M/s National Gems School, Kolkata V. ITO, Wd 28 (3), Kolkata, Kolkata

ITA 759/KOL/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 5019 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 11 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-04-2016
• Appeal Filed By: Assessee
• Bench Allotted: B
• Assessment Year: 2003-2004
• Appeal Filed On: 25-04-2014
• Court: TRIBUNAL
• Assessee Lawyers: LALIT MOHAN TYAGI
• Keywords: Business income; Business expenditure; Revised return; Capital expenditure
• Section: 143(3); 147; 148

Judgement Text

I.T.A. NO. 759/KOL./2014 ASSESSMENT YEAR: 2003-2004 PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA B(SMC) BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER I.T.A. NO. 759 /KOL/ 2014 ASSESSMENT YEAR: 2003-2004 M/S. NATIONAL GEMS SCHOOL,......................... .....................APPELLANT 629, DIAMOND HARBOUR ROAD, KOLKATA-700 034 [PAN : AAEFN 9134 A] -VS.- INCOME TAX OFFICER,................................ ...........................RESPONDENT WARD-28(3), KOLKATA, AAYAKAR BHAWAN DAKSHIN, 2, GARIAHAT ROAD (SOUTH), KOLKATA-700 068 APPEARANCES BY: SHRI LALIT MOHAN TYAGI, C.A., FOR THE ASSESSEE SMT. SUCHETA CHATTOPADHYAY, JCIT, SR. D.R., FOR THE DEPARTMENT DATE OF CONCLUDING THE HEARING : APRIL 11, 2016 DATE OF PRONOUNCING THE ORDER : APRIL 22, 2016 O R D E R THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX(APPEALS)-XIV, KOLKAT A DATED 28.01.2014, WHEREBY HE CONFIRMED THE ADDITIONS OF RS.36,274/- A ND RS.4,25,440/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNDERST ATEMENT OF BUSINESS INCOME AND DISALLOWANCE OF BUILDING REPAIR EXPENSES RESPECTIVELY. 2. THE ASSESSEE IN THE PRESENT CASE IS A PARTNERSHI P FIRM, WHICH FILED ITS RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATI ON DECLARING TOTAL INCOME OF RS.14,080/-. FROM THE PERUSAL OF RECORD, IT WAS FOUND BY THE ASSESSING OFFICER THAT THE ASSESSEE IN THE COMPUTAT ION OF INCOME HAD SHOWN TAXABLE BUSINESS PROFIT AT RS.14,080/-, WHERE AS THE PROFIT AS DECLARED IN THE INCOME & EXPENDITURE ACCOUNT FILED WITH THE RETURN OF I.T.A. NO. 759/KOL./2014 ASSESSMENT YEAR: 2003-2004 PAGE 2 OF 4 INCOME WAS SHOWN AT RS.51,344/-. ACCORDING TO THE A SSESSING OFFICER, THERE WAS THUS ESCAPEMENT OF INCOME OF THE ASSESSEE FROM ASSESSMENT TO THE EXTENT OF RS.37,264/- AND IN ORDER TO BRING THE SAME TO TAX, HE REOPENED THE ASSESSMENT BY ISSUING NOTICE UNDER SEC TION 148 AFTER RECORDING THE REASONS. IN RESPONSE TO THE SAID NOTI CE, THE ASSESSEE FILED RETURN OF INCOME, WHEREIN A FRESH CLAIM FOR DEDUCTI ON ON ACCOUNT OF CAR RENT AMOUNTING TO RS.93,150/- WAS MADE BY THE ASSES SEE. IN THE ABSENCE OF ANY REVISED RETURN FILED BY THE ASSESSEE MAKING THE SAID CLAIM, THE ASSESSING OFFICER DID NOT ENTERTAIN THE SAME MADE B Y THE ASSESSEE IN THE RETURN FILED IN RESPONSE TO NOTICE UNDER SECTION 14 8 AND REJECTING THE SAME, HE ASSESSED THE BUSINESS INCOME OF THE ASSESS EE AT RS.51,344/- AS SHOWN IN THE PROFIT & LOSS ACCOUNT. THE ASSESSING O FFICER ALSO PROCEEDED TO EXAMINE THE CLAIM OF THE ASSESSEE FOR DEDUCTION ON ACCOUNT OF BUILDING REPAIRS AMOUNTING TO RS.4,25,440/-. IN THIS REGARD, HE FOUND THAT THE FOUNDATIONS OF THE PILLARS OF THE BUILDING WERE REC ONSTRUCTED BY THE ASSESSEE TO STRENGTHEN THE WHOLE HOUSE PROPERTY. AC CORDING TO THE ASSESSING OFFICER, THE SAID CONSTRUCTION WORK DONE BY THE ASSESSEE ENHANCED THE LONGEVITY OF THE BUILDING AND THE EXPE NDITURE INCURRED FOR THE SAME, THEREFORE, WAS CAPITAL EXPENDITURE. HE NO TED THAT THE SAID EXPENDITURE ALSO WAS INCURRED FOR REMAKING OF FLOOR S, WALLS AND PILLARS, WHICH AGAIN WAS NOT IN THE NATURE OF CURRENT REPAIR S BUT WAS IN THE NATURE OF CAPITAL EXPENDITURE. ACCORDINGLY, THE BUI LDING REPAIR EXPENDITURE OF RS.4,25,440/- WAS DISALLOWED BY THE ASSESSING OFFICER TREATING THE SAME AS CAPITAL IN NATURE AND THE TOTA L INCOME OF THE ASSESSEE WAS FINALLY ASSESSED BY HIM AT RS.5,68,950/- AFTER ALLOWING PARTNERS REMUNERATION OF RS.96,124/- IN THE ASSESSMENT COMPL ETED UNDER SECTION 143(3) READ WITH SECTION 147 VIDE AN ORDER DATED 28 .11.2008. 3. AGAINST THE ORDER PASSED BY THE ASSESSING OFFICE R UNDER SECTION 143(3) READ WITH SECTION 147, AN APPEAL WAS PREFERR ED BY THE ASSESSEE BEFORE THE LD. CIT(APPEALS) AND AFTER CONSIDERING T HE SUBMISSIONS MADE BY THE ASSESSEE AS WELL AS THE MATERIAL AVAILABLE O N RECORD, THE LD. I.T.A. NO. 759/KOL./2014 ASSESSMENT YEAR: 2003-2004 PAGE 3 OF 4 CIT(APPEALS) UPHELD THE ORDER OF THE ASSESSING OFFI CER IN DISALLOWING THE CLAIM OF THE ASSESEE FOR DEDUCTION ON ACCOUNT OF CA R RENT PAID FOR THE FIRST TIME IN THE RETURN FILED IN RESPONSE TO NOTICE UNDE R SECTION 148 BY OBSERVING THAT THE SAID CLAIM COULD HAVE BEEN MADE BY THE ASSESSEE ONLY IN THE FORM OF REVISED RETURN AND NOT CERTAINLY IN THE RETURN FILED IN RESPONSE TO NOTICE UNDER SECTION 148. HE ALSO CONFI RMED THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF BUILDIN G REPAIR EXPENSES TREATING THE SAME AS CAPITAL EXPENDITURE BY OBSERVI NG THAT THE EXPENDITURE IN QUESTION INCURRED BY THE ASSESSEE RE SULTED IN ENDURING BENEFIT TO THE ASSESSEE. AGGRIEVED BY THE ORDER OF THE LD. CIT(APPEALS), THE ASSESSEE HAS PREFERRED THIS APPEAL BEFORE THE T RIBUNAL. 4. I HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. AS REGARDS T HE DISALLOWANCE MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE LD. C IT(APPEALS) ON ACCOUNT OF ASSESSEES CLAIM FOR DEDUCTION ON ACCOUNT OF MOT OR RENT, I FIND MYSELF IN AGREEMENT WITH THE LD. CIT(APPEALS) THAT SUCH FR ESH CLAIM COULD HAVE BEEN MADE BY THE ASSESSEE BY FILING THE REVISED RET URN AND NOT IN THE RETURN FILED IN RESPONSE TO NOTICE UNDER SECTION 14 8/147, THE PROVISIONS OF WHICH ARE ONLY FOR THE BENEFIT OF THE REVENUE. I , THEREFORE, FIND NO MERIT IN THE APPEAL OF THE ASSESSEE ON THIS ISSUE A ND DISMISS THE SAME. 5. AS REGARDS THE ISSUE RELATING TO THE NATURE OF B UILDING REPAIR EXPENDITURE INCURRED BY THE ASSESSEE, IT IS OBSERVE D THAT THE SAME AS PER THE ASSESSING OFFICER HIMSELF WAS INCURRED BY THE A SSESSEE FOR RECONSTRUCTION OF THE EXISTING PILLARS TO STRENGTHE N THE BUILDING AS WELL AS FOR REMAKING OF FLOORS AND WALLS. IT WAS THUS A CAS E OF REPLACEMENT OR RENEWAL OF PARTS OF THE EXISTING BUILDING AND THERE WAS NO NEW ASSET THAT HAD COME INTO EXISTENCE AS A RESULT OF THE EXPENDIT URE IN QUESTION INCURRED BY THE ASSESSEE. EVEN IF THE SAID EXPENDIT URE INCURRED BY THE ASSESSEE HAD RESULTED IN ENDURING BENEFIT, IT WAS N OT IN THE CAPITAL FIELD, I.T.A. NO. 759/KOL./2014 ASSESSMENT YEAR: 2003-2004 PAGE 4 OF 4 INASMUCH AS, THE ENTIRE BUILDING WAS NOT RECONSTRUC TED AND WHAT WAS RECONSTRUCTED WAS ONLY THE PARTS OF THE BUILDING, S UCH AS FLOORS, WALLS AND PILLARS. HAVING REGARD TO ALL THESE FACTS OF THE CA SE, I AM OF THE VIEW THAT THE EXPENDITURE IN QUESTION INCURRED BY THE ASSESSE E ON BUILDING REPAIR IS NOT IN THE NATURE OF CAPITAL AND THE SAME IS LIABLE TO BE ALLOWED AS BUSINESS EXPENDITURE BEING REVENUE IN NATURE. ACCOR DINGLY, I SET ASIDE THE IMPUGNED ORDER OF THE LD. CIT(APPEALS) ON THIS ISSU E AND DIRECT THE ASSESSING OFFICER TO DELETE THE DISALLOWANCE MADE O N ACCOUNT OF BUILDING REPAIR EXPENDITURE. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON APRIL 22, 201 6. SD/- (P.M. JAGTAP) ACCOUNTANT MEMBER KOLKATA, THE 22 ND DAY OF APRIL, 2016 COPIES TO : (1) M/S. NATIONAL GEMS SCHOOL, 629, DIAMOND HARBOUR ROAD, KOLKATA-700 034 (2) INCOME TAX OFFICER, WARD-28(3), KOLKATA, AAYAKAR BHAWAN DAKSHIN, 2, GARIAHAT ROAD (SOUTH), KOLKATA-700 068 (3) COMMISSIONER OF INCOME TAX(APPEALS)-XIV, KOLKAT A (4) COMMISSIONER OF INCOME TAX, KOLKATA (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.