ITO 9(1)3, MUMBAI V. ESKAY ELEVATORS (I) P.LTD, MUMBAI

ITA 4725/MUM/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 92322 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-04-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 15-04-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 18-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N V NADKARNIDR
• Keywords: Revenue expenditure; Capital expenditure

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES E, MUMBAI , . . , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI B.R. BASKARAN, ACCOUNTANT MEMBER ITA NO.4725/MUM/2013 ASSESSMENT YEAR: 2010-11 ITO 9(1)-3 ROOM NO.224, AAYAKAR BHAVAN, M.K.ROAD, MUMBAI-400020 / VS. M/S ESKAY ELEVATORS (INDIA) PVT. LTD. ESKAY HOUSE AT ESKAY RESORTS, OFF LINK ROAD, BORIVALI (W), MUMBAI-400091 ( ' / REVENUE) ( #$% & /ASSESSEE) P.A. NO. AAACE1840K ' / REVENUE BY SHRI N.V. NADKARNI-DR #$% & / ASSESSEE BY SHRI ANIL SATHE MS.KAVITA MEHENDALE ' ' ( & ) / DATE OF HEARING 15/04/2015 ( & ) / DATE OF ORDER: 17/04/2015 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE REVENUE IS AGGRIEVED BY THE IMPUGNED ORDER DATED 01/04/2013 OF THE LD. FIRST APPELLATE M/S ESKAY ELEVATORS (INDIA) PVT. LTD. 2 AUTHORITY, MUMBAI, ON THE GROUND THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN DELET ING THE DISALLOWANCE OF FACTORY RENOVATION EXPENSES BY TREATING THE SAME AS REVENUE EXPENDITURE WITHOUT APPRECIATING THAT SUCH EXPENSES WERE IN THE NATURE OF CAPITAL EXPENDITURE. 2. AT THE TIME OF HEARING, LD. DR, SMT. N.V. NADKAR NI, ADVANCED HER ARGUMENTS WHICH ARE IDENTICAL TO THE G ROUND RAISED BY SUBMITTING THAT THE LD. COMMISSIONER OF I NCOME TAX (APPEALS) WITHOUT APPRECIATING THE TRUE NATURE OF THE EXPENSES MERELY CONCLUDED THAT SUCH EXPENSES ARE REVENUE EXPENDITURE. ON THE OTHER HAND, SHRI ANIL SATHE ALONG WITH KAVITA MEHENDALE, LD. COUNSEL FOR THE AS SESSEE, DEFENDED THE CONCLUSION ARRIVED AT IN THE IMPUGNED ORDER. 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACT S, IN BRIEF, ARE THAT THE ASSESSEE IS A PRIVATE LIMITED C OMPANY ENGAGED IN THE BUSINESS OF MANUFACTURING AND INSTAL LATION OF ELEVATORS AND MAINTENANCE SERVICES, DECLARED LOS S OF RS.3,57,162/- IN ITS RETURN FILED ON 26/08/2010. T HE ASSESSEE IN ITS PROFIT AND LOSS ACCOUNT DEBITED THE EXPENDITURE UNDER THE HEAD, TELEPHONE, CONVEYANCE, TRAVELLING AND VEHICLE EXPENSES. THE ASSESSEE INCU RRED FACTORY RENOVATION EXPENSES OF RS.17,19,350/- WHICH WERE ALSO DEBITED IN THE PROFIT AND LOSS ACCOUNT BY CLAI MING THE SAME AS REVENUE EXPENDITURE. SUCH RENOVATION INCLU DES, FLOOR CHANGING, PLASTER WORKS, REPAIRING OF ELECTRI CAL WIRING, PAINTING CHARGES AND RELATED LABOUR CHARGES PERTAIN S TO M/S ESKAY ELEVATORS (INDIA) PVT. LTD. 3 THESE ACTIVITIES. THE CLAIM OF THE ASSESSEE IS/WAS THAT SUCH RENOVATION WAS DONE IN ROUTINE COURSE OF ITS B USINESS TO SAFEGUARD THE EXISTING ASSET AND THUS NO NEW ASS ET CAME INTO EXISTENCE NOR THE CAPACITY OF THE PLANT I NCREASED DUE TO SUCH EXPENSES. HOWEVER, THE LD. ASSESSING O FFICER DISALLOWED SUCH EXPENSES BEING OF ENDURING IN NATUR E AS THE WORKING CONDITIONS AND LIFE OF THE ASSET INCREA SED. ON APPEAL, BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEALS), IT WAS HELD THAT SUCH EXPENSES ARE OF RE VENUE IN NATURE, CONSEQUENTLY, DELETED THE ADDITION AGAINST W HICH THE REVENUE IS AGGRIEVED AND IS IN APPEAL BEFORE TH IS TRIBUNAL. 2.2. IF, TOTALITY OF FACTS IS ANALYZED, THERE IS N O DISPUTE TO THE FACT THAT THE ASSET IN QUESTION WAS ALREADY IN EXISTENCE AND THE ASSESSEE DULY SUBMITTED THE NA TURE OF EXPENSES/BRAKE-UP OF EXPENSES RIGHT FROM THE ASSESS MENT STAGE. THERE IS UNCONTROVERTED FINDING IN THE IMPU GNED ORDER THAT SUCH EXPENSES PERTAINS TO CURRENT REPAIR S AND INCURRED FOR MAINTAINING THE PROPERTY. SO FAR AS, THE CONTENTION OF THE REVENUE THAT THE EXPENSES WERE OF CAPITAL NATURE, IT HAS NOT BEEN DEMONSTRATED AS TO HOW THE EXPENSES ARE OF ENDURING IN NATURE. THESE EXPENSES WERE INCURRED FOR CHANGING THE FLOORING, PLASTERING, REP AIRING OF ELECTRICAL WIRE, PAINTING AND RELATED LABOUR EXPENS ES, THEREFORE, SUCH EXPENSES WERE RIGHTLY DIRECTED TO B E TREATED AS OF REVENUE IN NATURE, CONSEQUENTLY, WE FIND NO INFIRMITY IN THE CONCLUSION DRAWN BY THE LD. COMMIS SIONER OF INCOME TAX (APPEALS). IT IS AFFIRMED. M/S ESKAY ELEVATORS (INDIA) PVT. LTD. 4 FINALLY, THE APPEAL OF THE REVENUE IS DISMISSED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVE OF BOTH SIDES, AT TH E CONCLUSION OF HEARING ON 15/04/2015. SD/- (B.R.BASKARAN) SD/- (JOGINDER SINGH) '# / ACCOUNTANT MEMBER $# / JUDICIAL MEMBER ' MUMBAI; * DATED : 17/04/2015 F{X~{T? P.S/. . . %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. +,-. / THE APPELLANT 2. /0-. / THE RESPONDENT. 3. ' 1& ( +, ) / THE CIT, MUMBAI. P4. ' 1& / CIT(A)- , MUMBAI 5. 3' /&# , +, ) +# 4 , ' / DR, ITAT, MUMBAI 6. 5$ 6 / GUARD FILE. / BY ORDER, 03,& /& //TRUE COPY// / (DY./ASSTT. REGISTRAR) , ' / ITAT, MUMBAI