M/s S.G.S. Motors Pvt.Ltd., , Indore V. ACIT 5(1), Indore Range-1, Indore

ITA 640/Ind/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 9813 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 5 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2013-2014
• Appeal Filed On: 05-10-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K G GOYAL
• Assessee Lawyers: S N AGRAWAL; PANKAJ MOGRA A RS
• Keywords: Depreciation; Revenue expenditure
• Section: 143(3); 37(1)

Judgement Text

[ITA 640/IND/2017] [M/S. SGS MOTORS PVT. LTD., INDORE] , , IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA NO.640/IND/2017 ASSESSMENT YEAR: 2013-14 M/S. S.G.S. MOTORS PV T. LTD. 6, A.B. ROAD, MANORMAGANJ INDORE / VS. ACIT - 5(1) INDORE ( APPELLANT ) ( REVENUE ) P.A. NO. AAQCS9183H APPELLANT BY SHRI S.N. AGRAWAL & SHRI PANKAJ MOGRA, A.RS RESPONDENT BY SHRI K.G. GOYAL, SR.D.R. DATE OF HEARING: 28.03.2019 DATE OF PRONOUNCEMENT: 04.04.2019 / O R D E R PER KUL BHARAT, J.M: APPEAL BY THE ASSESSEE PERTAINING TO THE ASSESSMENT YEAR 2013-14 AGAINST THE ORDER OF LD. CIT(A)-2, INDORE [ITA 640/IND/2017] [M/S. SGS MOTORS PVT. LTD., INDORE] 2 DATED 2.8.2017. THE ASSESSEE HAS RAISED FOLLOWING GROU NDS OF APPEAL: 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE THE LEARNED CIT(A) ERRED IN MAINTAINING DISALLOWANCE OF RS.12,7 1,650/- AS MADE BY A.O. OUT OF REPAIRS & MAINTENANCE OF BUILDING BY HOLDING THAT SAID AMOUNT OF EXPENSES AS INCURRED BY THE ASSESSEE ARE OF ENDURING NATURE AND THEREFORE THE SAME ARE NOT CONS IDERED AS REVENUE EXPENDITURE WITHOUT PROPERLY APPRECIATING T HE FACTS OF THE CASE, AND SUBMISSION MADE BEFORE HIM. 2. THE ASSESSEE RESERVE ITS RIGHT TO ADD, ALTER, MODIF Y OR AMEND THE GROUNDS OF APPEAL AS AND WHEN REQUIRED. 2. FACTS IN BRIEF ARE THAT CASE OF THE ASSESSEE WAS TAKEN UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMENT U/S 143( 3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED AS TH E ACT) WAS FRAMED VIDE ORDER DATED 29.10.2015. THE A.O. OBSERVED THAT THE ASSESSEE HAD CLAIMED EXPENSES OF RS.24,95,156/- AS THE EXPENSES UNDER THE HEAD REPAIRS & MAINTENANCE OF THE BUILDING. THE A.O. CONSIDERING T HE AMOUNT OF RS.12,71,650/- AS THE EXPENDITURE INCURRED FOR ENDURING BENEFIT DISALLOWED THE SAME BEING CAPITAL IN NATURE AND ALSO DISALLOWED 10% OF THE DEPRECIATION ON TH E [ITA 640/IND/2017] [M/S. SGS MOTORS PVT. LTD., INDORE] 3 SAME AND MADE ADDITION OF RS.12,71,650/-, HE FURTHER MADE AN ADHOC DISALLOWANCE OF RS.2 LAKHS IN RESPECT OF TH E EXPENSES INCURRED UNDER THE HEAD TRAVELLING, REPAIRS & MAINTENANCE, SALES PROMOTIONS, DEMONSTRATION ON THE BASIS THAT THEY ARE NOT SUPPORTED BY THE SELF-MADE VOUCHERS. AGAINST THIS, THE ASSESSEE PREFERRED AN AP PEAL BEFORE THE LD. CIT(A) WHO AFTER CONSIDERING THE SUBM ISSIONS PARTLY ALLOWED THE APPEAL, THEREBY ADHOC DISALLOWANCES OF RS.2 LAKHS WERE DELETED AND THE ADDITION MADE ON ACCOU NT OF DISALLOWANCE OF EXPENDITURE BEING IN CAPITAL NATURE WAS SUSTAINED. 3. NOW THE ASSESSEE IS IN APPEAL AGAINST THE SUSTAINING O F THE DISALLOWANCE OF EXPENDITURE OF RS.12,71,650/- IN THE PRESENT APPEAL. LD. COUNSEL FOR THE ASSESSEE VEHEMENT LY ARGUED THAT THE AUTHORITIES BELOW WERE NOT JUSTIFIED I N MAKING THE ADDITION AS THE AUTHORITIES HAVE NOT POINTED OUT WHAT EXPENDITURES WERE OF THE ENDURING BENEFIT. LD. [ITA 640/IND/2017] [M/S. SGS MOTORS PVT. LTD., INDORE] 4 COUNSEL FOR THE ASSESSEE HAS RELIED UPON THE JUDGEMEN T OF THE HON'BLE MADRAS HIGH COURT RENDERED IN THE CASE OF THIRU AROORAN SUGARS LTD. VS. DCIT (2013) 31 TAXMANN.COM 3 (MADRAS) AND THE DECISION OF THE COORDINATE BENCH IN THE CASE OF M/S. ARIES EXPORTS PV T. LTD. VS. DCIT CIRCLE-3(1) IN ITA NO.5841/MUM/2012. FURT HER, LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIO NS AS MADE IN THE WRITTEN SYNOPSIS. THE SUBMISSIONS OF TH E ASSESSEE ARE AS UNDER: A.1] THE ASSESSEEE HAD FILED ITS RETURN OF TOTAL I NCOME FOR THE A.Y. 2013-14 ON 30.11.2013 DECLARING TOTAL INCOME AT RS.24471780/-. A.2] THE CASE OF THE ABOVE ASSESSEE WAS SELECTED IN SCRUTINY AND ASSESSMENT ORDER WAS PASSED U/S 143(3) ON 29.10.2015 WHEREIN TOTAL INCOME OF THE AB OVE ASSESSEE WAS ASSESSED AT RS.25816265/-. THAT WHILE PASSING THE ASSESSMENT ORDER FOLLOWING ADDITI ONS WERE MADE TO THE TOTAL INCOME OF THE ASSESSEE. SL.NO. PARTICULARS AMOUNT 01. DISALLOWANCE OUT OF REPAIRS AND MAINTENANCE EXP ENSES 1271650 02. ADHOC DISALLOWANCE OUT OF VARIOUS EXPENSES 2000 00 LESS DEPRECIATION ALLOWED ON EXPENSES UNDER REPAIRS & MAINTENANCE 127165 TOTAL ADDITION 1344485 A.3] THE LD. CIT(A) VIDE HIS ORDER DT.02.08.2017 HA S PARTLY ALLOWED THE APPEAL AS FILED BY THE ASSESSEE BY DELETING THE ADHOC DISALLOWANCE OF RS.2 00000/- MADE BY THE A.O. BUT HE HAS MAINTAINED THE DISALLOWANCE OF RS.1271650 MADE BY THEA.O. IN RESPE CT OF REPAIRS & MAINTENANCE EXPENSES. A.4] THE ASSESSEE IS IN APPEAL BEFORE THE HON'BLE B ENCH AGAINST THE SAID DISALLOWANCE OF RS.1271650/- AS MADE BY THE A.O. AND MAINTAINED BY THE LD. CIT(A ). [ITA 640/IND/2017] [M/S. SGS MOTORS PVT. LTD., INDORE] 5 [ITA 640/IND/2017] [M/S. SGS MOTORS PVT. LTD., INDORE] 6 [ITA 640/IND/2017] [M/S. SGS MOTORS PVT. LTD., INDORE] 7 4. ON THE CONTRARY, LD. D.R. OPPOSED THE SUBMISSIONS AND SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE A.O. HAD DISALLOWED EXPENDITURE BY OBSERVING AS UNDER: 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT HAS COME TO NOTICE THAT OUT OF TOTAL EXPENSES OF RS.24,95,156/- UNDER THE HEAD REPAIRS AND MAINTENANCE OF BUILDING, THE ASSESSEE H AS INCURRED EXPENDITURES UNDER THE FOLLOWING TWO HEADS: SL. NO. AMOUNT SPENT (INR) HEAD 1. 379750 FALSE CEILING, TILES, PAINTING, ELECTRIC WORK AT MEZZANINE FLOOR OF WORKSHOP 2. 891900 PCC AND RCC WORK. TOTAL 1271650 4.1 IT WAS BROUGHT TO THE NOTICE OF THE AR THAT THE ABOVE EXPENSES UNDER THE ABOVE TWO HEADS INCURRED BY THE ASSESSEE ARE OF ENDURING NATURE AND THEREFORE, THE SAME ARE NOT CON SIDERABLE AS REVENUE EXPENDITURE. ACCORDINGLY, THIS AMOUNT OF R S.12,71,650/- IS DISALLOWED AND ADDED TO THE INCOME OF THE ASSESSEE BY THE ASSESSEE IS ENTITLED TO CLAIM DEPRECIATION @ 10% ON RS.12,71 ,650/-, WHICH WORKS OUT TO RS.1,27,165/-. ACCORDINGLY, THE DEPREC IATION OF RS.1,27,165/- IS ALLOWED WHILE COMPUTING THE ASSESS ED INCOME OF THE ASSESSEE. [ITA 640/IND/2017] [M/S. SGS MOTORS PVT. LTD., INDORE] 8 6. FURTHER, LD. CIT(A) SUSTAINED THIS ADDITION BY OBSERVING AS UNDER: I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF THE APPELLANT. HOWEVER, THE FACT REMAINS THAT ALTHOUGH THESE EXPEN SES HAVE BEEN CLAIMED IN THE NATURE OF REPAIRS BUT AS PER THE APP ELLANT ITSELF THE SAID BUILDING HAD BECOME OLD AND THE PRINCIPAL THAT IS TATA MOTOR LTD. HAD DEMANDED THE RENOVATION OF THE BUILDING. CLEARLY, THERE IS A DIFFERENCE BETWEEN THE ROUTINE REPAIR WORK AND CO MPLETE RENOVATION OF THE BUILDING. ALSO FALSE CEILING AND OTHER WORK INCLUDING PUTTING UP OF NEW TILES WAS DONE, THEREBY CREATING A BENEFIT OF ENDURING NATURE FOR THE APPELLANT. THUS, BY ANY STRETCH OF IMAGINATION THESE PARTICULAR REPAIRS WORKS CANNO T FALL IN THE CATEGORY OF EXPENDITURE ALLOWABLE U/S 37(1) OF THE ACT. THE APPELLANT HAS CLEARLY DERIVED BENEFIT OF ENDURING N ATURE AND ITS HIS OWN WORDS, THE ENTIRE PREMISES WAS RENOVATED AND NOT JUST REPAIRED. HENCE, I HAVE NO HESITATION IN CONFIRMING THE ADD ITION SO MADE BY THE A.O. THEREFORE, THIS GROUND OF APPEAL IS DISMISSED . 7. BOTH THE AUTHORITIES HAVE NOT STATED AS WHAT WAS THE NATURE OF EXPENDITURE. MERELY ON THE BASIS OF CONJEC TURES HAVE ARRIVED AT A CONCLUSION THAT THE EXPENDITURE WAS OF THE ENDURING NATURE. WE ARE NOT INCLINED TO AFFIRM TH IS CASUAL APPROACH OF THE AUTHORITIES BELOW. THEREFORE, RESPECTFULLY FOLLOWING THE JUDGEMENT OF THE HON'BLE MADRAS [ITA 640/IND/2017] [M/S. SGS MOTORS PVT. LTD., INDORE] 9 HIGH COURT RENDERED IN THE CASE OF THIRU AROORAN SUGAR S LTD. VS. DCIT (SUPRA), WE HEREBY DIRECT THE A.O. TO DELETE THE ADDITIONS. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 04 . 04.2019. SD/- (MANISH BORAD) SD/- (KUL BHARAT) A CCOUNTANT MEMBER JUDICIALMEMBER INDORE; DATED : 04/04/2019 VG/SPS COPY TO: ASSESSEE/AO/PR. CIT/ CIT (A)/ITAT (DR)/GUAR D FILE. BY ORDER ASSISTANT REGISTRAR, INDORE