING BENEFIT IS NOT A CONCLUSIVE TEST W HICH CAN BE APPLIED BLINDLY AND MECHANICALLY WITH REGARD TO THE PARTICU LAR FACTS AND CIRCUMSTANCES OF A GIVEN CASE. MERELY BECAUSE A PA RTICULAR EXPENDITURE ITA NO.450/AHD/ 2014 AMNEAL PHARMACEUTICALS PVT LTD VS. DCIT ASST.YEAR 2011-12 - 3 - MAY RESULT AN ENDURING BENEFIT WOULD NOT MAKE SUCH AN EXPENDITURE OF CAPITAL IN NATURE. WHAT IS TO BE SEEN IS REAL INTEN T AND PURPOSE OF EXPENDITURE AND AS TO WHETHER THERE IS AN ACCRETION TO THE FIXED CAPITAL OF ASSESSEE. THE WATER PROOFING IN THE INSTANT CASE HA S MERELY CURED, MALFUNCTIONED ROOF WHICH IS SET RIGHT BY EFFECTING REPAIRS. SUCH INCURRING OF EXPENDITURE, AS NOTED ABOVE, MAY INVOLVE REPLACE MENT OF SOME PARTS THEREBY MAKING THE THING AS EFFICIENT AS IT WAS BEF ORE OR AS CLOSE TO IT AS POSSIBLE. NO ADVANTAGE OF ENDURING BENEFIT IN CAPI TAL FIELD HAS BEEN OBTAINED BY SUCH EXPENDITURES. AN OBJECTIVE APPRE CIATION OF THE CHARACTER OF THE EXPENDITURE NOTED ABOVE GOES TO SH OW THAT EXPENDITURE INCURRED ARE FOR PRESERVING AND MAINTAINING THE EXI STING ASSET AND THUS REVENUE OUTLAY IN CHARACTER. THIS BEING SO, WE FIN D OURSELVES IN AGREEMENT WITH THE CONTENTIONS ON BEHALF OF THE ASS ESSEE. 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . THIS ORDER PRONOUNCED IN OPEN COURT ON 06 / 09 /2017 SD/- SD/- () ( ) (RAJPAL YADAV) ( PRADIP KUMAR KEDIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 06/ 09 /2017 3..),.)../ T.C. NAIR, SR. PS ITA NO.450/AHD/ 2014 AMNEAL PHARMACEUTICALS PVT LTD VS. DCIT ASST.YEAR 2011-12 - 4 - !'#$%&%# / COPY OF THE ORDER FORWARDED TO : 1. #% / THE APPELLANT 2. &#% / THE RESPONDENT. 3. 456+ 7+ / CONCERNED CIT 4. 7+ ( ) / THE CIT(A)-1, AHMEDABAD 5. 89:+)56 , 56/ , 4 / DR, ITAT, AHMEDABAD 6. :<* / GUARD FILE. / BY ORDER, &8++ //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION .. 29.8.17 (DICTATION-PAD 5-PA GES ATTACHED AT THE END OF THIS APPEAL-FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 30.8.17 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S.6.9.17 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 6.9.17 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER