ARIES EXPORTS P.LTD, MUMBAI V. DCIT CIR 3(1), MUMBAI

ITA 5841/MUM/2012

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3350 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 11 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-09-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 28-05-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 24-09-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: VIRAL A MERCHANT
• Keywords: Capital asset; Depreciation; Business expenditure; Principle of natural justice; Question of law; Revenue expenditure; Capital expenditure
• Section: 143(3); 32; 37

Judgement Text

A IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ./ I.T.A. NO. 5841 /MUM/2012 ( / ASSESSMENT YEAR : 2009-10) M/S ARIES EXPORTS PVT. LTD., BHAKTAWAR, 11 TH FLOOR, NARIMAN POINT, MUMBAI 400 021. / V. DEPUTY COMMISSIONER OF INCOME TAX CIRCLE 3(1), MUMBAI. ./ PAN : AACCA2924N ( / APPELLANT ) .. ( / RESPONDENT ) ASSESSEE BY SHRI VIRAL A. MERCHANT REVENUE BY : SHRI AARSI PRASAD / DATE OF HEARING : 09-6-2016 / DATE OF PRONOUNCEMENT : 07-09-2016 / O R D E R PER RAMIT KOCHAR, ACCOUNTANT MEMBER THIS APPEAL, FILED BY THE ASSESSEE COMPANY, BEING ITA NO. 5841/MUM/2012, IS DIRECTED AGAINST THE APPELLATE OR DER DATED 29 TH AUGUST, 2012 PASSED BY LEARNED COMMISSIONER OF INCOME TAX ( APPEALS)- 5, MUMBAI (HEREINAFTER CALLED THE CIT(A)), FOR THE ASSESSME NT YEAR 2009-10, THE APPELLATE PROCEEDINGS BEFORE THE LEARNED CIT(A) ARI SING FROM THE ASSESSMENT ORDER DATED 20 TH DECEMBER, 2011 PASSED BY THE LEARNED ASSESSING OFF ICER (HEREINAFTER CALLED THE AO) U/S 143(3) OF THE INC OME TAX ACT,1961 (HEREINAFTER CALLED THE ACT). ITA 5841/MUM/2012 2 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE COM PANY IN THE MEMO OF APPEAL FILED WITH THE INCOME TAX APPELLATE TRIBUNAL , MUMBAI (HEREINAFTER CALLED THE TRIBUNAL) READ AS UNDER:- ON THE FACTS AND UNDER THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX APPEALS ERRED IN CONFIRMING THE ACTION OF ASSESSING OFFICER, OF TREATING RS. 37,56,259 /- AS CAPITAL EXPENDITURE INSTEAD OF REVENUE EXPENDITURE AS CLAIM ED BY THE ASSESSEE AND DISALLOWING RS. 35,68,446/- (BEING 37,56,259 LE SS 7.5% DEPRECIATION). 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E COMPANY IS ENGAGED IN THE BUSINESS AS EXPORTER OF SUGAR MILL MACHINERIES, SPARES AND OTHER CAPTIVE INPUTS IN SUGAR INDUSTRY. DURING THE COURSE OF ASSE SSMENT PROCEEDINGS U/S. 143(3) OF THE ACT, THE ASSESSEE WAS ASKED BY THE AO TO GIVE DETAILS OF REPAIRS AND MAINTENANCE EXPENSES AND ON PERUSAL OF THE DETA ILS FILED BY THE ASSESSEE, THE A.O. OBSERVED THAT PART OF THE REPAIR EXPENSES WERE CAPITAL IN NATURE. THE ASSESSEE WAS ASKED TO EXPLAIN AS TO WHY THE RENOVAT ION EXPENSES SHOULD NOT BE CAPITALIZED AND HOW IT CAN BE ALLOWABLE AS REVEN UE EXPENDITURE. IN REPLY, THE ASSESSEE SUBMITTED AS UNDER :- 'THE TOTAL EXPENDITURE OF RENOVATION FOR THE YEAR E NDED 31-03- 2009 IS RS. 94,61,331/- OUT OF WHICH RS. 57,05,072 /- HAS BEEN CAPITALIZED THE DETAILS ARE AS FOLLOWS: 1) FURNITURE & FIXTURES - RS. 26,99,495 2) OFFICE EQUIPMENT- RS. 12,24,142/- 3) AIR CONDITIONERS RS 8,13,226/- 4) OFFICE COMPUTER RS 1,54,908/- 5) ELECTRICAL FITTINGS RS 8,13,301/- ITA 5841/MUM/2012 3 THE ASSESSEE SUBMITTED THAT SINCE THE SAME CAN BE R EMOVED FROM THIS PLACE AND CAN BE PUT INTO USE ELSEWHERE, THE BALANCE AMOU NT OF RS 37,56,259/- IS OF REVENUE NATURE BECAUSE THIS EXPENDITURE ON ITEMS CANNOT BE REMOVED FROM THE PREMISES IN THE EVENT OF TERMINATION OF RENT AG REEMENT. THE ASSESSEE FURTHER SUBMITTED THAT THE RENT PAID FOR THE PREMIS ES IS VERY LOW AS COMPARED TO THE PREVAILING RENT IN THE AREA AND HENCE THE AS SESSEE HAS INCURRED SUCH EXPENDITURE FOR OFFICE RENOVATION. THE ASSESSEE REL IED ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT V. HED GE CONSULTANCY PVT. LTD. 127 TAXMAN 597 (BOM) AND THE DECISION OF THE TRIBUN AL IN THE CASE OF LIVING ROOM DESIGNERS V. ITO (MUM) (TRIB.) . THE A.O. CONSIDERED THE SUBMISSIONS OF THE ASSESSEE BUT IT WAS NOT ACCEPTABLE TO THE AO ON THE GROUND THAT THE ASSESSE E HAS ADOPTED ARTIFICIAL DISCRIMINATION BY SEGREGATING THE TOTAL EXPENDITURE FOR RENOVATION OF RS. 94,61,331/-, OUT OF WHICH RS. 57,05,072/- HAD BEEN CAPITALIZED BY THE ASSESSEE AND THE ASSESSEE HAS CLAIMED THE REMAINING AMOUNT OF RS. 37,56,259/- AS REVENUE EXPENDITURE ON THE GROUND TH AT SUCH ITEMS CANNOT BE REMOVED. THE A.O. OBSERVED THAT THE EXPENDITURE OF RS. 37,56,259/- IS NOT IN THE NATURE OF REGULAR REPAIRS BUT CAPITAL ADDITION IN THE FORM OF PARTITIONS, MARBLE FLOORING, TABLES, CIVIL WORKS ETC. AND A SU M OF RS. 7,95,548/- HAS BEEN PAID AS ARCHITECT FEES FOR THESE CAPITAL EXPENDITUR E. THE AO OBSERVED THAT THE EXPLANATION TO SECTION 30 OF THE ACT INSERTED W.E.F . 01-04-2004 CLEARLY STATES THAT THE CURRENT REPAIRS SHALL NOT INCLUDE ANY EXPE NDITURE IN THE NATURE OF CAPITAL EXPENDITURE. THE A.O. OBSERVED THAT THE ASS ESSEE HAD SHIFTED OUT OF THE LEASED PREMISES TO AN INTERIM PREMISES FOR A PE RIOD OF 11 MONTHS , DURING WHICH TIME THE ENTIRE RENOVATION WORK TOOK PLACE W HICH SHOWS THAT THE EXPENDITURE WAS OF THE NATURE OF CAPITAL EXPENDITU RE AND NOT CURRENT REPAIRS. THE A.O. OBSERVED THAT THE RELIANCE PLACED BY THE A SSESSEE IN THE CASE OF CIT V. MADRAS AUTO SERVICE PVT. LTD., 233 ITR 468 (SC) IS MISPLACED AS THIS CASE PERTAINS TO THE ASSESSMENT YEAR 1968-69 AND DOES NO T TAKE INTO ACCOUNT ITA 5841/MUM/2012 4 EXPLANATION TO SECTION 30 WHICH WAS INSERTED W.E.F. 1-4-2004 AND AT THAT TIME THERE WAS NO DISTINCTION BETWEEN CURRENT REPAIRS AN D CAPITAL REPAIRS. SIMILARLY THE ASSESSEES RELIANCE IN THE CASE OF CI T V. HEDGE CONSULTANCY, 127 TAXMAN 597 IS ALSO MISPLACED ON ACCOUNT OF THE REAS ONS MENTIONED ABOVE AS THE CASE PERTAINED TO ASSESSMENT YEAR 1988-89. THUS , IN NUTSHELL THE A.O. REJECTED THE CONTENTIONS OF THE ASSESSEE AND HELD T HAT THE EXPENSES OF RS. 37,56,259/- OUT OF REPAIRS AND MAINTENANCE IS CAPIT AL EXPENDITURE AND DEPRECIATION @ 50% OF 10% I.E. 5% WAS ALLOWED TO TH E ASSESSEE WHILE THE REMAINING SUM OF RS. 35,68,446/- WAS ADDED TO THE T OTAL INCOME OF THE ASSESSEE BY THE AO VIDE ASSESSMENT ORDER DATED 20-1 2-2011 PASSED U/S 143(3) OF THE ACT. 4. AGGRIEVED BY THE ASSESSMENT ORDER DATED 20-12-20 11 PASSED BY THE A.O. U/S 143(3) OF THE ACT, THE ASSESSEE FILED ITS FIRST APPEAL BEFORE THE LD. CIT(A). 5. BEFORE THE LD. CIT(A) THE ASSESSEE REITERATED TH E SUBMISSIONS WHAT WAS MADE BEFORE THE A.O. AND SUBMITTED THAT THE EXPENSE S OF RS. 37,56,259/- WAS INCURRED ON CURRENT REPAIRS AS WELL AS EXPENSES INC URRED ON FURNITURE AND FIXTURES WHICH ARE FIXED TO THE OFFICE AND CANNOT B E REMOVED WITHOUT SUBSTANTIAL DAMAGE AND MAKING THE ITEM NON-USABLE. IT WAS SUBMITTED THAT THE PREMISES WAS TAKEN ON LEAVE AND LICENSE BASIS A ND WAS NOT OWNED BY THE ASSESSEE, HENCE, THE A.O. ERRED IN TREATING THE SAM E AS CAPITAL EXPENDITURE. THE ASSESSEE SUBMITTED THAT ONCE THE RENTAL AGREEME NT EXPIRES, THESE ITEMS WILL BE REMOVED BUT THE FLOORING AND POP AND OTHER SUCH IDENTICAL EXPENSES CANNOT BE REMOVED AND NEEDS TO BE CHARGED TO P&L AC COUNT. IN SUPPORT, THE ASSESSEE PLACED RELIANCE ON THE FOLLOWING DECISIONS :- (I) INSTALMENT SUPPLY (P) LTD. CIT 149 ITR 52 (DEL) (II) CIT V. HI LINE PENS (P) LTD. [2008] 306 ITR 182 (DE L) (III) ACIT V. M.M. PUBLICATIONS LTD. (2011) 43 SOT 59 (CO CHIN) (TRIB). ITA 5841/MUM/2012 5 THE LD. CIT(A) OBSERVED THAT THE ASSESSEE HAD SPENT AN AMOUNT OF RS. 37,56,259/- ON ITEMS OF FLOOR MARBLES AND ITS FIXIN G, CIVIL WORK, FLOORING, CIVIL WORK AND PAINTING ON THE PREMISES WHICH WAS TAKEN O N LEAVE AND LICENSE BASIS BY THE ASSESSEE AND THUS WAS NOT OWNED BY THE ASSESSEE. THE TOTAL AMOUNT SPENT ON ACCOUNT OF RENOVATION WAS AT RS. 94 ,61,331/-, OUT OF WHICH RS. 57,05,072/- WAS CAPITALIZED BY THE ASSESSEE AND BALANCE OF RS. 37,56,259/- WAS CLAIMED AS REVENUE EXPENDITURE. THE ASSESSEE HAS ALSO PAID SEPARATELY AN AMOUNT OF RS. 7,95,548/- AS ARCHITEC T FEES FOR THE WORK OF RENOVATION. THE ASSESSEE HAD SHIFTED OUT OF THE LEA SE PREMISE TO ANOTHER PREMISE FOR A PERIOD OF 11 MONTHS AND DONE THE RENO VATION WORK. THE LD. CIT(A) HELD THAT THE WHOLE RENOVATION WORK WAS ON A CCOUNT OF RENOVATION WORK WHICH BROUGHT INTO EXISTENCE AN ENDURING BENEF IT TO THE ASSESSEE DURING THE PERIOD OF LEASE, THEREFORE, THE A.O. WAS JUSTIF IED IN TREATING THE TOTAL RENOVATION EXPENDITURE AS CAPITAL EXPENDITURE. THE LD. CIT (A) RELIED ON THE FOLLOWING DECISIONS:- 1. HONBLE BOMBAY HIGH COURT IN THE CASE OF NEW SHORRO CK SPINNING AND MANUFACTURING CO. LTD. V. CIT [1956] 3 0 ITR 338. 2. HONBLE ANDHRA PRADESH HIGH COURT IN THE CASE OF SR I RAMA TALKIES V. CIT [1966] 59 ITR 63 3. HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT V. VAS ANT SCREENS [1980] 124 ITR 835. 4. HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT V. BAL LIMAL NAWALKISHORE [1976] 119 ITR 292 THUS, IT WAS OBSERVED THAT THE ASSESSEE HAD SPENT A LARGE AMOUNT OF MONEY ON RENOVATION OF THE PREMISES WHICH HAS BROUGHT A N EW ASSET INTO EXISTENCE AND HAS RESULTED IN AN ENDURING BENEFIT TO THE ASSE SSEE AND HENCE THE ITA 5841/MUM/2012 6 ADDITION MADE BY THE A.O. WAS UPHELD BY THE LEARNED CIT(A) VIDE APPELLATE ORDERS DATED 29-08-2012. 6. AGGRIEVED BY THE APPELLATE ORDER DATED 29-08-201 2 PASSED BY THE LD. CIT(A) , THE ASSESSEE IS IN APPEAL BEFORE THE TRIBU NAL. 7. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS TAKEN A PREMISE ON RENT ON LEAVE AND LICENSE BASIS. EXPE NDITURE TO THE TUNE OF RS. 94,61,331/- WAS INCURRED BY THE ASSESSEE TOWARDS RE NOVATION WORK, OUT OF WHICH RS. 57,05,072/- WAS CAPITALIZED BY THE ASSESS EE AND BALANCE OF RS. 37,56,259/- WAS CLAIMED AS REVENUE EXPENDITURE AS T HESE AMOUNTS ARE EXPENDED ON ITEMS OF FLOOR MARBLES AND ITS FIXING, CIVIL WORK, FLOORING, CIVIL WORK AND PAINTING ON THE PREMISE ETC. AND HENCE THE SE CANNOT BE REMOVED FROM THE PREMISE HENCE THESE ARE WRITTEN OFF AS REV ENUE EXPENDITURE. THE LD. COUNSEL DREW OUR ATTENTION TO THE PAPER BOOK PAGE 2 WHICH CONTAINS ALL THE DETAILS OF THE REPAIR EXPENSES OF RS. 37,56,259/- S UCH AS BREAKING OLD PLASTER, FLOOR MARBLES AND FIXING, PLASTERING, FLOOR TILES, FILLING UP THE FLOOR, POP WORK, CEILING WORK, CARPENTRY WORK, PARTITION AND ARCHITE CT FEES ETC. 8. THE LD. D.R., ON THE OTHER HAND, RELIED ON THE O RDER OF THE AUTHORITIES BELOW. 9. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND ALS O PERUSED THE MATERIAL AVAILABLE ON RECORD. WE HAVE OBSERVED THAT THE ASS ESSEE HAS TAKEN THE PREMISE ON LEAVE AND LICENSE BASIS AND THE ASSESSEE HAVE UNDERTAKEN THE SUBSTANTIAL RENOVATION WORK IN THAT PREMISES. TOTA L AMOUNT OF RS. 94,61,331/- WAS INCURRED TOWARDS THE ABOVE RENOVATI ON WORK AND OUT OF WHICH AN AMOUNT OF RS. 57,05,072/- WAS CAPITALIZED BY THE ASSESSEE AND WHILE BALANCE OF RS. 37,56,259/- WAS CLAIMED AS REV ENUE EXPENDITURE ON THE GROUND THAT THE EXPENSES ON ITEMS WHICH CANNOT BE R EMOVED FROM THE PREMISES WERE INCURRED, AS THE AMOUNT WAS INCURRED ON FLOOR MARBLE AND ITS ITA 5841/MUM/2012 7 FIXING, POP, CIVIL WORK, FLOORING, FALSE CEILING, P LASTERING AND PAINTING ETC. THE LD. COUNSEL DREW OUR ATTENTION TO THE PAPER BOOK PA GE 2 WHEREIN THE BREAKUP OF SUCH REPAIR EXPENSES WERE GIVEN. ON PERUSAL OF THE SAID DETAILS, WE FIND THAT THE EXPENSES WERE INCURRED BY THE ASSESSEE S UCH AS MARBLE AND ITS FIXING, PLASTERING, FLOOR TILES, FILLING UP THE FLO OR, POP WORK, CEILING WORK, CARPENTRY WORK, PARTITION AND ARCHITECT FEES ETC. W HICH HAS BEEN INCURRED ON PREMISES TAKEN ON LEAVE AND LICENSE BASIS. WHILE ON THE OTHER HAND THE EXPENSES WHICH WERE CAPITALIZED WERE INCURRED ON FI XED ASSETS WHICH CAN BE REMOVED LIKE FURNITURE, AC, OFFICE EQUIPMENT, FURNI TURE AND FIXTURES, COMPUTERS ETC. . THE ASSESSEE ALSO SUBMITTED THAT S INCE THIS PREMISE IS A RENTAL PREMISE NO CAPITAL ASSET HAS BEEN CREATED IN FAVOUR OF THE ASSESSEE AS WHEN THE ASSESSEE WILL VACATE THE PREMISES, THESE R EPAIR EXPENSES TO THE TUNE OF RS. 37,56,259/- WILL NOT BE HAVING ANY VALUE/UTI LITY FOR THE ASSESSEE AS THESE CANNOT BE REMOVED AND TAKEN ALONG WITH. WHER EAS THE REVENUE HAS CONTENDED THAT THE ASSESSEE HAS BROUGHT NEW ASSET INTO EXISTENCE WHICH HAS RESULTED INTO AN ENDURING BENEFIT TO THE ASSESSEE. THE HONBLE BOMBAY HIGH COURT IN A RECENT DECISION DELIVERED ON 29-06-2016 HAS ELABORATELY DISCUSSED THIS ISSUE IN RPG ENTERPRISES LIMITED V. DCIT IN (2 016) 71 TAXMANN.COM 137(BOMBAY) WHEREIN IT WAS HELD AS UNDER: 5. WE FIND THAT THE APPELLANT WAS A TENANT OF THE SAI D PREMISES. IT WAS PAYING MONTHLY RENT OF RS. 73,530/- FROM APRIL, 199 5 ONWARDS UNDER THE AGREEMENT DATED 15TH FEBRUARY, 1995. FURTHER THE AG REEMENT PROVIDED THAT THE COST OF REPAIRS AND RENOVATION I.E. CIVIL, ELECTRICAL, PLUMBING, POLISHING ETC. WOULD BE CARRIED OUT BY THE APPELLAN T AT ITS OWN EXPENSES AFTER TAKING PRIOR PERMISSION FROM THE LANDLORD. AL L THE AUTHORITIES UNDER THE ACT HAVE RENDERED A FINDING OF FACT THAT THE SO CALLED 'REPAIRS AND MAINTENANCE' WERE IN FACT EXTENSIVE RENOVATION INVO LVING CIVIL WORK. THIS EXPENSE RESULTED IN AN ADVANTAGE/BENEFIT OF A ENDUR ING NATURE IN AS MUCH AS IT INTER ALIA RESULTED IN THE APPELLANT BEI NG ABLE TO ACCOMMODATE ITA 5841/MUM/2012 8 MORE NUMBER OF EMPLOYEES AND FACILITATE IMPROVING I TS TRADING OPERATIONS. THUS THE BENEFIT OBTAINED BY THE APPELLANT, ACCORDI NG TO THE AUTHORITIES WAS SUBSTANTIALLY IN THE CAPITAL FIELD AND COULD NO T BE ENTIRELY ALLOWED AS REVENUE EXPENDITURE. THE SUBMISSION ON BEHALF OF TH E APPELLANT, BEFORE US, THAT AS THE APPELLANT DOES NOT OWN THE PREMISES THE EXPENDITURE INCURRED ON RENOVATION GOES TO THE BENEFIT OF THE O WNER OF THE SAID PREMISES, THEREFORE IN THE HANDS OF THE TENANT IT C AN ONLY BE REVENUE EXPENDITURE IS MORE THEN MET BY THE IMPUGNED ORDER OF THE TRIBUNAL. THIS IN VIEW OF THE FACT THAT THE IMPUGNED ORDER PLACES RELIANCE UPON EXPLANATION-I TO SECTION 32 OF THE ACT, WHICH ALLOW S DEPRECIATION TO A TENANT IN CASE OF ANY CAPITAL EXPENDITURE INCURRED FOR RENOVATION/IMPROVEMENT TO THE BUILDING IN THE HANDS OF THE TENANT BY DEEMING THE TENANT TO BE THE OWNER OF THE PREMISES. IN THIS CASE THE BENEFIT OF DEPRECIATION HAS BEEN GIVEN TO THE APPEL LANT ON THE CAPITAL EXPENDITURE INCURRED FOR RENOVATION. 6. MR. JHAVERI, LEARNED COUNSEL FOR THE APPELLANT-ASS ESSEE THEN SUBMITS THAT ON AN IDENTICAL FACT SITUATION EXPENDITURE INC URRED BY TENANT HAS BEEN ALLOWED AS REVENUE EXPENDITURE BY THIS COURT. THEREFORE IT IS SUBMITTED THAT THE ENTIRE ISSUE IS NO LONGER OPEN T O DEBATE AS IT STANDS CONCLUDED IN FAVOUR OF THE APPELLANT BY THE DECISIO NS OF THIS COURT IN TALATHI & PANTHAKI ASSOCIATES (P.) LTD. (SUPRA) AND HEDE CONSULTANCY (P.) LTD. (SUPRA). IN TALATHI & PANTHAKI ASSOCIATES (P.) LTD. (SUPRA) THE TENANT OF THE PREMISES HAD CONTRIBUTED A SUM OF RS. 1.50 CRORES TO THE WORK OF REPAIRS AND RESTORATION/RECONSTRUCTION OF T HE BUILDING IN WHICH IT WAS A TENANT. THE ENTIRE AMOUNT OF RS. 1.50 CRORES WAS CLAIMED AS REVENUE EXPENDITURE. THE ASSESSEE THEREIN HAD ENTER ED INTO AN AGREEMENT WITH THE DEVELOPER TO CONTRIBUTE RS. 1.50 CRORES FOR THE RECONSTRUCTION/REPAIRS/RESTORATION OF THE BUILDING IN CONSIDERATION OF THERE BEING NO INCREASE IN THE RENT PAYABLE BY THE ASSESSEE IN THE NEW ITA 5841/MUM/2012 9 STRUCTURE TO THAT BEING PAID IN THE OLD STRUCTURE. IT WAS IN THE AFORESAID FACTS THAT IT WAS HELD THAT WHERE A LUMP-SUM PAYMEN T OF RS. 1.50 CRORES GETS RID OF ANNUAL BUSINESS EXPENSES CHARGEABLE AGA INST REVENUE THEN THE LUMPSUM IS TO BE REGARDED AS A REVENUE/BUSINESS EXPENDITURE. THE BENEFIT OBTAINED BY THE ASSESSEE IN THE ABOVE CASE WAS PREMISES AT A LOWER RENT IN VIEW OF THE CONTRIBUTION MADE TO THE DEVELOPER FOR REPAIRING/RECONSTRUCTING THE PREMISES. THUS, THE EX PENDITURE WAS IN THE REVENUE FIELD AND ALLOWABLE UNDER SECTION 37 OF THE ACT. IN THE PRESENT FACTS, NOTHING IS ON RECORD TO INDICATE THAT THERE WAS ANY ADVANTAGE SECURED BY THE APPELLANT IN THE REVENUE FIELD. THER E WAS NO DECREASE IN THE RENT NOR WAS THERE ANY EMBARGO ON FUTURE INCREA SE IN THE RENT IN CONSIDERATION OF THE EXPENDITURE FOR RENOVATION. TH EREFORE, THE ABOVE DECISION WOULD NOT APPLY TO THE FACTS OF THE PRESEN T CASE. 7. SIMILARLY, THE DECISION OF THIS COURT IN HEDE CONS ULTANCY (P.) LTD. (SUPRA) UPON WHICH ALSO RELIANCE IS PLACED UPO N ALSO DEALT WITH THE SITUATION WHERE THE AMOUNT EXPENDED FOR INTERIOR DE CORATION AND RENOVATING OF A GODOWN PREMISES SO AS TO BE CONVERT ED INTO AN OFFICE PREMISES WAS ALLOWED AS A REVENUE EXPENDITURE, WILL NOT APPLY TO THE PRESENT FACTS. THIS IS BECAUSE IN THAT CASE THE TEN ANT GOT THE BENEFIT OF LOWER RENT IN VIEW OF THE EXPENDITURE INCURRED ON R ENOVATION. IT WAS IN THAT CONTEXT THAT THIS COURT UPHELD THE VIEW OF THE TRIBUNAL THAT THE EXPENDITURE FOR REPAIRS AND RENOVATION WAS IN THE R EVENUE FIELD. AS POINTED OUT ABOVE, IN THE PRESENT CASE, THERE IS NO THING ON RECORD TO INDICATE THAT ANY BENEFIT WAS OBTAINED BY THE ASSES SEE IN THE REVENUE FIELD FOR HAVING EXPENDED THE AMOUNT OF RS. 31.32 L AKHS FOR REPAIRS/RENOVATION OF THE OFFICE PREMISES. THUS, TH E AFORESAID DECISIONS WOULD HAVE NO APPLICATION TO THE FACTS OF THE PRESE NT CASE. 8. IT WAS NEXT CONTENDED THERE IS NO BASIS INDICATED BY THE AUTHORITIES UNDER THE ACT FOR APPORTIONING THE EXPENDITURE IN T HE RATIO OF 75% AND ITA 5841/MUM/2012 10 25% BETWEEN CAPITAL AND REVENUE ACCOUNT BY THE REVE NUE. WE FIND THAT THE AUTHORITIES ON FACTS FOUND THAT SOME OF THE EXP ENDITURE INCURRED OUT OF RS. 31.32 LAKHS WAS INCURRED FOR MAINTENANCE SUCH A S PLASTERING ETC. THIS ALLOWING OF 25% WAS ON THE BASIS OF AN ESTIMAT E. NOTHING HAS BEEN SHOWN TO US THAT THE ESTIMATION BY THE AUTHORITIES ON THE BASIS OF FACTS FOUND WAS IN ANY WAY ARBITRARY OR PERVERSE. THUS WE FIND NO MERIT IN THE ABOVE SUBMISSION. 9. IN THE VIEW TAKEN BY US THAT THE EXPENDITURE OF 75 % OF RS. 31.32 LACS I.E. RS. 23.49 LAKHS IS ON CAPITAL ACCOUNT, THE SUB MISSION TO CLAIM DEDUCTION ON ACCOUNT OF SECTION 30 OF THE ACT MADE BY THE APPELLANT NEED NOT BE EXAMINED. NOR THE DECISION OF THE DELHI HIGH COURT IN CIT V. HI LINE PENS (P.) LTD. [2008] 306 ITR 182/175 TAXMAN 132 (DELHI) RELIED UPON FOR INTERPRETATION OF SECTION 30 OF THE ACT NE ED BE EXAMINED. THIS FOR THE REASON THAT THE EXPLANATION TO SECTION 30 OF TH E ACT ITSELF PROVIDES THAT THE AMOUNT PAID ON THE COST OF REPAIRS WOULD N OT INCLUDE ANY EXPENDITURE WHICH IS IN THE NATURE OF CAPITAL EXPEN DITURE. ALTHOUGH THIS EXPLANATION TO SECTION 30 OF THE ACT WAS INTRODUCED IN 2004 W.E.F. 1ST APRIL, 2004, THE EXPLANATION ITSELF CLARIFIES THAT IT HAS BEEN INTRODUCED FOR REMOVAL OF DOUBTS. THEREFORE, IT WOULD BE APPLICABL E EVEN FOR THE PERIOD PRIOR 1ST APRIL, 2004 INCLUDING THE SUBJECT ASSESSM ENT YEAR. IT IS FOR THE ABOVE REASON THE LEARNED COUNSEL FOR THE APPELLANT VERY FAIRLY DID NOT EVEN ATTEMPT TO SUGGEST THAT DEDUCTION UNDER SECTIO N 30 OF THE ACT WOULD BE AVAILABLE EVEN IN RESPECT OF CAPITAL EXPENDITURE . 10. IN THE ABOVE VIEW, THE CONCURRENT FINDING OF FACT BY THE AUTHORITIES UNDER THE ACT THAT THE EXPENDITURE INCURRED CLAIMIN G TO BE THE REPAIRS AND MAINTENANCE WAS IN FACT ON ACCOUNT OF RENOVATION OF THE PREMISES, LEADING TO ENDURING BENEFIT TO THE APPELLANT ASSESS EE IN AS MUCH AS IT ENABLED THE APPELLANT TO ACCOMMODATE LARGER NUMBER OF EMPLOYEES AND ALSO FACILITATE ITS TRADING OPERATIONS. THIS BENEFI T WOULD BE AVAILABLE TO IT ITA 5841/MUM/2012 11 FOR A LONG PERIOD OF TIME AND THUS, WAS CAPITAL IN NATURE. IT WAS IN THE ABOVE VIEW THAT THE TRIBUNAL GRANTED THE BENEFIT OF DEPRECIATION TO THE EXTENT THE CLAIM AS REVENUE EXPENDITURE WAS DISALLO WED. 11. IN THE ABOVE VIEW, WE FIND THAT THE VIEW TAKEN BY THE AUTHORITIES UNDER THE ACT INCLUDING THE TRIBUNAL, CANNOT BE FAU LTED AS THE APPELLANT HAS FAILED TO ESTABLISH THAT THE EXPENDITURE OF RS. 31.32 LAKHS CLAIMED AS 'REPAIRS AND MAINTENANCE' WAS IN THE REVENUE FIELD. IN THE ABOVE VIEW, THE SUBSTANTIAL QUESTION OF LAW AS FRAMED HEREINABO VE IN PARAGRAPH 2 IS ANSWERED IN THE AFFIRMATIVE I.E. IN FAVOUR OF THE R ESPONDENT REVENUE AND AGAINST THE APPELLANT ASSESSEE. 12. THE APPEAL IS DISPOSED OF IN THE ABOVE TERMS. IN OUR CONSIDERED VIEW, THE RATIO OF DECISION OF HO NBLE BOMBAY HIGH COURT IN RPG ENTERPRISES LIMITED(SUPRA) IS DIRECTLY APPLICAB LE IN THE INSTANT CASE , AND BY UNDERTAKING OF THIS SUBSTANTIAL REPAIRS , IT COU LD NOT BE SAID THAT NO ENDURING BENEFIT HAS RESULTED TO THE ASSESSEE AS TH E SAID MAJOR AND SUBSTANTIAL RENOVATION WORK HAS LED TO IMPROVEMENTS IN ITS TRADING OPERATIONS WHICH WOULD BRING ENDURING BENEFIT TO THE ASSESSEE FOR LONG PERIOD OF TIME AND HENCE IS CAPITAL IN NATURE. THE ASSESSEE WOULD BE ENTITLED AND QUALIFIED FOR AVAILING DEPRECIATION IN VIEW OF THE EXPLANATIO N 1 TO SECTION 32 OF THE ACT DESPITE THE FACT THAT THE ASSESSEE IS NOT THE OWNER OF THE SAID PREMISES WHEREIN IN THE ASSESSEE HAS TAKEN THE SAID PREMISES ON LEAVE AND LICENSE BASIS. THE ASSESSEE WOULD BE ENTITLED FOR TREATMENT OF EXPENSES SUCH AS BREAKING OLD PLASTER, CARTING AWAY, PLASTERING, POP ETC AS REVENUE EXPENSES WHICH ARE IN NATURE OF CURRENT REPAIRS IN VIEW OF P ROVISIONS OF SECTION 30 OF THE ACT. THE AO SHALL VERIFY THE CONTENTIONS OF THE ASSESSEE ON FACTS AND IN THE LIGHT OF THE AFORE-STATED DECISION OF HONBLE B OMBAY HIGH COURT IN THE CASE OF RPG ENTERPRISES LIMITED(SUPRA) ON MERITS. T HE ISSUE IS THEREFORE SET ASIDE AND RESTORED TO THE FILE OF THE AO FOR DE-NOV O ADJUDICATION OF THE ISSUE BY THE AO ON MERITS. NEEDLESS TO SAY PROPER AND ADE QUATE OPPORTUNITY OF ITA 5841/MUM/2012 12 HEARING SHALL BE GRANTED TO THE ASSESSEE BY THE AO IN ACCORDANCE WITH THE PRINCIPLES OF NATURAL JUSTICE AND THE ASSESSEE SHAL L BE ALLOWED TO SUBMIT ALL RELEVANT EVIDENCES AND EXPLANATIONS IN SUPPORT OF I TS CONTENTIONS WHICH SHALL BE ADMITTED BY THE AO AND ADJUDICATED BY THE AO ON MERITS. WE ORDER ACCORDINGLY. 8. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IN I TA NO. 5841/MUM/2012 FOR THE ASSESSMENT YEAR 2009-10 IS ALLOWED FOR STAT ISTICAL PURPOSES AS INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 7 TH SEPTEMBER, 2016. # $% &' 07-09-2016 ( ) SD/- SD/- (MAHAVIR SINGH) (RAMIT KOCHAR) JUDICIAL MEMBER ACCOUNTANT MEMBER $ MUMBAI ; & DATED 07-09-2016 [ .9../ R.K. R.K. R.K. R.K. , EX. SR. PS !'#$%&%# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. : ( ) / THE CIT(A)- CONCERNED, MUMBAI 4. : / CIT- CONCERNED, MUMBAI 5. =>( 99?@ , ?@ , $ / DR, ITAT, MUMBAI A BENCH 6. (BC D / GUARD FILE. / BY ORDER, = 9 //TRUE COPY// / ( DY./ASSTT. REGISTRAR) , $ / ITAT, MUMBAI