MIDCO LTD, MUMBAI V. DCIT CIR 2(2), MUMBAI

ITA 6127/MUM/2010

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 75731 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 6 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-03-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 16-12-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 10-08-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SU RENDRA KUMAR
• Keywords: Capital asset; Depreciation; Opportunity of being heard; Revised return; Revenue expenditure; Capital expenditure
• Section: 37(1)

Judgement Text

B IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI .. , , BEFORE SHRI P.M. JAGTAP, AM AND SHRI. SHRI AMIT SHU KA, JM ./ I.T.A. NO. 6127/MUM/2010 ( / ASSESSMENT YEAR : 2006-07 M/S MIDCO LTD., 3 RD FLOOR, NATIONAL HOUSE, 6, TULLOCK ROAD, MUMBAI 400 039. / VS. THE DY. COMMISSIONER OF INCOME TAX- CIRCLE 2(2), MUMBAI. ./ PAN : AAACM0149F ( # / APPELLANT ) .. ( $%# / RESPONDENT ) # & / APPELLANT BY : SHRI VIJAY MEHTA $%# & / RESPONDENT BY : SHRI SURENDRA KUMAR & + / DATE OF HEARING : 07-01-2014 & + / DATE OF PRONOUNCEMENT :07-03-2014 / O R D E R PER P.M. JAGTAP, A.M . .. , THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF LD. CIT(A) -5, MUMBAI DATED 12-05-2010. 2. THE ISSUE INVOLVED IN GROUND NO. 1 OF THIS APPEA L RELATES TO THE DISALLOWANCE OF RS. 44,20,690/- MADE BY THE A.O . AND CONFIRMED BY THE LD. CIT(A) ON ACCOUNT OF FACTORY A ND OFFICE REPAIRS EXPENDITURE. 3. THE ASSESSEE IN THE PRESENT CASE IS A COMPANY WH ICH IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF VARIOUS PETROLEUM 2 ITA NO.6127 /MUM/2010 DISPENSING UNITS AND SPARES ETC. THE RETURN OF INC OME FOR THE YEAR UNDER CONSIDERATION WAS FILED BY IT ON 27-11-2006 D ECLARING TOTAL INCOME OF RS. 9,82,03,330/-. IN THE P&L ACCOUNT FI LED ALONG WITH THE SAID RETURN, EXPENDITURE INCURRED ON EXTENSIVE REPAIRS AND MAINTENANCE OF ITS FACTORY AND OFFICE PREMISES WAS DEBITED BY THE ASSESSEE. DURING THE COURSE OF ASSESSMENT PROCEEDIN GS, THE DETAILS OF THE SAID EXPENDITURE FURNISHED BY THE ASSESSEE W ERE EXAMINED BY THE A.O. AND ON SUCH EXAMINATION, HE WAS OF THE VIEW THAT SOME OF THE SAID EXPENSES WERE OF CAPITAL NATURE. HE, T HEREFORE, REQUIRED THE ASSESSEE TO EXPLAIN AS TO WHY THE SAID EXPENDIT URE SHOULD NOT BE DISALLOWED TREATING THE SAME AS OF CAPITAL NATUR E. IN REPLY, THE FOLLOWING SUBMISSION WAS MADE BY THE ASSESSEE IN WR ITING VIDE LETTER DATED 18-12-2008:- DURING ASSESSMENT YEAR 2006-07, ASSESSEE CARRIED O UT SOME RENOVATION EXPENSES ON THE FACTORY SITUATED AT KALINA. SINCE FACTORY WAS DILAPIDATED, THERE WAS AN URGENT NEED OF RENOVATION. HOWEVER, THE ASSESSEE IS A TENANT OF TH E FACTORY AND NOT THE OWNER. THE EXPENDITURE INCURRED BY THE PROCESS OF RENOVATION DID NOT BRING INTO EXISTENCE ANY BENE FIT OR ADVANTAGE OF AN ENDURING NATURE, OR ANY NEW ASSET O R NEW ADVANTAGE. THE ASSESSEE SUBMITS THAT THE AFORESAID EXPENDITURE HAS BEEN INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOS E OF ASSESSEES BUSINESS AND HENCE AN ALLOWABLE DEDUCTIO N U/S 37(1) OF THE INCOME-TAX ACT. FOR ALLOWABILITY OF EX PENSES U/S 37(1), THE FOLLOWING CONDITIONS NEED TO BE FULFILLE D. I. THE EXPENDITURE SHOULD NOT BE COVERED U/S 30 TO 36. II. THE EXPENDITURE SHOULD NOT BE CAPITAL EXPENDITURE. III. THE EXPENDITURE SHOULD NOT BE PERSONAL EXPENDITURE. IV. THE EXPENDITURE SHOULD BE LAID OUT WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. THIS ASSESSEE S PROPOSITION IS SUPPORTED BY THE FO LLOWING CATENA OF DECISIONS. (I) CIT VS. I.C.I. (INDIA) PVT. LTD. (1983) 139 ITR 105 (CAL) 3 ITA NO.6127 /MUM/2010 (II) CIT VS. OXFORD UNIVERSITY PRESS 108 ITR 166 (BORN) (EXHIBIT 3) (III) CIT (DELHI) VS. S. ZORASTER & CO. (1979) 133 ITR 559 (RAJ.) (IV) DIGITAL EQUIPMENT INDIA LTD VS. DEPUTY COMMISSIONER OF INCOME TAX (2006) /03 TTJ (BANG) 329 (V) CIT VS. SAKTHI FINANCE LTD. (2007) 291 ITR 83 (MAD) (EXHIBIT 4) (VI) CIT VS. MAHALAKSHMI TEXTILE MILLS LTD. (1967) 66 ITR 710 (SC) HENCE, WE SUBMIT YOUR HONOUR TO CONSIDER THE EXPENS ES AS REVENUE EXPENDITURE AND ALLOW THE SAME AS DEDUCTION IN ITS ENTIRELY. 4. THE SUBMISSION MADE BY THE ASSESSEE WAS NOT FOUN D FULLY ACCEPTABLE BY THE A.O. ON EXAMINATION OF THE RELEV ANT DETAILS FURNISHED BY THE ASSESSEE, HE FOUND THAT THE FOLLOW ING EXPENSES CLAIMED BY THE ASSESSEE UNDER THE HEAD REPAIRS AND MAINTENANCE WERE OF CAPITAL NATURE:- A. FACTORY REPAIRS & MAINTENANCE. SR. PARTICULARS AMOUNT (RS.) I. TOWARDS FLOORING & COATING 20,24,460 II. TOWARDS BOREWELL WORK 2,47,980 TOTAL 22,72,440 B. OFFICE REPAIRS SR. PARTICULARS AMOUNT (RS.) I. TOWARDS PROVIDING AND FILLING PINTH AREA, BRICK WORK, WATERPROOF COMPOUND WORK CERAMIC TILE WORK, CERAMIC FLOORING WORK, FRP DOOR SHUTTERS, PLUMBING WORK 3,21,715 II. TOWARDS REPAIRING PLASTER AND FLOORING MOSAIC TILES WITH POLISHING CHICKEN MESS 5,02,573 III. TOWARDS GROUND FILLING AND CEMENT FLOORING 12,13,678 IV. TOWARDS CONSTRUCTION OF SEPTIC TANK AND SOAK PIT 2,06,910 V. TOWARDS EXTRA ITEM FOR GROUND FILLING AND CEMENT FLOORING WORK 2,39,618 4 ITA NO.6127 /MUM/2010 VI. TOWARDS MAKING AND FIXING TOILET PARTITION SYSTEM, ALL PANELS AND DOORS TO COMPACT LAMINATE IN BLACK CORE ETC. 1,54,944 TOTAL 26,39,438 ACCORDINGLY, THE ABOVE EXPENDITURE AGGREGATING TO R S. 49,11,878/- WAS TREATED BY THE A.O. AS OF CAPITAL NATURE AND ON LY DEPRECIATION THEREON @ 10% WAS ALLOWED BY HIM RESULTING INTO THE DISALLOWANCE OF RS. 44,20,690/-. 5. THE DISALLOWANCE MADE BY THE A.O. ON ACCOUNT OF REPAIRS AND MAINTENANCE EXPENDITURE WAS DISPUTED BY THE ASS ESSEE IN AN APPEAL FILED BEFORE THE LD. CIT(A). DURING THE COUR SE OF APPELLATE PROCEEDINGS BEFORE THE LD. CIT(A), THE ASSESSEE AGR EED THAT THE EXPENDITURE OF RS. 2,47,980/- INCURRED TOWARDS BORE WELL WORK WAS OF CAPITAL NATURE AS RIGHTLY HELD BY THE A.O. AS RE GARDS THE BALANCE REPAIRS EXPENDITURE TREATED BY THE A.O. AS OF CAPIT AL NATURE, A DETAIL SUBMISSION WAS MADE BY THE ASSESSEE IN RESPE CT OF EACH AND EVERY ITEM OF SUCH EXPENDITURE TO SUPPORT AND SUBST ANTIATE ITS CONTENTION THAT THE SAME WAS OF REVENUE NATURE. THE SUBMISSION MADE BY THE ASSESSEE IN THIS REGARD WAS AS UNDER:- EXPENDITURE ON FLOORING AND COATING - RS. 20,24,46 01- THE APPELLANT IS IN THE BUSINESS OF MANUFACTURING OF VA RIOUS PETROLEUM DISPENSING UNITS AND SPARES, TRADING OF P UMPS, MOTORS ETC IT HAS A FACTORY PREMISES AT VATVA, AHME DABAD WHICH IS A RENTAL PREMISES HAVING AN AREA OF APPROX IMATELY 55600 SQ.FT. THERE ARE ABOUT 75 WORKERS AND IT REQU IRES MACHINES AND DIES TO MANUFACTURE THE DISPENSERS. TH E FACTORY IS USED BY THE APPELLANT SINCE LAST 20 YEAR S AND THE EXPENSES INCURRED IN THE EARLIER YEARS WERE IN THE NATURE OF REGULAR MAINTENANCE EXPENSES. THE EXPENSES INCURRED IN THE PREVIOUS YEAR WERE BASICALLY INCURRED FOR THE F LOORING OF THE PREMISE. DUE TO REGULAR AND CONTINUOUS USAGE OF THE FLOORING, SINCE LAST 20 YEARS IT WAS WORN OUT. THE EXPENSES WERE INCURRED FOR RELAYING THE FLOORING OF THE FACT ORY PREMISE. THE RATE FOR FLOORING AND COATING WAS RS. 6160/- PER SQ FT WHICH WAS AS PER THE INDUSTRY RATE AND BE CAUSE OF THE HUGE AREA OF THE FACTORY (WORK CARRIED OUT IN A PPROX. 30430 SQ FT) THE QUANTUM OF THE EXPENSES APPEARS HI GH. AS 5 ITA NO.6127 /MUM/2010 CAN BE SEEN ON A PERUSAL OF THE INVOICE THAT APPELL ANT HAD INCURRED A MEAGER SUM OF RS. 6160 PER SQ FT TO CARR Y THIS REPAIRS WHICH BY NO STRETCH OF IMAGINATION CAN BE S AID TO BE CAPITAL IN NATURE. BECAUSE OF INCURRENCE OF SUCH EXPENDITURE THERE WAS NEITHER ANY CAPACITY EXPANSIO N NOR ANY INCREASE IN THE LIFE OF THE PREMISE. THE EXPENS ES ONLY AIDED SMOOTH FUNCTIONING OF THE RESOURCES AT THE FA CTORY. THERE WAS NO ERECTION OF NEW BUILDING OR STRUCTURES TOWARDS REPAIRING PLASTER AND FLOORING MOSAIC TILES WITH POLISHING CHICKEN MESS - RS. 5,02,5731-THESE EXPENS ES WERE INCURRED FOR APPLYING THE NEW PLASTER IN PLACE OF THE EXISTING ONE. SINCE THE BUILDING WAS VERY OLD, TO M AINTAIN THE BUILDING IN ITS EXISTING CONDITION, THE SAID EX PENSES WERE INCURRED OUT OF COMPELLING NECESSITY. FLOORING WAS ALSO WORN OUT DUE TO REGULAR USAGE AND HAD TO BE RELAID. THIS DOES NOT BRING ANY CAPITAL ASSET INTO EXISTENCE. IT WAS COMPELLED TO REPLACE THE FLOORING AND HAD TO INCUR AN EXPENDITURE OF RS. 206,190 ON REPLACEMENT OF THE FL OORING. II. TOWARDS GROUND FILLING AND CEMENT FLOORING AND TOWARDS EXTRA ITEM FOR GROUND FILLING AND CEMENT FLOORING W ORK RS. 14,53,296/-THIS EXPENDITURE WAS INCURRED FOR GROUND FILLING AND CEMENT FLOORING TO RAISE THE HEIGHT OF PREMISE. THE PREMISE WAS AT GROUND LEVEL AND THIS WAS CREATING A LOT OF PROBLEM FOR THE APPELLANT IN EVERY MONSOON AS THERE USED TO BE HEAVY WATER LOGGING AT THE OFFICE GATE AND MA NY A TIMES WATER USE TO SIP INSIDE THE OFFICE PREMISES. THUS, THIS EXPENDITURE WAS ALSO A COMPULSORY EXPENDITURE NECESSITATED BY BUSINESS EXIGENCIES AND WAS NOT IN THE NATURE OF ADDITIONAL CONSTRUCTION OR INCREASING THE AREA OF OFFICE PREMISE. III. TOWARDS RECONSTRUCTION OF SEPTIC TANK AND SOAK PIT - RS.2,06,910/- THE APPELLANT SUBMITS THAT SEPTIC TAN K IS BEING USED FOR DEPOSITION OF SETTLING SOLIDS IN SEW AGE BY SEDIMENTATION, AND PARTIAL OR COMPLETE DIGESTION OF THE SLUDGE PRIOR TO ITS DISPOSAL. THE EFFLUENT FROM THE SEPTIC TANK IS DISCHARGED EITHER IN TO THE SOAK PIT OR BEL OW GROUND LEVEL THROUGH DRAINS, SO THAT THE EFFLUENT GETS ABS ORBED IN THE SOIL. ALSO A VENT PIPE IS PROVIDED FOR THE ESCA PE OF GASES. THE APPELLANT SUBMITS IT IS NOT CONNECTED TO THE PU BLIC DRAINAGE SYSTEM AND SINCE YEARS T HAS BEEN DISPOSIN G OFF THE WASTE BY USE OF SEPTIC TANK AND SOAK PIT. AS A RESULT OF THE COMPOUNDING EFFECT OF WEAR ARID TEAR AND FLOODS OF 26)H JULY 2005 TO U MAINTAIN THE ABOVE DRAINAGE SYSTEM I T HAD TO BE REPLACED SO AS TO ENSURE SMOOTH OUTFLOW OF TH E WASTE FROM THE FACTORY OFFICE. THE EXPENSES WERE ESSENTIA L AND ARE REVENUE IN NATURE AS MERE REPLACEMENT OF THE EXISTI NG TANK DOES NOT BRING IN ENDURING BENEFIT. 6 ITA NO.6127 /MUM/2010 IV. TOWARDS PROVIDING AND FILLING PLINTH AREA, BRIC K WORK, WATERPROOF COMPOUND WORK CERAMIC TILE WORK, CERAMIC FLOORING WORK, FRP DOOR SHUTTERS, PLUMBING WORK AND TOWARDS MAKING AND FIXING TOILET PARTITION SYSTEM, ALL PANELS AND DOORS TO COMPACT LAMINATE IN BLACK CORE, ETC - RS. 4,76,6591-AS STATED ABOVE, THE OFFICE PREMISES WAS 44 YEARS OLD, THE WASHROOM AND TOILETS IN THE OFFICE W ERE IN PRETTY BAD STATE AND WERE NOT IN A USABLE CONDITION . THE PROBLEM WAS FURTHER COMPOUNDED BY DISASTER ON 26 JU LY A MENTIONED EARLIER, THE APPELLANTS CLIENTELE INCLUDE HPCL, BPCL, I0CC. RELIANCE ETC AND HENCE II WAS ABSOLUTEL Y IMPERATIVE FOR THE APPELLANT TO REFURBISH THE TOILE TS AND THE WASHROOMS. THIS IN NO WAY INCREASES CAPACITY OF THE BUILDING OR ANY ADDITIONAL SUPER STRUCTURE AND IT I S ONLY A BASIC NECESSITY PROVIDED FOR THE EMPLOYEES AND CUST OMERS AND HENCE REVENUE IN NATURE. THE SAID EXPENSES DID NOT GIVE RISE TO ANY NEW ASSET BUT WERE INCURRED FOR BE TTER OPERATIONAL EFFICIENCIES. SIMILARLY WITH REGARD TO FACTORY CUM OFFICE REPAIRS OF RS, 2639438/, THEY WERE INCURRED DUE TO THE SAID PREMISES WAS 44 YEARS OLD, PLASTERING AND RELAYING OF FLOORING TO MAINTAIN THE PREMISES REVISING THE H EIGHT OF THE GROUND LEVEL TO PREVENT PROBLEM OF WATER LOGGIN G AND WATER SEEPAGE, RECONSTRUCTION TOILETS AS THE OLD TO ILETS WERE UNUSABLE AND RECONSTRUCTING THE DRAINAGE SYSTEM. BESIDES THE ABOVE SUBMISSION, IT WAS ALSO PLEADED O N BEHALF OF THE ASSESSEE BEFORE THE LD. CIT(A) THAT BY INCURRING TH E ABOVE EXPENDITURE, IT HAD NOT DERIVED ANY ADDITIONAL BENE FIT IN THE CAPITAL FIELD. IT WAS CONTENDED THAT THE QUANTUM OF EXPEND ITURE INCURRED COULD NOT BE THE DECIDING FACTOR AS THE MAGNITUDE O F REPAIRS WOULD DEPEND ON THE AMOUNT OF WEAR AND TEAR OF THE ASSET. IT WAS CONTENDED THAT THE WEAR AND TEAR OF THE ASSET IS NO T ONLY RELATED TO PASSAGE OF TIME BUT THEY ALSO RELATE TO HAPPENING O F CERTAIN CONTINGENT EVENTS WHICH REQUIRED INCURRING OF SUCH EXPENDITURE FOR RESTORING THE ASSETS BACK TO ITS ORIGINAL CONDITION . 6. THE CONTENTION OF THE ASSESSEE ON THIS ISSUE WAS NOT FOUND ACCEPTABLE BY THE LD. CIT(A) FOR THE FOLLOWING REAS ONS GIVEN IN PARA 5 OF HIS IMPUGNED ORDER:- 7 ITA NO.6127 /MUM/2010 5 ON CAREFUL CONSIDERATION OF THE ABOVE FACTS AND MORE SPECIFICALLY NATURE OF THE EXPENDITURE INCURRED, IT COULD NOT BE SAID THAT THEY PERTAIN DAY TO CLAY REPAIRS AND MAINTENANCE EXPENSES. THERE IS SUFFICIENT MERITS IN THE CONCLUSION DRAWN BY THE AO THAT SUCH EXPENDITURE AR E CAPITAL IN NATURE. NONE OF THE EXPENDITURE BY ANY S TRETCH OF IMAGINATION COULD BE CONSIDERED AS CURRENT REPAIRS AS THE SAME ARE NOT DONE IN A ROUTINE MANNER. THERE IS DEF INITE ELEMENT OF ENDURANCE IN SUCH EXPENDITURE. APPARENTL Y, NEW ASSETS HAVE BEEN CREATED BY THE APPELLANT, IT HAS I TSELF ADMITTED THAT THE EXPENDITURE OF THIS NATURE WERE I NCURRED WHICH WAS DUE FOR SUFFICIENTLY LONG TIME AS IN THE PAST ONLY ROUTINE EXPENSES WERE INCURRED FOR REPAIRS AND MAINTENANCE. THUS, FROM SUCH ADMISSION OF THE APPEL LANT ITSELF IT IS APPARENT THAT SUCH EXPENDITURE WERE IN CURRED ONCE AFTER SEVERAL YEARS AND WERE DEFINITELY NOT IN THE NATURE OF CURRENT REPAIRS. THE EXPENDITURE HAS RESU LTED INTO LONG AND ENDURING BENEFIT TO THE APPELLANT AND ARE THEREFORE, CAPITAL IN NATURE. THE APPELLANT HAS INC URRED THE EXPENDITURE FOR COMPLETE RESTORATION AND RENOVATION OF THE CAPITAL ASSETS WHICH WAS DUE TO FOR SEVERAL YEARS. IT IS WORTH NOTING THAT THE APPELLANT ITSELF HAS ADMITTED THAT A PART OF THE EXPENDITURE INCURRED ON BOREWELL WAS CAPITAL EXPENDITURE. 7. FOR THE REASONS GIVEN ABOVE AND RELYING ON VARIO US JUDICIAL PRONOUNCEMENTS REFERRED IN HIS IMPUGNED ORDER, THE LD. CIT(A) CONFIRMED THE DISALLOWANCE MADE BY THE A.O. ON ACCO UNT OF REPAIRS AND MAINTENANCE EXPENDITURE INCURRED BY THE ASSESSE E TREATING THE SAME AS OF CAPITAL NATURE. 8. THE LD. COUNSEL FOR THE ASSESSEE, AT THE OUTSET, INVITED OUR ATTENTION TO THE COPIES OF RELEVANT BILLS FOR REPAI RS AND MAINTENANCE EXPENDITURE IN QUESTION PLACED AT PAGE 12 TO 19 OF THE PAPER BOOK. HE POINTED OUT THAT THE EXPENDITURE OF RS. 20,24,46 0/- WAS INCURRED BY THE ASSESSEE ON THE REPLACEMENT OF FLOO RING OF ITS FACTORY BUILDING. HE CONTENDED THAT THE SAID EXPEN DITURE THUS WAS INCURRED BY THE ASSESSEE ON REPLACEMENT OF THE PORT ION OF THE ASSET I.E. FACTORY BUILDING AND NOT THE REPLACEMENT OF TH E ASSET AS A WHOLE. HE CONTENDED THAT THE SAID EXPENDITURE WAS REQUIRED TO BE INCURRED TO MAINTAIN THE FACTORY BUILDING IN WORKIN G CONDITION 8 ITA NO.6127 /MUM/2010 WHICH DID NOT RESULT IN BRINGING INTO EXISTENCE ANY NEW ASSET OR ADVANTAGE OF ENDURING NATURE ON THE CAPITAL FIELD. HE TOOK US THROUGH THE COPIES OF RELEVANT BILLS FOR THE REMAIN ING REPAIRS AND MAINTENANCE EXPENDITURE PLACED IN HIS PAPER BOOK TO POINT OUT THAT THE SAID EXPENDITURE WAS INCURRED ON REPAIRS A ND REPLACEMENT OF PART OF THE ASSETS I.E. FACTORY AND OFFICE PREMI SES WHICH DID NOT BRING INTO EXISTENCE ANY NEW CAPITAL ASSET. HE SUBM ITTED THAT THE ENTIRE EXPENDITURE IN QUESTION INCURRED BY THE ASSE SSEE ON REPAIRS AND MAINTENANCE EXCEPT THE EXPENDITURE INCURRED TOW ARDS BOREWELL THUS WAS REVENUE IN NATURE AND THE DISALLO WANCE MADE BY THE A.O. TREATING THE SAME AS CAPITAL EXPENDITURE W AS CONFIRMED BY THE LD. CIT(A) BY APPLYING WRONGLY THE TEST OF CURR ENT REPAIRS IGNORING THE FACT THAT THE EXPENDITURE WAS CLAIMED BY THE ASSESSEE ON REPLACEMENT ON PART OF ASSET. IN SUPPORT OF THIS CONTENTION, HE RELIED INTER ALIA, ON THE DECISION OF HONBLE BOMBA Y HIGH COURT IN THE CASE OF CIT VS. CHOWGULE AND CO. PVT. LTD. (199 5) 214 ITR 523 AND HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS . HI LINE PENS PVT. LTD. (2008) 306 ITR 182 (DELHI). 9. THE LD. D.R., ON THE OTHER HAND, STRONGLY SUPPOR TED THE IMPUGNED ORDER OF LD. CIT(A) CONFIRMING THE DISALLO WANCE MADE BY THE A.O. ON ACCOUNT OF REPAIRS AND MAINTENANCE EXPE NDITURE INCURRED BY THE ASSESSEE TREATING THE SAME AS OF CA PITAL NATURE. HE CONTENDED THAT THE ACCUMULATED REPAIRS CANNOT BE ALLOWED AS CURRENT REPAIRS AND SINCE THE EXPENDITURE IN QUESTI ON INCURRED BY THE ASSESSEE BROUGHT ADVANTAGE OF ENDURING NATURE T O THE ASSESSEE, THE SAME WAS RIGHTLY DISALLOWED BY THE AU THORITIES BELOW TREATING THE SAME AS OF CAPITAL NATURE. HE CONTENDE D THAT THE EXPENDITURE IS NOT INCURRED BY THE ASSESSEE IN THE NORMAL COURSE OF ITS BUSINESS AND THE FACTS INVOLVED IN THE CASE OF THE ASSESSEE ARE 9 ITA NO.6127 /MUM/2010 ENTIRELY DIFFERENT FROM THE FACTS INVOLVED IN THE C ASE LAWS CITED BY THE LD. COUNSEL FOR THE ASSESSEE. 10. WE HAVE CONSIDERED THE RIVAL SUBMISSION AND ALS O PERUSED THE RELEVANT MATERIAL PLACED ON RECORD. WE HAVE AL SO GONE THROUGH THE COPIES OF RELEVANT BILLS PLACED IN THE PAPER BO OK OF THE ASSESSEE IN SUPPORT OF ITS STAND THAT THE EXPENDITURE IN QUE STION INCURRED ON REPAIRS AND MAINTENANCE ON FACTORY AND OFFICE BU ILDING IS OF REVENUE NATURE EXCEPT THE EXPENDITURE TOWARDS BOREW ELL WORK. A PERUSAL OF THE CONTENTS OF THESE BILLS CLEARLY SHOW S THAT THE EXPENDITURE IN QUESTION WAS INCURRED BY THE ASSESSE E ON REPAIRS AND REPLACEMENT OF THE PARTS OF THE CONCERNED ASSET S I.E. BUILDINGS AND THE SAME DID NOT RESULT IN BRINGING INTO EXISTE NCE ANY NEW ASSET OR ADVANTAGE OF ENDURING NATURE IN THE CAPITA L FIELD. THE EXPENDITURE WAS INCURRED BY THE ASSESSEE ON THE PAR TS OF THE BUILDING SUCH AS FLOORING, TANKS, PLASTER OF WALLS ETC. AND IT WAS NOT A CASE OF REPLACEMENT OF ANY ASSET AS A WHOLE OR SU BSTANTIALLY THE WHOLE. IT APPEARS THAT THE A.O. AND LD. CIT(A), HO WEVER, CONSIDERED THE CLAIM OF THE ASSESSEE FOR DEDUCTION ON ACCOUNT OF THE EXPENDITURE IN QUESTION FROM THE ANGLE OF ONLY CURR ENT REPAIRS AND KEEPING IN VIEW THE QUANTUM OF EXPENDITURE AS WELL AS THE ENDURING BENEFIT, TREATED THE SAME AS OF CAPITAL NA TURE. 11. IN THE CASE OF CHOWGULE AND CO. PVT. LTD. (SUPR A) CITED BY THE LD. COUNSEL FOR THE ASSESSEE, IT WAS HELD BY THE HO NBLE BOMBAY HIGH COURT THAT THE QUANTUM OF EXPENDITURE INCURRED ON THE REPAIRS IS NOT RELEVANT FOR DETERMINING WHETHER IT IS AN EXPENDITURE ON CURRENT REPAIRS OR NOT, BECAUSE THE EXTENT OF RE PAIRS AND THE AMOUNT SPENT WOULD DEPEND UPON VARIOUS FACTORS. IT WAS ALSO HELD THAT IT CANNOT BE SAID, BY THE MERE FACT THAT OLD P ARTS WERE REPLACED BY NEW PARTS, THAT A NEW ASSET IS BROUGHT INTO EXISTENCE. 10 ITA NO.6127 /MUM/2010 IN THE CASE OF HI LINE PENS PVT. LTD. (SUPRA), THE EXPENDITURE INCURRED BY THE ASSESSEE TOWARDS FALSE CEILING, FIX ING TILES, REPLACING GLASSES, WOODEN PARTITIONS, REPLACEMENT O F ELECTRIC WIRING, EARTHING, REPLACEMENT OF GO PIPES ETC. WAS DISALLOWED ON THE GROUND THAT THE SAME WAS NOT IN THE NATURE OF C URRENT REPAIRS, AND IT WAS HELD BY THE HONBLE DELHI HIGH COURT THA T THE DISTINCTION BETWEEN CURRENT REPAIRS AND REPAIRS IS BORNE OUT BY THE PROVISION ITSELF AND WOULD BE APPARENT UPON A P LAIN READING OF SECTION 30. IT WAS HELD THAT THE WORD REPAIRS IS MUCH WIDER THAN THE EXPRESSION CURRENT REPAIRS AND WHEN THE REPLA CEMENT WAS NOT OF THE PREMISES BUT OF CERTAIN PARTS SUCH AS THE INTERNAL WIRES AND GI PIPES ETC., THE EXPENDITURE INCURRED ON SUCH REPLACEMENT WAS REVENUE IN NATURE AS THE SAME DID NOT BRING INT O EXISTENCE ANY NEW ASSET. 12. KEEPING IN VIEW THE RATIO LAID DOWN IN THE CASE OF CHOWGULE AND CO. PVT. LTD. (SUPRA) BY THE HONBLE BOMBAY HIG H COURT AND IN THE CASE OF HI LINE PENS PVT. LTD. (SUPRA) BY THE H ONBLE DELHI HIGH COURT AND HAVING REGARD TO THE FACTS OF THE CASE, W E ARE OF THE VIEW THAT THE EXPENDITURE IN QUESTION INCURRED BY THE AS SESSEE ON REPAIRS AND MAINTENANCE, EXCEPT THE EXPENDITURE INC URRED TOWARDS BOREWELL WORK, IS OF REVENUE NATURE WHICH IS DEDUCT IBLE AS REVENUE EXPENDITURE. IN THAT VIEW OF THE MATTER, WE DELETE THE DISALLOWANCE MADE BY THE A.O. AND CONFIRMED BY THE LD. CIT(A) ON ACCOUNT OF REPAIRS AND MAINTENANCE EXPENDITURE EXCEPT TO THE E XTENT IT IS RELATABLE TO THE EXPENDITURE INCURRED TOWARDS BOREW ELL WORK AND ALLOW PARTLY GROUND NO. 1 OF THE ASSESSEES APPEAL. 13. IN GROUND NO. 2, THE ASSESSEE HAS CHALLENGED TH E ACTION OF THE LD. CIT(A) IN UPHOLDING THE DECISION OF THE A.O . OF NOT ALLOWING THE CLAIM OF THE ASSESSEE FOR WRITE BACK OF INVESTM ENT OF RS. 11 ITA NO.6127 /MUM/2010 6,28,566/- ON THE GROUND THAT THE SAME WAS NOT CLAI MED IN THE REVISED RETURN OF INCOME. 14. AS AGREED BY THE LD. REPRESENTATIVES OF BOTH TH E SIDES, THIS ISSUE IS REQUIRED TO BE RESTORED TO THE FILE OF THE A.O. FOR DECIDING THE CLAIM OF THE ASSESSEE ON MERIT IN VIEW OF THE D ECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF PRITHVI BROKERS AN D SHARE BROKERS PVT. LTD. (349 ITR 336) WHEREIN IT WAS HELD THAT THE ASSESSEE IS ENTITLED TO RAISE ADDITIONAL CLAIMS BEF ORE THE APPELLATE AUTHORITIES WHO HAVE DISCRETION TO PERMIT SUCH ADDI TIONAL CLAIMS TO BE RAISED. ACCORDINGLY WE ENTERTAIN THE CLAIM MADE BY THE ASSESSEE IN GROUND NO. 2 AND RESTORE THIS ISSUE TO THE FILE OF THE A.O. TO DECIDE THE SAME ON MERIT AFTER GIVING THE A SSESSEE AN OPPORTUNITY OF BEING HEARD. GROUND NO. 2 OF THE AS SESSEES APPEAL IS ACCORDINGLY TREATED AS ALLOWED FOR STATISTICAL P URPOSE. 13. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 7 TH MARCH, 2014. & 0 1 0750352014 & SD/- SD/- (AMIT SHUKLA) (P.M. JAGTAP ) JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; 1 DATED 0750352014 ../ R.K. SR. PS 12 ITA NO.6127 /MUM/2010 ' #%& '& / COPY OF THE ORDER FORWARDED TO : 1. # / THE APPELLANT 2. $%# / THE RESPONDENT. 3. () / THE CIT (A) - 5 , MUMBAI 4. /CIT -2, MUMBAI 5. = $? , + ? , / DR, ITAT, MUMBAI B BENCH 6. B / GUARD FILE. / BY ORDER, %= $ //TRUE COPY// / ( DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI