DCIT, New Delhi V. M/s. Rambagh Palace Hotel Pvt. Ltd., New Delhi

ITA 6097/DEL/2014

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2992 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-03-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2003-2004
• Appeal Filed On: 07-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ATIQ AHMAD SENIOR
• Assessee Lawyers: A JAY VOHRA SENIOR
• Keywords: Depreciation; Business expenditure; Revenue expenditure; Capital expenditure
• Section: 37(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH F : NEW DELHI) BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.6024/DEL./2014 (ASSESSMENT YEAR : 2003-04) ITA NO.6025/DEL./2014 (ASSESSMENT YEAR : 2005-06) RAMBAGH PALACE HOTELS PVT. LTD., VS. DCIT, CIRCLE 1 5 (1), C/O PRICEWATERHOUSE COOPERS PVT.LTD., NEW DELHI. SUCHETA BHAWAN, (GATE NO.2, 3 RD FLOOR), 11-A, VISHNU DIGAMBER MARG, NEW DELHI 110 002. (PAN : AAACH6899P) ITA NO.6097/DEL./2014 (ASSESSMENT YEAR : 2003-04) ITA NO.6098/DEL./2014 (ASSESSMENT YEAR : 2005-06) DCIT, CIRCLE 15 (1), VS. RAMBAGH PALACE HOTELS PVT. LTD., NEW DELHI. C/O PRICEWATERHOUSE COOPERS PVT.LTD., SUCHETA BHAWAN, (GATE NO.2, 3 RD FLOOR), 11-A, VISHNU DIGAMBER MARG, NEW DELHI 110 002. (PAN : AAACH6899P) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI AJAY VOHRA, SENIOR ADVOCATE AND SHRI ADITYA VOHRA, ADVOCATE REVENUE BY : SHRI ATIQ AHMAD, SENIOR DR ITA NO.6024 & 6025/DEL./2014 ITA NO.6097 & 6098/DEL./2014 2 DATE OF HEARING : 22.03.2018 DATE OF ORDER : 23.03.2018 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : THE AFORESAID CROSS APPEALS FILED BY THE ASSESSEE C OMPANY AND THE REVENUE ARE BEING DISPOSED OF BY WAY OF CON SOLIDATED ORDER TO AVOID REPETITION OF DISCUSSION 2. THE APPELLANT, RAMBAGH PALACE HOTELS PVT. LTD. ( HEREINAFTER REFERRED TO AS THE ASSESSEE COMPANY) BY FILING TH E PRESENT APPEALS, SOUGHT TO SET ASIDE THE IMPUGNED ORDERS BOTH DATED 29.08.2014 PASSED BY LD. CIT(APPEALS)-XVIII, NEW DELHI QUA THE ASSESSMENT YEARS 2003-04 & 2005-06 ON THE SIMILAR GROUNDS, EXC EPT THE DIFFERENCE IN AMOUNT, INTER ALIA THAT :- 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW, THE ORDER PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) XVIII ['CIT (A)'], TO THE EXTENT UPHOLDING THE ACTION OF THE LD . AO IN FULL OR IN PART, IS CONTRARY TO THE FACTUAL AND LEGAL POSITION AND THUS IS BAD IN LAW. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, LD. CIT (A) HAS ERRED IN HOLDING T HAT THE REPAIR AND MAINTENANCE EXPENSES AMOUNTING TO RS.2,23,45,165 & RS.2,55,93,985 FOR AYS 2003-04 & 2005-06 RESPECTIVELY IS CAPITAL IN NATURE AND THERE FORE NOT ALLOWABLE AS REVENUE EXPENDITURE . 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, THE LD. CIT(A) GROSSLY ERRED IN SUSTAINING THE ADHOC DISALLOWANCE OF REPAIR & ITA NO.6024 & 6025/DEL./2014 ITA NO.6097 & 6098/DEL./2014 3 MAINTENANCE EXPENSES AMOUNTING TO RS.13,80,005 & RS.19,17,585 FOR AYS 2003-04 & 2005-06 RESPECTIVELY (BEING 5% OF RS.2,76,00,116 & RS.3,83,51,700 RESPECTIVELY) PURELY UNDER MISCONCEIVED FACTS AND O N SURMISES OR SUSPICION, AS TO THE EXISTENCE OF THE P ARTY(S) WITHOUT APPRECIATING THAT THE ADHOC DISALLOWANCE HA S NO NEXUS WITH ANY SPECIFIC PARTY, AND THEREFORE, TH IS PART OF THE ORDER DESERVES TO BE SET ASIDE. 3. THE APPELLANT, DEPUTY COMMISSIONER OF INCOME-TAX , CIRCLE 15 (1), NEW DELHI (HEREINAFTER REFERRED TO AS THE REVENUE) BY FILING THE PRESENT APPEALS, SOUGHT TO SET ASIDE THE IMPUGNED ORDERS BOTH DATED 29.08.2014 PASSED BY LD. CIT(APPEALS)-XV III, NEW DELHI QUA THE ASSESSMENT YEARS 2003-04 & 2005-06 ON THE SIMILAR GROUNDS, EXCEPT THE DIFFERENCE IN AMOUNT, INTER ALI A THAT :- 1. ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE , THE LD. CIT(A) HAS ERRED IN DELETING THE DISALLOWAN CE OF RS.1,38,00,058/- & RS.1,91,75,850/- FOR AYS 2003-04 & 2005-06 RESPECTIVELY BY NOT APPRECIATING THE FINDIN GS OF THE ASSESSING OFFICER AND MATERIAL EVIDENCE ON RECO RD. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE OF RS.12,38,793/- & RS.32,41,106/- FOR AYS 2003-04 & 2005-06 RESPECTIVELY MADE BY THE AO O N ACCOUNT OF DIRECTOR'S TRAVEL EXPENDITURE BY RELYING ON THE ORDER OF THE AO FOR A.Y. 2011-12 IN WHICH THIS EXPENDITURE HAD NOT BEEN DISALLOWED IGNORING THE FA CT THAT EACH ASSESSMENT YEAR IS CONSIDERED A SEPARATE YEAR FOR ASSESSMENT. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ABOVE DISALLOWANCE BY IGNORING THE FACT THAT IT IS UNFAIR TO ITA NO.6024 & 6025/DEL./2014 ITA NO.6097 & 6098/DEL./2014 4 EXTRAPOLATE THE INFERENCE DRAWN BY THE AO IN ONE ASSESSMENT YEAR INTO THE REASONED CONCLUSION DRAWN BY ANOTHER AO FOR AN EARLIER YEAR. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ABOVE DISALLOWANCE BY NOT APPRECIATING THE FACT THAT AS P ER THE AGREEMENT ALL THE EXPENSES RELATED TO THE BUSINESS / FOREIGN TRAVEL OF THE COMPANY WILL BE BORNE BY M/S. INDIA HOTELS CO. LTD. 4. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICA TION OF THE CONTROVERSY AT HAND IN ALL THE AFORESAID APPEALS AR E : ASSESSING OFFICER MADE DISALLOWANCE OF RS.1,38,00,058/- & RS. 1,91,75,850/- BEING 50% OF RS.2,76,00,116/- & RS.3,83,51,701/- FOR AYS 2003- 04 & 2005-06 RESPECTIVELY ON ACCOUNT OF REPAIR AND MAINTENANCE EXPENSES QUA WHICH VENDORS WERE NOT PRODUCED FOR VE RIFICATION ON AD HOC BASIS. AO FURTHER MADE DISALLOWANCE ON ACCO UNT OF REPAIR AND MAINTENANCE EXPENDITURE PAID TO CHANDRA SINGH C ONTRACTOR AND NATIONAL SANITATION TO THE TUNE FOR RS.2,13,76, 928/- & RS.9,68,237/- FOR AY 2003-04 AND RS.2,36,00,765/- & RS.19,93,220/- FOR AY 2005-06 RESPECTIVELY ON THE G ROUND THAT THE SAME HAVE GIVEN ENDURING BENEFIT TO THE ASSESSEE CO MPANY. AO FURTHER DISALLOWED AN AMOUNT OF RS.12,38,793/- & RS .32,41,106/- FOR AYS 2003-04 & 2005-06 RESPECTIVELY ON ACCOUNT O F DIRECTORS FOREIGN TRAVEL EXPENSES ON THE GROUND THAT THE SAME ARE NOT RELATED TO BUSINESS OF THE ASSESSEE COMPANY. ITA NO.6024 & 6025/DEL./2014 ITA NO.6097 & 6098/DEL./2014 5 5. ASSESSEE COMPANY CARRIED THE MATTER BY WAY OF FI LING APPEALS BEFORE THE LD. CIT (A) WHO HAS REDUCED THE AD HOC DISALLOWANCE OF REPAIR AND MAINTENANCE EXPENSES FRO M 50% TO 5%; CONFIRMED THE DISALLOWANCE MADE BY THE AO QUA REPAI R AND MAINTENANCE EXPENDITURE PAID TO CHANDRA SINGH CONTR ACTOR AND NATIONAL SANITATION AND DELETED THE DISALLOWANCE OF DIRECTORS TRAVEL EXPENDITURE DISALLOWED BY THE AO BY PARTLY A LLOWING THE APPEALS. FEELING AGGRIEVED, THE ASSESSEE COMPANY A S WELL AS REVENUE HAS COME UP BEFORE THE TRIBUNAL BY WAY OF F ILING THE CROSS APPEALS. 6. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. GROUND NO.1 OF ASSESSEES APPEALS IN ITA NOS.6024/DEL/2014 & 6025/DEL/2014 7. GROUND NO.1 OF ASSESSEES APPEALS IN ITA NOS.6024/DEL/2014 & 6025/DEL/2014 IS GENERAL IN NAT URE, HENCE DOES NOT REQUIRE ANY ADJUDICATION. ITA NO.6024 & 6025/DEL./2014 ITA NO.6097 & 6098/DEL./2014 6 GROUND NO.3 OF ASSESSEES APPEALS IN ITA NOS.6024/DEL/2014 & 6025/DEL/2014 GROUND NO.1 OF REVENUES APPEALS IN ITA NOS.6097/DEL/2014 & 6098/DEL/2014 8. AT THE VERY OUTSET, THE LD. AR FOR THE ASSESSEE COMPANY CONTENDED THAT THE ISSUE IN CONTROVERSY HAS BEEN DU LY COVERED IN FAVOUR OF THE ASSESSEE COMPANY IN ITS OWN CASE FOR AYS 2006-07 & 2009-10 HOLDING THAT SIMILAR REPAIR AND MAINTENANCE EXPENDITURE AS REVENUE IN NATURE AND THE APPEAL FILED BY THE REVEN UE AGAINST THE SAID ORDER HAS ALSO BEEN DISMISSED BY HONBLE HIGH COURT. 9. UNDISPUTEDLY, THE DISALLOWANCE OF REPAIR AND MAI NTENANCE EXPENSES ON AD HOC BASIS HAS BEEN MADE BY THE AO TO THE EXTENT OF 50%, WHICH WAS REDUCED TO 5% BY THE LD. CIT (A), ON THE SOLE GROUND THAT THE ASSESSEE COMPANY HAS NOT PRODUCED T HE VENDORS FOR VERIFICATION. IT IS ALSO NOT IN DISPUTE THAT AT NO POINT OF TIME, THE AO HAS DISPUTED THE INCURRENCE OF EXPENDITURE ON RE PAIR AND MAINTENANCE. 10. IN THE BACKDROP OF THE AFORESAID UNDISPUTED FAC TS AND ARGUMENTS ADDRESSED BY LD. AUTHORIZED REPRESENTATIV ES OF THE PARTIES TO THE APPEALS, THE QUESTION ARISES FOR DET ERMINATION IS :- AS TO WHETHER DISALLOWANCE OF REPAIR AND MAINTENAN CE EXPENSES ON AD HOC BASIS CAN BE MADE BY THE REVENUE AUTHORITIES FOR NOT PRODUCING VENDORS FOR VERIFICAT ION? ITA NO.6024 & 6025/DEL./2014 ITA NO.6097 & 6098/DEL./2014 7 11. THE LD. AR FOR THE ASSESSEE COMPANY DREW OUR AT TENTION TOWARDS THE DECISION RENDERED BY THE HONBLE HIGH C OURT OF DELHI IN CIT VS. FANCY INTERNATIONAL 166 TAXMAN 183 (DELHI HC), AVAILABLE AT PAGES 62 & 63 OF THE PAPER BOOK . HONBLE JURISDICTIONAL HIGH COURT WHILE DECIDING THE IDENTI CAL ISSUE, WHEREIN ASSESSEE HAD FAILED TO PRODUCE THE PARTIES QUA WHICH THE EXPENDITURE WERE CLAIMED, HELD AS UNDER :- SECTION 37(1) OF THE INCOME-TAX ACT, 1961 - BUSIN ESS - EXPENDITURE - ALLOWABLE AS - ASSESSMENT YEAR 1997-9 8 - ASSESSEE, A 100 PER CENT. EXPORT-ORIENTED UNIT DEAL ING IN GARMENTS, CLAIMED CERTAIN EXPENDITURE TOWARDS FABRICATION CHARGES - ASSESSING OFFICER ISSUED SUMM ONS TO SOME OF PARTIES,' TO WHOM PAYMENT WAS ALLEGEDLY MADE BY ASSESSEE - SAID SUMMONS, HOWEVER, CAME BACK WITH REPORT THAT SUCH PERSONS WERE NOT FOUND EXISTI NG AT GIVEN ADDRESSES - WHEN ASKED TO PRODUCE THOSE PARTI ES, ASSESSEE CONTENDED THAT MATTER WAS 3-4 YEARS OLD AN D PARTIES MIGHT HAVE SHIFTED OR GONE OUT OF BUSINESS DURING THAT PERIOD; THAT PAYMENTS WERE MADE TO ALL THOSE PERSONS THROUGH ACCOUNT-PAYEE CHEQUES AND THA T THERE WAS A GATE PASS AND CHALLAN SYSTEM, WHICH. WA S BEING STRICTLY ADHERED TO IN THAT REGARD - ASSESSEE REQUESTED ASSESSING .OFFICER TO DEPUTE A PERSON TO TRACE OUT PARTIES - ASSESSING OFFICER DID NOT TAKE ANY ST EPS TO TRACE OUT PARTIES, BUT ADDED AMOUNT PAID TO FABRICA TORS AS INCOME- WHETHER SINCE EXPLANATION THAT PARTIES CONCERNED MIGHT HAVE MOVED OUT OR CLOSED DOWN THE IR BUSINESS; APPEARED PLAUSIBLE, ASSESSING OFFICER WAS UNJUSTIFIED IN MAKING ADDITION- HELD; YES 12. IN THE INSTANT CASE, ASSESSEE HAS BROUGHT ON RE CORD THE COMPLETE DETAIL OF THE VENDORS INCLUDING THEIR PAN AVAILABLE AT PAGES 196 & 197 OF THE PAPER BOOK, INVOICES RAISED BY THEM ITA NO.6024 & 6025/DEL./2014 ITA NO.6097 & 6098/DEL./2014 8 AVAILABLE AT PAGES 507 TO 509 & 542OF THE PAPER BOO K AND LEDGER ACCOUNT AT PAGES 198 TO 464 OF THE PAPER BOOK, WHIC H WERE ALSO PRODUCED BEFORE AO DURING ASSESSMENT PROCEEDINGS AN D HAVE NOT BEEN DISPUTED NOR THE AO AND LD. CIT (A) HAS DISPUT ED THE INCURRENCE OF EXPENDITURE. MOREOVER LD. CIT (A) RE DUCED THE AD HOC DISALLOWANCE FROM 50% TO 5% MERELY ON THE BASIS OF SURMISES THAT, STILL SOME DOUBT ABOUT THE EXISTENCE OF VENDORS IS THERE . 13. THE COORDINATE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR AYS 2006-07 & 2009-10 , ORDER AVAILABLE AT PAGES 35 TO 55 OF THE PAPER BOOK HAS DECIDED THE ISSUE IN ASSESSEES FAVOUR. 14. WHEN EXPENDITURE CLAIMED BY THE ASSESSEE COMPAN Y ON ACCOUNT OF REPAIR AND MAINTENANCE DISALLOWED ON ACC OUNT OF NON- PRODUCING THE VENDORS ARE HELD TO BE EXISTED BUT LD . CIT (A) HAS RESTRICTED THE DISALLOWANCE TO 5% ON THE BASIS OF D OUBT ONLY AND NO ADDITION CAN BE MADE ON THE BASIS OF SUSPICION. SO , WE ARE OF THE CONSIDERED VIEW THAT THE DISALLOWANCE OF 5% MADE BY THE LD. CIT (A) ON THE GROUND THAT STILL SOME DOUBT ARE THERE Q UA THE EXISTENCE OF VENDORS IS NOT SUSTAINABLE IN THE EYES OF LAW AN D HENCE ORDERED TO BE DELETED. CONSEQUENTLY, GROUND NO.3 OF ASSESS EES APPEALS IN ITA NOS.6024/DEL/2014 & 6025/DEL/2014 IS DECIDED IN FAVOUR OF THE ASSESSEE AND GROUND NO.1 OF REVENUES APPEAL S IN ITA ITA NO.6024 & 6025/DEL./2014 ITA NO.6097 & 6098/DEL./2014 9 NOS.6097/DEL/2014 & 6098/DEL/2014 IS DECIDED AGAINS T THE REVENUE. GROUND NO.2 OF ASSESSEES APPEALS IN ITA NOS.6024/DEL/2014 & 6025/DEL/2014 15. THE LD. CIT (A) CONFIRMED THE DISALLOWANCE OF R EPAIR AND MAINTENANCE EXPENDITURE PAID TO CHANDRA SINGH CONTR ACTOR AND NATIONAL SANITATION TO THE TUNE OF RS.2,13,76,928/- & RS.9,68,237/- FOR AY 2003-04 AND RS.2,36,00,765/- & RS.19,93,220/ - FOR AY 2005-06 RESPECTIVELY MADE BY THE AO BY TREATING THE SAME CAPITAL IN NATURE. THERE IS NO DISPUTE AS TO THE GENUINENE SS OF THE PAYMENT MADE TO CHANDRA SINGH CONTRACTOR AND NATIONAL SANIT ATION. THE ONLY DISPUTE IS, AS TO WHETHER THE EXPENDITURE ARE CAPITAL OR REVENUE IN NATURE. 16. ASSESSEE COMPANY HAS BROUGHT ON RECORD THE DOCU MENTS AS TO WORK DONE BY CHANDRA SINGH CONTRACTOR AND COPY O F AGREEMENTS AVAILABLE AT PAGES 66 TO76 & 84 OF THE PAPER BOOK. 17. PERUSAL OF THE NATURE OF THE WORK DONE BY AFORE SAID CONTRACTOR APPARENTLY SHOWS THAT THE EXPENSES ARE Q UA CHANGE IN FLOOR AND REPLACEMENT OF MARBLE, REPAIR WORK IN GEM PALACE, REPLACEMENT OF FIXED WOOD WORK & ART WORK, CHANGES/ REPAIR OF ROOMS INCLUDING DISMANTLING MASONRY, WATER PROOFING , FLOORING, ITA NO.6024 & 6025/DEL./2014 ITA NO.6097 & 6098/DEL./2014 10 FINISHING, TILES/CLADDING ETC., CHANGING OF CEILING /FLOOR IN CORRIDOR, REPAIR WORK IN BALCONY AREA, REPAIR/REPLACEMENT OF ELECTRICAL WORK IN ROOMS ETC. 18. COORDINATE BENCH OF THE TRIBUNAL DECIDED THE ID ENTICAL ISSUE IN ASSESSEES OWN CASE FOR AYS 2006-07 & 2009-10 AND HELD THE SIMILAR EXPENDITURE AS REVENUE IN NATURE BY RETURNI NG FOLLOWING FINDINGS :- 9. FURTHER, HON'BLE MADRAS HIGH COURT IN CASE OF CIT VS DASPRAKASH (SUPRA) HAS HELD THAT MANY ITEMS, WHICH ARE FIXED IN THE WALL THAT WOULD PRESENT AN INVITING APPEARANCE FOR THE CUSTOMERS ASSEMBLED, AR E ALLOWABLE AS REVENUE EXPENDITURE. FURTHERMORE, THE HON'BLE MADRAS HIGH COURT IN 237 ITR 902 ALSO HELD THAT EXPENDITURE INCURRED FOR REPAIRS AND MODERNIZI NG HOTEL AND REPLACING THE EXISTING COMPONENTS OF OLD BUILDING FURNITURE AND FITTINGS WITH THE OBJECT TO CREATE A CONDUCIVE AND BEAUTIFUL ATMOSPHERE FOR RUNNING BUSINESS OF HOTEL IS NOT AN EXPENDITURE OF ENDURING IN NATURE BUT IS ONLY CURRENT REPAIRS. FURTHER HON'BLE KARNATAKA HIGH COURT IN 233 TAXMAN 177 HAS HELD THAT EXPENDITURE INCURRED ON REPLACING FLOORING, FA LLS ROOFING, FURNITURE, CARPETS AND REFURNISHING OF HOT EL ROOMS IN TUNE WITH INTERNATIONAL STANDARD WITHOUT ADDITION OF EXTRA FLOOR SPACE OR EXTRA ROOM CAPACIT Y IS REVENUE IN NATURE. ASSESSEE WAS INCURRING EXPENDITU RE FROM AY 2002-03 TO THE PRESENT ASSESSMENT YEAR ON REPAIRS AND MAINTENANCE AS UNDER:- ASSESSMENT YEAR AMOUNT OF REPAIR/ EXP. CLAIMED (IN RS.) 2002-03 74120326 2003-04 52409060 2004-05 67692199 2005-06 78384501 2006-07 66788797 ITA NO.6024 & 6025/DEL./2014 ITA NO.6097 & 6098/DEL./2014 11 10. THE EXPENDITURE IN EARLIER YEAR THOUGH HIGHER OR OF ALMOST OF THE SIMILAR LEVEL INCURRED ARE ALLOWED TO THE ASSESSEE. REVENUE HAS NOT SHOWN THAT BY INCURRING T HIS EXPENDITURE THE ASSESSEE HAS MADE ANY ADDITION TO T HE ROOM CAPACITY OF THE HOTEL. IT IS ALSO NOT THE CASE OF THE REVENUE THAT THE EXPENDITURE HAS RESULTED INTO CONSTRUCTION OR SETTING UP OF A NEW RESTAURANT OR A NY OTHER NEW FACILITY IN THE HOTEL. THE INCREASING TRE ND IN THE ROOM TARIFF ITSELF SUGGESTS THAT INCURRING SUCH EXPENDITURE HAS RESULTED INTO CONTINUED OCCUPANCY A ND SALEABILITY SALABILITY OF HOTEL ROOMS. THE INCREASE D ROOM TARIFF HAS DEFINITELY GONE TO SWELL THE REVENUE OF THE HOTEL. IN VIEW OF THE SEVERAL JUDICIAL PRONOUNCEMEN TS CITED ABOVE AS WELL AS FAILURE OF REVENUE TO SHOW A NY INCREASE IN THE CAPACITY OF THE ROOM OR ANY NEW FAC ILITY, MERELY BECAUSE REPAIRS EXPENDITURE ARE ON HIGHER SI DE AS PER PERCEPTION OF THE REVENUE, IT CANNOT BE HELD TO BE CAPITAL EXPENDITURE. IN VIEW OF THIS WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD CIT(A) IN ALLOWING THE EXPENDITURE OF RS. 51154867/-. GROUND NO. 1 OF THE APPEAL OF THE ASSESSEE, WHICH IS ALSO ON THE SAME P OINT WHEREIN, THE LD CIT(A) HAS UPHELD THE DISALLOWANCE OF RS. 2943060/- ON ACCOUNT OF RENOVATION OF FLOOR. IS SUE IS NOW SQUARELY COVERED IN FAVOUR OF THE ASSESSEE B Y THE DECISION OF THE HON'BLE KARNATAKA HIGH COURT IN 233 TAXMAN 177 WHEREIN, EXPENDITURE ON REFURNISHING ON HOTEL ROOMS IS HELD TO BE REVENUE IN NATURE. THE EXPENDITURE DISALLOWED BY THE LD CIT(A) WERE WOODEN PURCHASES FOR RENOVATION OF FLOOR. IT DOES NOT MEET THE TEST OF INCREASE IN ANY ADDITIONAL CAPACITY IN THE HOTEL. THEREFORE, THE ORDER OF THE LD CIT(A) TO THE EXTENT OF DISALLOWANCE CONFIRMED OF RS. 2943060/- CANNOT BE UPHELD. IN VIEW OF OUR ABOVE FINDING, GROUND NO. 1 OF THE APPEAL OF THE REVENUE IS DISMISSED AND GROUND N O. 1 OF THE APPEAL OF THE ASSESSEE IS ALLOWED WITH A DIR ECTION TO ALLOW TOTAL EXPENDITURE ON REPAIRS AND MAINTENAN CE INCURRED BY THE ASSESSEE OF RS. 66788797/- AND WITHDRAW THE DEPRECIATION ALLOWED OF RS. 6010990/-. ITA NO.6024 & 6025/DEL./2014 ITA NO.6097 & 6098/DEL./2014 12 19. KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE DECISION RENDERED BY THE COORDINATE BENCH OF TH E TRIBUNAL IN ASSESSEES OWN CASE (SUPRA), WE ARE OF THE CONSIDER ED VIEW THAT LD. CIT (A) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF REPAIR AND MAINTENANCE EXPENDITURE PAID TO CHANDRA SINGH CONTR ACTOR AND NATIONAL SANITATION FOR AYS 2003-04 AND 2005-06 AS THE EXPENDITURE ARE LIABLE TO BE TREATED AS REVENUE IN NATURE AS KEEPING THE HOTEL ROOMS, FLOORS, CEILINGS AND ITS AMBIENCE IN GOOD CONDITION WOULD CERTAINLY LEAD TO THE INCREASE OF THE REVENUE OF HOTEL AND IT WILL ALSO ENHANCE ITS SALE-ABILITY AND CANNOT BE TR EATED AS CAPITAL EXPENDITURE OF ENDURING NATURE. SO, GROUND NO.2 OF ASSESSEES APPEALS IN ITA NOS.6024/DEL/2014 & 6025/DEL/2014 IS DETERMINED IN FAVOUR OF THE ASSESSEE. GROUND NO.2, 3 & 4 OF REVENUES APPEALS IN ITA NOS.6097/DEL/2014 & 6098/DEL/2014 20. THE AO MADE DISALLOWANCE OF RS.12,38,793/- AND RS.32,41,106/- FOR AYS 2003-04 & 2005-06 RESPECTIVE LY TOWARDS FOREIGN TRAVEL EXPENSES OF DIRECTORS BEING NOT RELA TED TO BUSINESS OF THE ASSESSEE COMPANY WHICH HAVE BEEN ALLOWED BY THE LD. CIT (A) BY FOLLOWING THE ASSESSMENT ORDER FOR AY 2011-12 TR EATING THE ITA NO.6024 & 6025/DEL./2014 ITA NO.6097 & 6098/DEL./2014 13 FOREIGN TRAVEL EXPENDITURE INCURRED WHOLLY AND EXCL USIVELY FOR BUSINESS PURPOSES. 21. THE LD. DR FOR THE REVENUE RELIED UPON THE ORDE R OF THE AO. 22. APPEAL EFFECT ORDER PASSED BY AO IS AVAILABLE A T PAGES 32 TO 34 OF THE PAPER BOOK. ASSESSEE HAS BROUGHT ON RECO RD COMPLETE DETAIL OF THE EXPENDITURE ON PASSPORT AND VISA APPR OVAL, AVAILABLE AT PAGES 544 TO 555 OF THE PAPER BOOK, EXTRACT OF THE MINUTES OF THE BOARD MEETING OF THE FOREIGN TRAVEL FOR BUSINESS DE VELOPMENT, AVAILABLE AT PAGE 556 OF THE PAPER BOOK, INVOICES R ELATING TO TRAVEL EXPENSES, AVAILABLE AT PAGES 559 TO 582 OF THE PAPE R BOOK, DETAILS OF SOME TRAVEL AGENTS WHOM DIRECTORS MET DURING THE FOREIGN VISITS, AVAILABLE AT PAGE 585 OF THE PAPER BOOK, DETAILS OF FOREIGN TRAVELLING EXPENSES, AVAILABLE AT PAGES 591 & 592 O F THE PAPER BOOK AND OPERATING AGREEMENT BETWEEN ASSESSEE COMPA NY AND IHC LTD. SHOWING RESPONSIBILITY FOR PROMOTING BUSIN ESS LIES WITH ASSESSEE. 23. HOWEVER, THE LD. AR FOR THE ASSESSEE COMPANY CO NTENDED THAT THE ISSUE IN CONTROVERSY HAS BEEN DECIDED IN F AVOUR OF THE ASSESSEE IN ASSESSEES OWN CASE FOR AYS 1997-98, 2006-07 & 2009-10 WHEREIN THE ISSUE WAS INITIALLY SET ASIDE TO AO FO R ITA NO.6024 & 6025/DEL./2014 ITA NO.6097 & 6098/DEL./2014 14 VERIFICATION AND RE-ADJUDICATION WHICH WAS TREATED AS BUSINESS EXPENDITURE BY THE AO WHILE GIVING EFFECT TO THE AP PEAL ORDER. 24. LD. CIT (A) HAS TREATED THE FOREIGN TRAVEL EXPE NSES AS BUSINESS EXPENSES BY EXAMINING THE DETAILS AND FOLL OWING THE ASSESSMENT ORDER PASSED IN ASSESSEES OWN CASE (SUPRA) PASSED BY GIVING APPEAL EFFECT TO THE ORDER OF THE TRIBUNAL. SO, WE FIND NO ILLEGALITY OR PERVERSITY IN THE DELETION OF THE DIS ALLOWANCE MADE BY THE CIT (A) BY TREATING THE SAME AS EXPENDITURE INC URRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS ON ACCO UNT OF DIRECTORS FOREIGN TRAVELLING EXPENDITURE. SO, GROUND NOS.2, 3 & 4 OF REVENUES APPEALS IN ITA NOS.6097/DEL/2014 & 6098/D EL/2014 ARE DETERMINED AGAINST THE REVENUE. 25. IN THE RESULT, THE APPEALS OF THE ASSESSEE BEIN G ITA NOS.6024/DEL/2014 & 6025/DEL/2014 ARE ALLOWED WHERE AS APPEALS OF THE REVENUE IN ITA NOS. 6097/DEL/2014 & 6098/DEL /2014 ARE DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THIS 23 RD DAY OF MARCH, 2018. SD/- SD/- (R.K. PANDA) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 23 RD DAY OF MARCH, 2018 TS ITA NO.6024 & 6025/DEL./2014 ITA NO.6097 & 6098/DEL./2014 15 COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-XVIII, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.