M/s. Eco RRB Infra Pvt. Ltd., New Delhi V. DCIT, New Delhi

ITA 6633/DEL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 97605 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 9 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-10-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 02-09-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 16-12-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: AMRESH BEDI
• Assessee Lawyers: K SAMPATH RAJ KUMAR
• Keywords: Depreciation; Capital expenditure
• Section: 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH D , NEW DELHI) BEFORE SHRI T. S. KAPOOR, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER I.T.A. NO.6633 /DEL/2013 ASSESSMENT YEAR : 2010-11 ECO RRB INFRA PVT. LTD., VS. DCIT, CIRCLE 15(1), (EARLIER KNOWN AS RRB CONSULTANTS NEW DELHI & ENGINEERS PVT. LTD.), 2C AND D, M-6, UPPAL PLAZA DISTRICT CENTRE, JASOLA , NEW DELHI GIR / PAN:AAACR0233R (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K. SAMPATH, RAJ KUMAR, ADV. RESPONDENT BY : SHRI AMRESH BEDI, SR. DR DATE OF HEARING : 02.09.2015 DATE OF PRONOUNCEMENT : 13.10.2015 ORDER PER KULDIP SINGH, JM: THE APPELLANT ECO RRB INFRA PVT. LTD. BY FILING TH E PRESENT APPEAL, SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 02.09. 2013 PASSED BY LD. CIT(A) XVIII, NEW DELHI FOR THE ASSESSMENT YEAR 201 0-2011 ON THE GROUNDS INTER ALIA THAT: 1) LD. CIT(A) ERRED IN CONFIRMING THE REVENUE EXPE NSES OF BUILDING REPAIR IN A SUM OF RS.7,96,187/- AS CAPITA L EXPENDITURE; 2) DISALLOWING DEPRECIATION IN A SUM OF RS.9,216/- . ITA NO.6633/DEL/2013 2 2. BRIEFLY STATED, THE FACTS OF THIS CASE ARE: THE INCOME TAX RETURN FILED BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2010-2011 SHOW ING LOSS OF RS.5,78,03,649/-, WAS PUT UNDER SCRUTINY ASSESSMENT UNDER CASS AND CONSEQUENTLY, STATUTORY NOTICES U/S 143(2) DATED 19 .09.2011 AND 28.09.2011 AND NOTICE U/S 142(1) DATED 21.08.2012 WERE ISSUED. SHRI F.A. SAMSI, C.A. BEING AR OF THE ASSESSEE ATTENDED THE PROCEEDINGS, FILED DOCUMENTS / EVIDENCES IN SUPPORT OF HIS CLAIM. 3. THE ASSESSEE COMPANY IS ENGAGED IN THE FIELD OF POWER GENERATION, CONSULTANCY SERVICES IN POWER SECTOR. FROM THE PER USAL OF PROFIT & LOSS ACCOUNT FOR THE PERIOD UNDER SCRUTINY IT IS NOTICED THAT THE COMPANY HAS DEBITED AN AMOUNT OF RS.55,65,812/- UNDER THE HEAD REPAIR & MAINTENANCE TOWARDS BUILDING, AND THE ASSESSEE PROVIDED DETAIL S. DURING SCRUTINY OF DETAILS PROVIDED BY THE ASSESSEE, IT HAS BEEN NOTIC ED THAT THE COMPANY HAS INCURRED THE EXPENSES OF RS.6,51,641/- AND RS.2,37, 010/- ON ACCOUNT OF WATER PROOFING EXPENSES. VIDE ORDER SHEET ENTRY DA TED 22.01.2013 THE ASSESSEE WAS CALLED UPON TO SHOW CAUSE AS TO WHY TH E SAME SHOULD NOT BE CAPITALIZED BEING AN EXPENDITURE OF CAPITAL NATURE. FINDING THE REPLY DATED 07.02.2013 NOT TENABLE, AN AMOUNT OF RS.7,96,187/- IS ADDED BACK TO THE RETURNED INCOME OF THE ASSESSEE AND RS.88,465/- IS ALLOWED AS DEPRECIATION @ 10% ON BUILDING. 4. IT HAS ALSO BEEN OBSERVED THAT DURING ASSESSMENT PROCEEDINGS FOR THE YEAR 2006-2007 TO 2009-2010 DEPRECIATION CLAIMED BY ASSESSEE ON WEGS LAND WAS DISALLOWED. ASSESSEE COMPANY HAS FILED CH ART SHOWING DEPRECIATION ON WEG FOR THE YEAR 2010-2011 AS RS.9, 216/- AND THE SAME WAS DISALLOWED AS IN CASE OF EARLIER ASSESSMENT YEA RS. ITA NO.6633/DEL/2013 3 5. THE ASSESSEES APPEAL HAS BEEN PARTLY ALLOWED BY LD. CIT(A). FEELING AGGRIEVED, THE ASSESSEE HAS CHALLENGED THE IMPUGNED ORDER BEFORE THE TRIBUNAL BY FILING THE PRESENT APPEAL. 6. THE ASSESSEE CHALLENGING THE IMPUGNED ORDER, CON TENDED THAT THE EXPENDITURE TO THE TUNE OF RS.7,96,187/- CLAIMED BY THE ASSESSEE WAS PURELY OF REVENUE IN NATURE HAVING BEEN INCURRED ON UTTER NECESSITY AND DEPRECIATION OF RS.9,216/- ON WEG LAND IS ALSO ALLOWABLE. ON TH E OTHER HAND, LD. D.R. REITERATED THE CONTENTIONS MADE BEFORE LD. CIT(A) A ND RELIED UPON THE IMPUGNED ORDER AND PRAYED FOR DISMISSAL OF APPEAL. 7. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES, HAVE GONE THROUGH THE DOCUMENTS BROUGHT ON RECORD IN THE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. 8. A BARE PERUSAL OF THE IMPUGNED ORDER PASSED BY L D. CIT(A) SHOWS THAT THE SAME HAS BEEN PASSED ON THE BASIS OF CONJE CTURES AND SURMISES AND BY WRONGLY PLACING RELIANCE ON THE JUDGMENT CITED A S HUMAYUN PROPERTIES LTD. VS CIT 44 ITR 73 (CAL.) WHEREIN LUXURY REPAIRS AND CURRENT REPAIRS HAVE BEEN DISTINCTLY CATEGORIZED AND ONLY LUXURY RE PAIRS HAVE BEEN HELD TO BE CAPITAL EXPENDITURE, WHICH IS NOT THE POSITION IN THE PRESENT CASE. 9. HON'BLE HIGH COURT IN THE JUDGEMENT CITED AS CIT VS KAIRA DISTT. CO-OPERATIVE MILK PRODUCERS UNION LTD., 192 ITR 608 (GUJ.) HELD THAT EXPENDITURE INCURRED AT GUESTS HOUSE FOR WATER PROO FING WORK ON TERRACE IS ALLOWABLE AS DEDUCTION U/S 30A(II) OF THE ACT. SIM ILARLY, HONBLE JURISDICTIONAL HIGH COURT IN THE JUDGEMENT CITED AT CIT VS DELHI PRESS SAMACHAR PATRA (P.) LTD., 322 ITR 590 (DEL.) AFFIRMED THE VIEW TAKEN BY THE HONBLE TRIBUNAL THAT IN CASE ASSESSEE HAD INCU RRED EXPENDITURES, ONLY TO PRESERVE AND MAINTAIN EXISTING ASSET AND THAT EXPEN DITURE WAS NOT OF A NATURE ITA NO.6633/DEL/2013 4 WHICH BROUGHT INTO BEING A NEW ASSET OR CREATED A N EW ADVANTAGE OF AN ENDURING NATURE, DELETION HAS TO BE ALLOWED. 10. BY APPLYING THE RATIO OF JUDGEMENT IN THE CASE OF KAIRA DISTT. COOPERATIVE MILK PRODUCERS UNION LTD. AND DELHI PRESS SAMACHAR PATRA (P.) LTD. (SUPRA), THE EXPENDITURE OF RS.7,96,187/- INCURRED BY THE ASSESSEE FOR WATER PROOFING WORK, FALL IN THE CATEG ORY OF CURRENT REPAIRS AND NOT THE LUXURY REPAIRS, HENCE, ALLOWABLE AS DEDUCTI ON U/S 30A(II) OF THE ACT. 11. SO FAR AS THE QUESTION OF DISALLOWANCE OF DEPRE CIATION BY CIT(A) OF RS.9,216/- ON ACCOUNT OF DEPRECATION ON LAND WHICH WAS USED FOR INSTALLATION OF WEG AT 80% AS CLAIMED BY THE ASSESSEE IS CONCERN ED, NO MATERIAL WHATSOEVER HAS BEEN BROUGHT ON RECORD BY THE ASSESS EE TO MAKE OUT AS TO HOW THE LAND ON WHICH WEG FUNCTIONS, GOT DEPRECIATE D. EVEN NO DETERIORATION IS PROVED TO BE CAUSED TO LAND BECAUS E OF INSTALLATION OF PLANT AND MACHINERY ON THE SAME. RATHER, IT IS A MATTER OF COMMON KNOWLEDGE THAT THE LAND, ON WHICH SOME INDUSTRY IS RUNNING, G ETS APPRECIATED IN TERMS OF ITS VALUE. SO, NO GROUND IS MADE OUT TO INTERFERE INTO THE ORDER OF LD. CIT(A) IN DISALLOWANCE OF DEPRECIATION ON WEG LAND TO THE TUNE OF RS.9,216/-. 11. IN VIEW OF WHAT HAS BEEN DISCUSSED ABOVE, THE P RESENT APPEAL FILED BY THE ASSESSEE IS HEREBY PARTLY ALLOWED TO THE EXTENT OF ADDITION OF RS.7,96,187/- MADE ON ACCOUNT OF WATER PROOFING EXP ENSES. 12. ORDER PRONOUNCED IN THE OPEN COURT ON 13 TH OCT., 2015 SD./- SD./- ( T. S. KAPOOR) (KULDIP SING H) ACCOUNTANT MEMBER JUDICIAL MEMBER DATE: 13 TH OCT., 2015 SP ITA NO.6633/DEL/2013 5 COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DEL HI. TRUE COPY. BY ORDER (ITAT, NEW DELHI). S.NO. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 3/9 SR. PS/PS 2 DRAFT PLACED BEFORE AUTHOR 3,7,7,21 SR. PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/AM 5 APPROVED DRAFT COMES TO THE SR. PS/PS 13/10/2015 SR. PS/PS 6 KEPT FOR PRONOUNCEMENT 13/10 SR. PS/PS 7 FILE SENT TO BENCH CLERK 13/10 SR. PS/PS 8 DATE ON WHICH THE FILE GOES TO HEAD CLERK 9 DATE ON WHICH FILE GOES TO A.R. 10 DATE OF DISPATCH OF ORDER