DCIT, New Delhi V. M/s. CB Richard Ellis, New Delhi

ITA 521/DEL/2010

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 0631 (ITAT-DELHI)
• Duration Of Justice: 11 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-01-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 30-11-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 04-02-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMRENDRA KUMAR
• Keywords: Depreciation; Opportunity of being heard; Additional evidence; Revenue expenditure; Capital expenditure; Set aside
• Section: 205; 208

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL [ DELHI BENCH B DELHI ] BEFORE SHRI A. D. JAIN, JM & SHRI K. D. R ANJAN, AM I. T. APPEAL NO. 521 (DEL) OF 2010. ASSESSMENT YEAR : 200506. DY. COMMISSIONER OF INCOME-TAX, M/S. CB RICH ARD ELLIS SOUTH ASIA P. LTD., C I R C L E : 3 (1), VS. 4 P T I BUILDING, G. F., N E W D E L H I. PARLIAMENT STREET, NEW DELHI. P A N / G I R NO. AAA CC 6456 H. A N D C. O. NO. 82 (DEL) OF 2010. [ IN I. T. APPEAL NO. 521 (DEL) OF 2010 ]. ASSESSMENT YEAR : 200506. M/S. CB RICHARD ELLIS SOUTH ASIA P. LTD., DY. C OMMISSIONER OF INCOME-TAX, 4 P T I BUILDING, G. F., VS. C I R C L E : 3 (1), PARLIAMENT STREET, NEW DELHI. N E W D E L H I. P A N / G I R NO. AAA CC 6456 H. ( APPELLANTS ) ( RESPONDENTS ) ASSESSEE BY : SHRI GAUTAM JAIN, C. A.; DEPARTMENT BY : SHRI AMRENDRA KUMAR, SR. D.R.; O R D E R. PER K. D. RANJAN, AM : THIS APPEAL BY THE REVENUE AND THE CROSS OBJECTION BY THE ASSESSEE FOR ASSESSMENT YEAR 2005-06 ARISE OUT OF THE ORDER OF THE LD. CIT (APPE ALS)VI, NEW DELHI. THESE APPEALS WERE 2 I. T. A. NO. 521 (DEL) OF 2010 A N D C. O. NO. 82 (DEL) OF 2010. HEARD TOGETHER AND FOR THE SAKE OF CONVENIENCE, ARE DISPOSED OF, BY THIS CONSOLIDATED ORDER. THE ISSUE RELATING TO RENOVATION EXPENSES ARE COMMON IN BOTH THE APPEALS. FIRST WE TAKE UP THE APPEAL FILED BY THE REVENUE. 2. THE GROUNDS OF APPEAL RAISED BY THE REVENUE, REA D AS UNDER :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE LD. CIT (A) ERRED IN LAW AND ON FACTS BY ALLOWING THE DEPRECIATION @ 60 PER CENT ON COMPUTER PERIPHERALS AND ACCESSORIES AMOUNTING TO RS.42,061/ - THOUGH THE I. T. RULES ALLOWS 60 PER CENT DEPRECIATION ON COMPUTER AND COM PUTER SOFTWARE; 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE LD. CIT (A) ERRED IN LAW AND ON FACTS IN ALLOWING RELIEF TO THE ASSESSEE OF RS.10,77,747/- ON ACCOUNT OF CAPITALIZATION OF RENOVATION EXPENSES IGNORING THAT : (A) THESE EXPENSES ARE CLEARLY IN THE NATURE OF CAPITAL EXPENSES INCURRED BY THE ASSESSEE COMPANY ON ACCOUNT OF SETTING UP OF NEW OF FICE AT MUMBAI; (B) THE DECISION OF THE HONBLE DELHI HIGH CO URT IN THE CASE OF CIT VS. HI LINES PENS PVT. LTD. ON WHICH THE LD. CIT (A) HAS R ELIED UPON FOR ALLOWING RELIEF TO THE ASSESSEE, DEALS WITH REPAIRS OF PREMISES BUT IN THE PRESENT CASE THE ASSESSEE HAS ADDED NEW FURNITURE AND ELECTRIC INSTALLATION. 3. THE FIRST ISSUE FOR CONSIDERATION RELATES TO ALL OWING THE DEPRECIATION AT THE RATE OF 60 PER CENT ON COMPUTER PERIPHERALS AND ACCESSORIES, AMOUN TING TO RS.42,061/-. THE FACTS OF THE CASE STATED IN BRIEF ARE THAT THE ASSESSEE CLAIMED DEPRE CIATION AT THE RATE OF 60 PER CENT ON COMPUTER ACCESSORIES. THE ASSESSEE IN RESPONSE TO A QUERY R AISED IN THIS REGARD VIDE HIS LETTER DATED 10/08/2007 SUBMITTED THAT PRINTERS, SCANNERS AND OT HER RELATED ACCESSORIES COULD NOT FUNCTION WITHOUT BEING ATTACHED TO THE COMPUTER AND COMPUTER S CANNOT PERFORM FUNCTIONS OF PRINTERS AND SCANNERS. THEREFORE, DEPRECIATION AT THE RATE OF 6 0 PER CENT WAS ALLOWABLE. HOWEVER, THE AO 3 I. T. A. NO. 521 (DEL) OF 2010 A N D C. O. NO. 82 (DEL) OF 2010. NOTED THAT ONLY COMPUTERS AND SOFT-WARES ARE ELIGIB LE FOR DEPRECIATION AT THE RATE OF 60 PER CENT AND ON PRINTERS AND SCANNERS DEPRECIATION AT THE RA TE OF 25 PER CENT SHOULD BE ALLOWABLE. ON APPEAL THE LD. CIT (APPEALS) RELYING ON THE DECISIO N OF ITAT IN THE CASE OF ITO VS. SIMIRAN MAJUMDAR 98 I.T.D. 119 (KOL.) ALLOWED DEPRECIATION AT THE RATE OF 60 PER CENT. 4. WE HAVE HEARD BOTH THE PARTIES. WE FIND THAT TH IS ISSUE IS COVERED BY THE DECISION OF THE ITAT, KOLKATA BENCH IN THE CASE OF ITO VS. SIMI RAN MAJUMDAR (SUPRA) WHEREIN IT HAS BEEN HELD THAT PRINTERS AND SCANNERS BEING INTEGRAL PART OF COMPUTER SYSTEM ARE TO BE TREATED AS COMPUTER FOR THE PURPOSE OF ALLOWING HIGHER RATE OF DEPRECIATION. RESPECTFULLY FOLLOWING THE PRECEDENT, IT IS HELD THAT PRINTERS AND SCANNER S ARE PART OF COMPUTER AND WILL BE ELIGIBLE FOR DEPRECIATION AT THE RATE OF 60 PER CENT, WHICH IS APPLICABLE TO COMPUTER AND COMPUTER SOFT-WARES. ACCORDINGLY, WE DO NOT FIND ANY INFIRM ITY IN THE ORDER PASSED BY THE LD. CIT (APPEALS) DELETING THE ADDITION. 5. THE NEXT ISSUE FOR CONSIDERATION RELATES TO DELE TING THE ADDITION OF RS.10,77,747/- ON ACCOUNT OF CAPITALIZATION OF RENOVATION EXPENSES. THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOUND THAT THE ASSESSEE HAS DEBITED REPAIRS AND MAINTENANCE EXPENSES AMOUNTING TO RS.51,35,213/- AS AGAINST RS.23,82,741 /- INCURRED FOR THE IMMEDIATE PRECEDING YEAR. OUT OF THIS AMOUNT, AN AMOUNT OF RS.25,80,11 3/- WAS INCURRED FOR OFFICE RENOVATION AND TEMPORARY ERRICTIONS AT MUMBAI OFFICE WHICH INCLUDE D PAYMENTS TOWARDS INSTALLATION OF TEMPORARY PARTITION, FURNITURE AND FITTINGS AND CIV IL WORKS. IN RESPONSE TO QUERY RAISED BY THE ASSESSING OFFICER IT WAS SUBMITTED THAT NO NEW ASSE T HAD BEEN CREATED AND ONLY REPAIRS HAD BEEN DONE TO MAKE THE OFFICE SPACE USABLE. ELECTRIC REP AIR HAS BEEN DONE BY REPLACING CERTAIN OLD POINTS / CABLES, CONTACT POINTS AND SWITCHES INCURR ING AND EXPENDITURE OF RS.4,10,295/-. DISMANTLING WORK WAS DONE, WHICH INCLUDED REMOVING AND CLEARING THE ALREADY EXISTING FALSE CEILING, AIR-CONDITIONER DUCTS, FLOOR TILES AND REP AIRING THE WALLS AT THE COST OF RS.14,06,435/-. AI R CONDITIONING WORK INCLUDED RE-DOING THE AIR CONDITI ONING DUCTS AS THE OLD DUCTS HAD TO BE REPLACED BEING VERY OLD AND DAMAGED. AN AMOUNT OF RS.95,932/- WAS INCURRED FOR THIS PURPOSE. 4 I. T. A. NO. 521 (DEL) OF 2010 A N D C. O. NO. 82 (DEL) OF 2010. THE ASSESSEE FILED COPY OF LEDGER ACCOUNTS AND BILL S AND VOUCHERS OF SOME OF THE ITEMS OF WORK CARRIED OUT BY IT. THE ASSESSING OFFICER RELYING O N VARIOUS DECISIONS HELD THAT THE EXPENSES WERE INCURRED IN RESPECT OF LEASED PREMISES AND THE FACT THAT DISALLOWANCE OF RS.54,26,986/- MADE IN RESPECT OF RENOVATION OF DELHI OFFICE IN ASSESSMENT YEAR 2003-04 WAS CONFIRMED BY THE LD. CIT (APPEALS), HE DISALLOWED RS.25,80,113/- IN RESPECT OF REPAIRS AND MAINTENANCE EXPENSES RELATING TO MUMBAI OFFICE. 6. ON APPEAL IT WAS SUBMITTED THAT THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF REAL ESTATE CONSULTANCY SERVICES, SITE MANAGEMENT SERVICES, PRO FESSIONAL ADVISORY SERVICES AND PROJECT MANAGEMENT SERVICES. THE ASSESSEE UNDER A LEASE AG REEMENT WITH ING VYSYA BANK LTD. TOOK THE PREMISES ON LEASE AT A RENT OF RS.1,75,000/- PER MONTH. LEASE AGREEMENT WAS FOR A TERM OF 33 MONTHS AND WAS NOT RENEWABLE AFTER EXPIRY OF THE SA ID PERIOD. DURING THE FINANCIAL YEAR THE ASSESSEE INCURRED RS.31,87,475/- ON REPAIR AND MAIN TENANCE OF THE OFFICE PREMISES. OUT OF THIS, A SUM OF RS.25,80,113/- WAS INCURRED FOR MUMBAI OFFIC E RENOVATION AND TEMPORARY ERRICTION EXPENSES. THE PREMISES TAKEN ON LEASE COULD NOT BE USED FOR OFFICE PURPOSES DUE TO NEGLECT AND BAD CONDITIONS OF THE PREMISES. THEREFORE, THE ASS ESSEE HAD TO INCUR THE EXPENDITURE TO MAKE THE PREMISES CONDUCIVE TO THE WORK. NO NEW ASSET WAS A CQUIRED. THEREFORE, THE EXPENDITURE WAS ALLOWABLE AS DEDUCTION UNDER SECTION 30(A)(I) OF TH E ACT. THE ASSESSEE FILED PETITION FOR ADMISSION OF ADDITIONAL EVIDENCE IN THE SHAPE OF CO PY OF INVOICE RAISED BY M/S. SONI FURNISHERS. IT WAS SUBMITTED THAT THESE PAPERS WERE REQUIRED TO SUBSTANTIATE THE ISSUE INVOLVED IN THE APPEAL AND THE SAME COULD NOT BE PLACED ON RECORD AS SUCH EVIDENCE WAS NOT READILY AVAILABLE WITH THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS. THE AS SESSING OFFICER IN HIS REMAND REPORT INFORMED THAT WHEN THE ASSESSEE WAS ASKED TO FURNISH THE ORI GINAL BILLS AND VOUCHERS OF M/S. SONI FURNISHERS, THE SAME WERE NOT FURNISHED. THE COPY OF REMAND REPORT WAS GIVEN TO THE ASSESSEE. IT WAS STATED THAT ORIGINAL BILLS AND VOUCHERS WERE NOT AVAILABLE AND, THEREFORE, COULD NOT BE SUBMITTED. THE LD. AR OF THE ASSESSEE SUBMITTED TH AT THERE WAS NO DISPUTE ABOUT THE GENUINENESS OF THE EXPENDITURE INCURRED BY THE ASSESSEE. THE A DDITIONAL EVIDENCE HAD BEEN FILED BECAUSE THE AO IN ASSESSMENT ORDER HAS MENTIONED THAT BILLS AND VOUCHERS IN RESPECT OF SONY FURNISHERS HAD NOT BEEN FURNISHED. THEREFORE, THE BILL HAS BEEN P LACED ON RECORD TO ESTABLISH THAT THE ENTIRE 5 I. T. A. NO. 521 (DEL) OF 2010 A N D C. O. NO. 82 (DEL) OF 2010. EXPENDITURE HAD BEEN INCURRED ON REPAIRS AND MAINTE NANCE OF RENTED PREMISES AND NOT TO BRING OUT ANY NEW ASSET OF CAPITAL NATURE. 7. THE LD. CIT (APPEALS) CONSIDERED THE SUBMISSIONS MADE BY THE ASSESSEE. THE LD. CIT (APPEALS) DID NOT ALLOW THE AMOUNT OF RS.14,06,434/ - PAID TO M/S. SONI FURNISHERS. HE UPHELD THE ADDITION, BUT WITHDREW THE DEPRECIATION ALLOWED BY THE ASSESSING OFFICER. THE LD. CIT (APPEALS) ALLOWED THE AMOUNT OF RS.10,77,747/- IN R ESPECT OF DISALLOWANCE MADE AS CAPITAL EXPENDITURE. HE ALSO UPHELD THE DISALLOWANCE OF RS .95,934/- TOWARDS AIR-CONDITIONING WORK PAID TO NIKHIL COMFORTS. WHILE DECIDING THIS ISSUE, THE LD. CIT (APPEALS) HELD AS UNDER :- I) THE ASSESSEE HAS CLAIMED THAT AN AMOUNT OF RS.14,06,434/- WAS PAID TO SONI FURNISHER FOR DISMANTLING WORK AT MUMBAI OFFIC E PREMISES. HOWEVER, NO BILLS AND VOUCHERS COULD BE PRODUCED DURING THE ASS ESSMENT STAGE. AT APPEAL STAGE, THE APPELLANT FILED ADDITIONAL EVIDENCE IN S UPPORT OF ITS CLAIM. ON FURTHER VERIFICATION, THE ASSESSEE FAILED TO FILE THE ORIGI NAL BILLS AND VOUCHERS DESPITE OPPORTUNITY BEING PROVIDED FOR THE PURPOSE. IT IS PERTINENT TO MENTION HERE THAT THE ADDITIONAL EVIDENCES FILED BY THE APPELLANT A RE MERELY COMPUTER PRINTOUTS AND NOT SUPPORTED BY ORIGINALS. RATHER, THE LD. AR EXPRESSED HIS INABILITY TO PRODUCE THE ORIGINAL DOCUMENTS AS THEY ARE NOT AVAI LABLE. IN SUCH CIRCUMSTANCES, THE LD. AR WAS REQUIRED TO SHOW CAUSE THAT IN THE A BSENCE OF ANY AUTHENTIC EVIDENCE IN SUPPORT OF THE EXPENDITURE OF RS.14,06, 434/- HOW THE AMOUNT IS AN ALLOWABLE EXPENDITURE AND WHY THE DEPRECIATION ON C APITALIZED AMOUNT, AS ALLOWED BY THE ASSESSING OFFICER, BE NOT WITHDRAWN. NO REPLY HAS BEEN FILED TO THIS SHOW CAUSE FOR WITHDRAWAL OF DEPRECIATION AND CONSEQUENTIAL ENHANCEMENT OF INCOME ON THIS ISSUE. IN SUCH CIRCUMSTANCES, I FIN D THAT THE APPELLANT HAS FAILED TO SUBSTANTIATE THE CLAIM OF RS.14,06,434/- AND HENCE EVEN THE CAPITALIZATION OF SUCH AMOUNT CANNOT BE ALLOWED. THE ADDITION MADE BY THE ASSESSING OFFICER OF 6 I. T. A. NO. 521 (DEL) OF 2010 A N D C. O. NO. 82 (DEL) OF 2010. RS.14,06,434/- IS, THEREFORE, UPHELD AND THE DEPREC IATION ALLOWED BY THE ASSESSING OFFICER WILL STAND WITHDRAWN. II) THE ASSESSING OFFICER HAS MADE A DISALL OWANCE OF RS.6,47,572/-, RS.19,880/- AND RS.4,10,295/- WITH THE OBSERVATION THAT THESE EXPENSES ARE CAPITAL IN NATURE. AS PER THE DESCRIPTION GIVEN IN THE ASS ESSMENT ORDER, THE EXPENSES ARE INCURRED TOWARDS INTERIOR FIT-OUT DONE, SUPPLY AND INSTALLATION OF FALSE CEILING AND ELECTRICAL WORK DONE. THE APPELLANTS CONTENTION D IS THAT THE AMOUNT IS SPENT FOR RENOVATION AND TEMPORARY PARTITION, ETC. AND THE PR EMISES WAS TAKEN ON LEASE FOR A LIMITED TERM OF 33 MONTHS. I FIND THAT THE IDENT ICAL ISSUE CAME UP BEFORE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. HI LINE PENS PVT. LTD. 306 ITR 182. IN THAT CASE ALSO THE EXPENDITURE WAS INCURRE D TOWARDS FALSE CEILING, FIXING TILES, REPLACING GLASSES, WOODEN PARTITION, REPLACE MENT OF ELECTRIC WIRING, EARTHING, REPLACEMENT OF GI PIPES ETC. IT WAS OBSE RVED BY HONBLE HIGH COURT THAT THE EXPENSES INCURRED BY THE ASSESSEE WERE TOW ARDS REPAIRING THE PREMISES TAKEN ON LEASE SO AS TO MAKE THEM MORE CONDUCIVE TO ITS BUSINESS ACTIVITY. SUCH EXPENSES COULD FALL WITHIN THE EXPRESSION OF REPAIR S TO THE PREMISES AS APPEARING IN SECTION 30(A)(I) OF THE ACT. IN LIGHT OF THE FI NDINGS OF THE HONBLE DELHI HIGH COURT, I FIND THAT THE EXPENDITURE OF RS.6,47,572/- INCURRED FOR INTERIOR FIT-OUT, RS.19,880/- INCURRED TOWARDS FALSE CEILING AND RS.4 ,10,295/- TOWARDS ELECTRICAL WORK, IS ALLOWABLE UNDER SECTION 30(A)(I) OF THE AC T. III) THE ASSESSING OFFICER HAS MADE A DISALLOWANCE OF RS.95,932/-, TOWARDS AIR-CONDITIONING WORK PAID TO NIKHIL COMFORTS. AS PER THE BILL OF NIKHIL COMFORTS, THE AMOUNT PERTAINS TO AIR-CONDITIONING WORK CARRIE D OUT AT THE ASSESSEES PREMISES. THE APPELLANT FILED A COPY OF BILL OF NI KHIL COMFORTS DATED 17/08/04 AND COPY OF THE LETTER ISSUED BY NIKHIL COMFORTS ON 26/10/05. ON THESE PAPERS, IT IS SIMPLY MENTIONED THAT THE AMOUNT IS TOWARDS AIR- CONDITIONING WORK CARRIED OUT 7 I. T. A. NO. 521 (DEL) OF 2010 A N D C. O. NO. 82 (DEL) OF 2010. AT SITE. HOWEVER, NO FURTHER DETAILS ARE BEEN GIVE N ON THE BILL OR IN THE LETTER. IN THE ABSENCE OF THE DETAILS, NATURE OF THE WORK CARR IED OUT IS NOT ASCERTAINABLE. HENCE, THE APPELLANTS CONTENTION THAT THE AMOUNT I S SPENT FOR REPAIR PURPOSE AND IS COVERED BY SECTION 30(A)(I) IS NOT SUBSTANTIATED BY ANY DOCUMENT. IN VIEW OF THE ABOVE, I FIND THAT THE ASSESSING OFFICER WAS JUSTIF IED IN TREATING THE AMOUNT OF RS.95,932/- AS CAPITAL EXPENDITURE AND THE ADDITION MADE BY HIM IS, THEREFORE UPHELD. 8. THE REVENUE IS IN APPEAL AGAINST THE RELIEF OF R S.10,77,747/- ALLOWED ON ACCOUNT OF CAPITALIZATION OF RENOVATION EXPENSES AND THE ASSES SEE IS IN CROSS OBJECTION AGAINST THE SUSTENANCE OF ADDITION OF RS.14,06,434/- ON ACCOUNT OF PAYMENT MADE TO M/S. SONI FURNISHERS AND RS.95,932/- PAID TO NIKHIL COMFORTS FOR AIR-CONDITI ONING WORK. 9. BEFORE US THE LD. SR. DR SUBMITTED THAT REPAIR A ND MAINTENANCE EXPENSES ALLOWED BY THE LD. CIT (A) ARE IN THE NATURE OF ENDURING BENEFIT A ND THEREFORE, THE LD. CIT (APPEALS) IS NOT JUSTIFIED IN ALLOWING THE RELIEF OF RS.10,77,747/-. ON THE OTHER HAND, THE LD. AR OF THE ASSESSEE SUBMITTED THAT THE REPAIR AND MAINTENANCE EXPENSES WERE INCURRED TO A RENTED PREMISES. THEREFORE, THE EXPENSES INCURRED ARE ALLOWABLE UNDE R SECTION 30(A)(I) OF THE ACT. HE FURTHER SUBMITTED THAT THE PREMISES WERE GIVEN BY LICENSOR IN A BARE SHELL CONDITION AND, THEREFORE, THE ASSESSEE HAS TO INCUR EXPENDITURE IN ORDER TO BRING THE PREMISES CONDUCIVE FOR THE BUSINESS OF THE ASSESSEE AND, THEREFORE, THE EXPENSES INCURRED ON R ENOVATION IS ALLOWABLE AS REVENUE EXPENDITURE. 10. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. UNDER SECTION 30(A)(I) OF THE ACT WHERE THE PREMISES ARE OCCUPIED BY THE ASSESSEE AS A TENANT AND HE HAS UNDERTAKEN TO BEAR THE COST OF REPAIRS TO THE PREMI SES, THE AMOUNT PAID ON ACCOUNT OF SUCH REPAIRS SHALL BE ALLOWABLE AS DEDUCTION WHILE COMPUTING THE INCOME FROM BUSINESS OR PROFESSION. IN THE INSTANT CASE, AS IS EVIDENT FROM THE LEASE AGREEMEN T THAT THE PREMISES HAS BEEN TAKEN IN A BARE SHELL CONDITION. THEREFORE, THE EXPENDITURE INCURR ED ON REPAIRS OF PREMISES FOR THE PURPOSE OF CARRYING OUT BUSINESS OR PROFESSION, SHALL BE ALLOW ABLE AS DEDUCTION U/S 30(A)(I) OF THE ACT. THE 8 I. T. A. NO. 521 (DEL) OF 2010 A N D C. O. NO. 82 (DEL) OF 2010. LD. CIT (A) WHILE ALLOWING THE RELIEF TO THE ASSESS EE HAS HELD THAT THE EXPENSES HAVE BEEN INCURRED TOWARDS INTERIOR FIT-OUT DONE, SUPPLY AND INSTALLATION OF FALSE CEILING AND ELECTRICAL WORK. THE PREMISES HAVE BEEN TAKEN ON LEASE FOR A PERIOD OF 33 MONTHS WHICH ARE NOT RENEWABLE. HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. HI LINES PENS PVT. LTD. 306 ITR 182 (DEL.) HAS HELD THAT THERE IS A DISTINCTION BETWEEN EXPENSES I NCURRED BY A TENANT FOR REPAIRS OF THE PREMISES AND THE EXPENSES INCURRED BY A PERSON, WHO IS NOT A TENANT TOWARDS CURRENT REPAIRS TO THE PREMISES. A TENANT WOULD BY THE VERY NATURE OF HIS STATUS AS TENANT, NOT UNDERTAKE EXPENDITURE AS WOULD ENDURE BEYOND HIS LIKELY PERIOD OF TENANCY OR CREATE A NEW ASSET, WHEREAS AN OWNER MAY UNDERTAKE EXPENDITURE SO AS TO EVEN BRING ABOUT NEW ASSETS OF CAPITAL NATURE. IN THE INSTANT CASE, THE ASSESSEE HAS TAKEN THE PREMISES FROM THE LESSOR IN BARE SHELL CONDITION AND, THEREFORE, THE ASSESSEE HAD TO INCUR EXPENDITURE ON REPAIRS WHICH WOULD LAST FOR THE PERIOD OF HIS TENANCY. AS PER THE TERMS OF AGREEMENT, THE TENANCY PERIOD OF 3 3 MONTH IS NOT TO BE INCREASED. THEREFORE, THE EXPENDITURE INCURRED BY THE ASSESSEE ON INTERIO R FIT OUT DONE SUPPLY AND INSTALLATION OF FALSE CEILING AND ELECTRICAL WORK WOULD FALL WITHIN MEANI NG OF REPAIRS U/S. 30(A)(I) OF THE ACT. ACCORDINGLY, IN OUR OPINION THE LD. CIT (A) WAS JUS TIFIED IN TREATING THE AMOUNT OF RS.10,77,747/-. THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF BIG JOES INDIA LTD. VS. CIT 293 ITR 170 (DEL.) RELIED BY THE REVENUE IS DIS TINGUISHABLE ON FACTS SINCE IN THIS CASE MOST OF THE EXPENSES RELATED TO SUPPLY OF BUILDING MATER IAL INCLUDING TIMBER AND PLY-WOOD. MOREOVER, IT WAS AN ADMITTED FACT THAT THE STRUCTURAL CHANGES HAVE BEEN MADE BY THE ASSESSEE IN THE PREMSES AND, THEREFORE, THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF BIG JOES INDIA LTD. VS. CIT (SUPRA) IS DISTINGUISHABLE ON FACTS. THE REVE NUE HAS PLACED RELIANCE ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF BALLI MAL NAVA L KISHORE & ANOTHER VS. CIT 224 ITR 414 (SC). IN THIS CASE THE ISSUE RELATED TO CURRENT RE PAIRS CARRIED ON BY THE ASSESSEE AS OWNER OF THEATRE, WHEREAS IN THE INSTANT CASE THE EXPENDITUR E INCURRED BY THE ASSESSEE DOES NOT FALL UNDER CURRENT REPAIRS AS OWNER, BUT FALLS UNDER THE REPAI RS CARRIED OUT BY THE TENANT. THEREFORE, THE ASSESSEES CASE IS COVERED BY THE DECISION OF HONB LE DELHI HIGH COURT IN THE CASE OF HI-LINES PENS (SUPRA). ACCORDINGLY WE DO NOT FIND ANY INFIR MITY IN THE ORDER PASSED BY THE LD. CIT (A) DELETING THE ADDITION OF RS.10,77,747/-. 9 I. T. A. NO. 521 (DEL) OF 2010 A N D C. O. NO. 82 (DEL) OF 2010. 11. IN THE RESULT, THE APPEAL FILED BY THE REVENUE , IS DISMISSED. 12. NOW WE WILL DEAL WITH THE GROUNDS OF APPEAL RAI SED IN THE CROSS OBJECTION. THE FIRST ISSUE FOR CONSIDERATION RELATES TO CONFIRMING THE ADDITIO N OF RS.14,06,434/-, BEING THE AMOUNT PAID TO M/S. SONI FURNISHERS FOR DISMANTLING WORK OF MUMBAI OFFICE PREMISES. THE LD. CIT (APPEALS) HAS RECORDED A FINDING THAT THE BILLS AND VOUCHERS WERE NOT PRODUCED IN RESPECT OF DISMANTLING WORK DONE BY M/S. SONI FURNISHERS. AT THE APPELLAT E STAGE, THE ASSESSEE FAILED TO FILE ORIGINAL BILLS AND VOUCHERS. THE ADDITIONAL EVIDENCE FILED BEFORE HIM WAS MERELY COMPUTER PRINT-OUTS AND NOT SUPPORTED BY THE ORIGINALS. IN THE ABSENCE OF ANY SUCH DETAILS, THE LD. CIT (APPEALS) NOTED THAT THE ASSESSEE WAS NOT ABLE TO SUBSTANTIAT E THE CLAIM FOR EXPENSES INCURRED AT RS.14,06,434/-. THE ASSESSING OFFICER ALLOWED DEPR ECIATION BY TREATING THE AMOUNT AS CAPITALIZED. SINCE THE ASSESSEE HAS NOT PRODUCED THE ORIGINAL BI LLS, THE LD. CIT (APPEALS) HAS WITHDRAWN THE DEPRECIATION ALLOWED. 12.1 BEFORE US THE LD. AR OF THE ASSESSEE SUBMITTED THAT NO NEW EVIDENCE WAS FILED. THE ASSESSING OFFICER HAS TREATED THE EXPENSES AS GENUI NE AND NO ADVERSE FINDING WAS RECORDED. THEREFORE, THE DEPRECIATION ALLOWED BY THE ASSESSIN G OFFICER COULD NOT BE WITHDRAWN AND THE EXPENSES SHOULD HAVE BEEN ALLOWED AS REVENUE EXPEND ITURE. HE PLACED RELIANCE ON THE FOLLOWING DECISIONS:- (I) JUARY LEASING & FIN. CORPN. LTD. VS. ITO; 112 I.T.D. 205 [T.M.]; (II) CIT VS. F.C.S. INTERNATIONAL MARKETING P. LTD. (2006); 203 CTR 601 (P & H); (III) CIT VS. GENESIS COMMET (P) LTD. 163 TAXMAN 482 (DEL). 10 I. T. A. NO. 521 (DEL) OF 2010 A N D C. O. NO. 82 (DEL) OF 2010. 12.2 HE FURTHER SUBMITTED THAT THE PAYMENT HAS BEEN MADE THROUGH BANKING CHANNELS AND MONEY HAS NOT FLOWN BACK TO THE ASSESSEE. THER EFORE, THE ASSESSEE CANNOT BE PENALIZED. ON THE OTHER HAND, THE LD. SR. DR SUBMITTED THAT THE P AYMENT THROUGH CHEQUE DOES NOT MAKE A TRANSACTION SACROSANCT. HE PLACED RELIANCE ON THE DECISION OF HONBLE CALCUTTA HIGH COURT IN THE CASE OF 208 ITR 465 (CAL.) AND MADRAS HIGH COURT DE CISION IN THE CASE OF 315 ITR 105 (MAD). 13. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. THE ASSESSEE HAS MADE PAYMENT OF RS.14,06,434/- TO M/S. SONI FURNISHERS FOR DISMANTLING WORK OF MUMBAI OFFICE AND FALSE CEILING WORK. THE ASSESSEE HAD OBTAINED THE PREMISES IN BARE SHELL CONDITION. NEITHER THE ASSESSING OFFICER NOR THE L D. CIT (APPEALS) HAS EXAMINED WHETHER THE DISMANTLING WORK WAS DONE BY M/S. SONI FURNISHERS O R NOT. THE DISALLOWANCE HAS BEEN MADE BY THE ASSESSING OFFICER ON THE GROUND THAT ORIGINAL B ILLS AND VOUCHERS WERE NOT PRODUCED. THE LD. CIT (APPEALS) HAS WITHDRAWN THE DEPRECIATION ALLOWE D BY THE ASSESSING OFFICER ON THE GROUND THAT ORIGINAL BILLS FOR DISMANTLING WORK WERE NOT P RODUCED. THE DECISIONS RELIED BY LD AR OF THE ASSESSEE ARE OF NO HELP IN VIEW OF THE FACTS THAT T HE ASSESSEE HAS NOT FILED BILLS TO SUPPORT IT CAIM . UNDER THESE CIRCUMSTANCES WE FEEL IT PROPER TO SET ASIDE THE MATTER TO THE FILE OF THE ASSESSING OFFICER TO EXAMINE THE CLAIM OF THE ASSESSEE WHETHE R M/S. SONI FURNISHERS HAS ACTUALLY CARRIED OUT DISMANTLING WORK OF MUMBAI OFFICE. THE ASSESSE E WILL LEAD NECESSARY EVIDENCE TO SUPPORT HIS CONTENTION. THE ASSESSING OFFICER WILL DECIDE THE ISSUE AFTER PROVIDING THE ASSESSEE THE NECESSARY OPPORTUNITY OF BEING HEARD. 14.1 THE NEXT ISSUE IN THE CROSS OBJECTION RELATES TO DISALLOWANCE OF RS.95,932/- TOWARDS AIR-CONDITIONING CHARGES. ON THE BILLS, NO DETAILS ABOUT THE WORK CARRIED OUT HAVE BEEN MENTIONED. THE LD. CIT (A) HAS CONFIRMED THE DISAL LOWANCE ON THE GROUND THAT THE NATURE OF WORK CARRIED OUT IS NOT ASCERTAINABLE. 11 I. T. A. NO. 521 (DEL) OF 2010 A N D C. O. NO. 82 (DEL) OF 2010. 14.2 THE LD. AR OF THE ASSESSEE SUBMITTED THAT EXPE NDITURE INCURRED WAS RENOVATION OF THE PREMISES WHICH CLEARLY SHOWS THAT BILL WAS FOR AIR- CONDITIONING WORK. IT WAS THUS INCORRECT FOR THE LD. CIT (APPEALS) TO HOLD THAT NATURE OF EXPEND ITURE WAS NOT ASCERTAINABLE. IT WAS NOT DISPUTED THAT THE LEASED PREMISES OF THE ASSESSEE W ERE RENOVATED TO MAKE IT FIT FOR USE FOR BUSINESS PURPOSES AND, AIR-CONDITIONING BEING ONE O F THE EXPENDITURE INCURRED WAS ALSO ELIGIBLE FOR CLAIM OF DEDUCTION UNDER SECTION 30(A)(I) OF TH E ACT. THE EXPENDITURE WAS INCURRED FOR INSTALLATION OF AIR-CONDITIONING DUCTS, AS THE EQUI PMENT WAS ALREADY INSTALLED BY THE LICENSOR. IT WAS THUS SUBMITTED THAT NO CAPITAL EXPENDITURE WAS INCURRED BY THE ASSESSEE AND, THEREFORE, THE SAME WAS ALLOWABLE AS REVENUE EXPENDITURE. ON THE OTHER HAND, THE LD. SR. DR SUPPORTED THE ORDER OF THE LOWER AUTHORITIES. 15. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ASSESSING OFFICER HAS MADE DISALLOWANCE ON THE GROU ND THAT DETAILS OF WORK DONE BY NIKHIL COMFORTS HAS NOT BEEN GIVEN. IN THE ABSENCE OF DETA ILS OF WORK CARRIED OUT BY NIKHIL COMFORTS THE ASSESSING OFFICER COULD NOT CARRY OUT VERIFICAT ION OF EXPENDITURE INCURRED. UNDER THESE CIRCUMSTANCES WE FEEL IT PROPER TO SET ASIDE THE IS SUE TO THE FILE OF ASSESSING OFFICER WITH THE DIRECTIONS TO EXAMINE THE NATURE EXPENDITURE INCURR ED ON AIR CONDITIONING WORK AND DECIDE THE ISSUE AS PER PROVISIONS OF LAW. 16. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED AND THE CROSS OBJECTION FILED BY THE ASSESSEE IS ALLOWED, FOR STATISTICAL PURPOSE S. ORDER PRONOUNCED IN THE OPEN COURT TODAY ON : 14 TH JANUARY, 2011. SD/- SD/- [ A. D. JAIN ] [ K. D. RANJAN ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 14 TH JANUARY, 2011. *MEHTA * 12 I. T. A. NO. 521 (DEL) OF 2010 A N D C. O. NO. 82 (DEL) OF 2010. COPY OF THE ORDER FORWARDED TO : - 1. APPELLANTS. 2. RESPONDENTS. 3. CIT, 4. CIT (APPEALS), 5. DR, ITAT, NEW DELHI. TRUE COPY. BY ORDER. ASSISTANT REGISTRAR, ITAT.