ACIT, Chandigarh V. M/s Glaxo Smithkline Consumer Healthcare Ltd., Nabha

ITA 939/CHANDI/2009

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 73520 (ITAT-CHANDIGARH)
• Duration Of Justice: 4 year(s) 5 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-03-2014
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 18-02-2014
• Assessment Year: 2000-2001
• Appeal Filed On: 08-09-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ROHIT JAIN
• Keywords: Capital asset; Depreciation; Revenue expenditure; Capital expenditure
• Section: 32

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A CHANDIGARH BEFORE SHRI T.R.SOOD ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO.929/CHD/2009 ASSESSMENT YEAR : 2000-01 M/S GLAXO SMITHKLINE CONSUMER VS THE A.C.I.T., HEALTHCARE LTD., CIRCLE 4(1), PATIALA ROAD, CHANDIGARH. NABHA-147201. (PUNJAB). PAN : AABCCS0144E & ITA NO.939/CHD/2009 ASSESSMENT YEAR : 2000-01 THE A.C.I.T., VS M/S GLAXO SMITHKL INE CONSUMER CIRCLE 4(1), HEALTHCARE LTD., CHANDIGARH. PATIALA ROAD, NABHA-147201. (PUNJAB). & ITA NO.930/CHD/2009 ASSESSMENT YEAR : 2001-02 M/S GLAXO SMITHKLINE CONSUMER VS THE A.C.I.T., HEALTHCARE LTD., CIRCLE 4(1), PATIALA ROAD, CHANDIGARH. NABHA-147201. (PUNJAB). PAN : AABCCS0144E & ITA NO.940/CHD/2009 ASSESSMENT YEAR : 2001-02 THE A.C.I.T., VS M/S GLAXO SMITHKL INE CONSUMER CIRCLE 4(1), HEALTHCARE LTD., CHANDIGARH. PATIALA ROAD, NABHA-147201. (PUNJAB). (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI ROHIT JAIN RESPONDENT BY : SHRI AKHILESH GUPTA DATE OF HEARING : 18.02.2014 DATE OF PRONOUNCEMENT : 06.03.2014 2 O R D E R PER SUSHMA CHOWLA, JM THE TWO CROSS APPEALS BY THE ASSESSEE AND THE REVEN UE ARE DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) CHANDIGARH DATED 09.07.2009 RELATING TO ASSESSMENT YEAR 2000-01 AND 2001-02 AGAINST THE ORDER PASSED UNDER SECTION 143 (3) OF THE INCOME- TAX ACT, 1961 ( 'THE ACT' FOR SHORT). 2. IN BOTH THE APPEALS, THE ASSESSEE HAS RAISED IDE NTICAL GROUNDS OF APPEAL AND THE GROUNDS OF APPEAL AS RAISED IN ITA NO. 929/CHD/2009 READ AS UNDER : 1. THAT COMMISSIONER OF INCOME TAX (APPEALS) ERRED ON FACTS AND IN LAW IN CONFIRMING THE ACTION OF THE ASSESSING OF FICER IN DISALLOWING EXPENSES ON ACCOUNT OF RENOVATION/INTERIOR DECORATI ON EXPENSES INCURRED AT THE LEASED OFFICE PREMISES, TREATING TH E SAME TO BE CAPITAL IN NATURE, INVOKING EXPLANATION 1 TO SECTION 32 (1) OF THE ACT EXCEPT THE STATIONERY, SECURITY, TELECOM, STATUTORY AND MISCEL LANEOUS EXPENSES. 2. THAT COMMISSIONER OF INCOME TAX (APPEALS) ERRED ON FACTS AND IN LAW IN NOT FOLLOWING THE DIRECTIONS OF THE TRIBU NAL WHEREIN, THE TRIBUNAL DIRECTED THAT ALL REVENUE EXPENDITURES, PA RTICULARLY EXPENDITURE ON TRAVEL, SHOULD BE TREATED AS REVENUE IN NATURE. 2.1 WITHOUT PREJUDICE, THE COMMISSIONER OF INCOM E TAX (APPEALS) ERRED ON FACTS IN LAW IN NOT DIRECTING ALLOWANCE OF DEPRECIATION ON EXPENSES, ALLEGED TO BE CAPITAL EXPENDITURE, IN TER MS OF EXPLANATION 1 TO SECTION 32(1) OF THE ACT, HELD TO BE APPLICABLE TO THE FACTS OF THE CASE. 3. IN CROSS-APPEALS, THE REVENUE HAS RAISED IDENTIC AL GROUNDS OF APPEAL AND THE GROUNDS OF APPEAL AS RAISED IN ITA N O. 939/CHD/2009 READ AS UNDER : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) HAS ERRED IN ALLOWING APPEAL OF THE ASSESSEE WITHOUT APPRECIATING THE FACTS OF THE CASE. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LD. CIT(A) VIDE HIS COMPOSITE ORDER DATED 09/07/2009 IN APPEAL NO. 537- 538/P/208-09 FOR THE A.Y. 2000-01 AND 2 00I-02 HAS ERRED IN DELETING THE ADDITION MADE BY THE A.O, ON ACCOUNT O F ENTERPRISING EXPENSES IN THE ABSENCE OF ANY EVIDENCE I.E. PAYM ENT DETAILS/ BILLS 3 PRODUCED 3. IT. IS PRAYED THAT THE ORDER OF THE LD. C1 T (A) BE SET ASIDE AND THAT OF THE ASSESSING OFFICER MAY BE RESTORED . 4. THESE BUNCH OF APPEALS RELATING TO ASSESSMENT Y EARS 2000-01 AND 2001-02 ON SIMILAR ISSUE WERE HEARD TOGETHER AND AR E BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIE NCE. 5. THE ISSUE IN THE APPEAL FILED BY THE ASSESSEE IS AGAINST THE DISALLOWANCE OF EXPENDITURE CLAIMED ON ACCOUNT OF R ENOVATION/INTERIOR DECORATION INCURRED AT THE LEASED OFFICE PREMISES O F THE ASSESSEE. 6. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSI NG OFFICER WHILE PASSING THE ORIGINAL ORDER HAD MADE ADDITIONS ON AC COUNT OF DISALLOWANCE OF EXPENDITURE INCURRED ON NEW ERP PAC KAGE AND RENOVATION EXPENDITURE CLAIMED BY THE ASSESSEE. THE SAID ADDITIONS WERE CONFIRMED BY THE COMMISSIONER OF INCOME TAX (A PPEALS). HOWEVER, THE TRIBUNAL IN AN APPEAL FILED BY THE ASS ESSEE VIDE ORDER DATED 21.03.2007 SET ASIDE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER WHO IN THE SECOND ROUND OF PROCEEDINGS HAS OBSERVED THAT THE ASSESSEE HAD FILED COPY OF DETAILS OF ENTERPRISE EXPENSES NO T CHARGED IN THE BOOKS FOR THE ASSESSMENT YEAR 2000-01 ON THE PAPER SHEET AND HAD ALSO FILED COPY OF DEFERRED REVENUE EXPENSES INCURRED ON LEASED PREMISES (4 TH FLOOR AT DLF, GURGAON ) AND ALSO DECLARED REVENUE EXPENSES INCURRED ON LEASED PREMISES OF TWO FLOORS AT JSR, N EW DELHI DURING THE YEAR ENDING 31.3.2000, ON A PAPER SHEET. THE ASSESS ING OFFICER HAS FURTHER OBSERVED THAT THE ASSESSEE HAD SIMPLY FILED THE SAID DETAILS OF PAPER SHEET BUT NO EVIDENCE WHAT-SO-EVER IN SUPPORT THEREOF HAD BEEN FILED OR MADE AVAILABLE FOR VERIFICATION. IN VIEW T HEREOF, THE ASSESSING OFFICER UPHELD THE ADDITIONS MADE IN THE EARLIER AS SESSMENT ORDER ON ACCOUNT OF BOTH ISSUES I.E. ADDITION ON ACCOUNT OF ENTERPRISE EXPENSES AND REPAIR/RENOVATION EXPENSES. 4 7. THE COMMISSIONER OF INCOME TAX (APPEALS) ALLOWED THE CLAIM OF THE ASSESSEE VIS--VIS THE ENTERPRISE EXPENSES HOLD ING THAT THE EXPENDITURE WAS ON ACCOUNT OF PAYMENTS MADE TO BHAR TI AND V-SAT FOR THE PURPOSE OF CONNECTIVITY. THE CLAIM OF THE ASSE SSEE THAT THE PAYMENTS WERE MADE TO TELECOM COMPANIES FOR THE USA GE OF LEASED LINES AND NOT ON ACCOUNT OF CERTAIN EQUIPMENTS WAS ACCEPT ED BY THE COMMISSIONER OF INCOME TAX (APPEALS) AND THE CLAIM OF THE ASSESSEE WAS ALLOWED. IN RESPECT OF SECOND CLAIM ON ACCOUNT OF RENOVATION OF LEASED PREMISES, THE COMMISSIONER OF INCOME TAX (AP PEALS) CONSIDERED THE IMPORT OF EXPLANATION 1 TO SECTION 3 2 OF THE ACT AND OBSERVED THAT THE QUESTION ARISING IN THE APPEAL WA S WHETHER LARGE SCALE EXPENDITURE INCURRED BY THE ASSESSEE WAS WITH IN THE DEFINITION OF DOING OF ANY WORK OR IMPROVEMENT OF BUILDING. THE COMMISSIONER OF INCOME TAX (APPEALS) FURTHER OBSERVED THAT A HALL HAS BEEN CONVERTED INTO A FULL FLEDGED TOP CLASS SHOW ROOM. IN OTHER W ORDS, THE ASSESSEE DID NOT CONSTRUCT THE FOUR WALLS BUT UNDERTOOK LARG E SCALE WORK AND ALSO MADE IMPROVEMENT TO THE BUILDING. THIS IS EVID ENT FROM THE FACT THAT THE ASSESSEE HAS EVEN ENGAGED CONSULTANTS. THE PROJECT MANAGEMENT FEE ITSELF IS RS.3780000/-. THE ASSESSEE HAD GIVEN A CHART OF RENOVATION EXPENSES . THE PERUSAL OF CHART SHOWS THAT ALL THE EXPENSES HAVE BEEN INCURRED IN RELATION TO THIS WOR K OF IMPROVEMENT OF BUILDING. THE HON'BLE ITAT HAS REFERRED THAT THERE ARE CERTAIN EXPENSES ON TRAVELING, ETC. WHICH ARE PURPORTEDLY R EVENUE IN NATURE. THIS IS A GENERAL OBSERVATION. HOWEVER, WE HAVE TO SEE THE CONTEXT IN WHICH THE EXPENDITURE IS INCURRED. THE COMMISSIONER OF INCOME TAX (APPEALS) WAS OF THE VIEW THAT THE EXPENDITURE INCU RRED IN RELATION TO THE REDOING OF BUILDING, IF INCURRED ON LARGE SCALE WOULD COME WITHIN THE MEANING OF CAPITAL EXPENDITURE. FURTHER, THE EXPENDITURE INCURRED BY THE ASSESSEE ON STATIONERY WAS HELD TO BE REVENUE IN 5 NATURE. ALSO, EXPENDITURE INCURRED ON SECURITY SER VICES EXPENSES, TELECOMMUNICATION EXPENSES, ADVERTISEMENT EXPENSES AND MISCELLANEOUS EXPENSES WERE REVENUE IN NATURE. AS PER THE COMMISSIONER OF INCOME TAX (APPEALS), THE OTHER EXP ENSES CLAIMED BY THE ASSESSEE WERE CAPITAL EXPENDITURES AS THE SAME HAD BEEN INCURRED FOR THE WHOLE PROJECT FOR ESTABLISHING MODERN SHOWR OOM. THE COMMISSIONER OF INCOME TAX (APPEALS) VIDE PARA 3.3. 3 HAS OBSERVED THAT THE TRIBUNAL HAD ALSO DIRECTED TO CONSIDER THE CASE LAWS RELIED UPON BY THE ASSESSEE AND IT WAS THUS, HELD THAT, IT IS A SETTLED LAW THAT EACH CASE HAD TO BE SEEN ON ITS OWN FACTS IN RESPEC T OF THE RELIANCE PLACED BY THE ASSESSEE ON VARIOUS CASE LAWS BUT AS PER THE COMMISSIONER OF INCOME TAX (APPEALS), THE CASE OF T HE ASSESSEE HAD TO BE SEEN IN THE BACK DROP OF FACTS THAT MODEM SHOW-R OOMS HAVE COME INTO BEING WHERE THE ASSESSEE HAD MADE EXPENDITURE ON TILES, CEILING, ETC. AND THE CASE OF THE ASSESSEE WAS HELD TO BE DI FFERENT. THE COMMISSIONER OF INCOME TAX (APPEALS) PLACED RELIANC E ON THE DECISION OF THE HON'BLE PUNJAB & HARYANA HIGH COURT IN UTTAR BHARAT WOOL MANUFACTURING CO. PVT. LTD. 55 ITR 550 (P&H) AND SI LVER SCREEN ENTERPRISES 85 ITR 578 (P&H) AND HELD THAT THE EXPE NDITURE INCURRED BY THE ASSESSEE WAS CAPITAL IN NATURE. FURTHER REL IANCE WAS PLACED ON THE FOLLOWING CASE LAWS : I) MODI SPINNING & WEAVING MILLS CO. LTD. 200 ITR 5 44 (DEL) II) BALLIMAL NAVAL KISHORE & ANOTHER 224 ITR 414 (S .C) III) M/S SARAVANA SPINNING MILLS P.LTD. 293 ITR 201 (S.C) 8. THE JUDICIAL PRECEDENTS RELIED UPON BY THE ASSE SSEE BEING NOT BY THE JURISDICTIONAL HIGH COURT WERE NOT RELIED UPON BY THE COMMISSIONER OF INCOME TAX (APPEALS) AND IN VIEW THEREOF, THE EX PENDITURE INCURRED BY THE ASSESSEE EXCEPT CERTAIN EXPENSES, WHICH HAD BEEN ALLOWED BY HIM, 6 WERE TREATED AS CAPITAL IN NATURE. THE ASSESSEE IS IN APPEAL AGAINST THE SAID ORDER OF COMMISSIONER OF INCOME TAX (APPEALS). THE REVENUE IS IN APPEAL AGAINST THE DELETION OF ADDITION OF ENTERPRI SES EXPENSES. 9. THE LD. AR FOR THE ASSESSEE POINTED OUT THAT THE TRIBUNAL WHILE DECIDING THE ISSUE AT PAGE 62 OF THE PAPER BOOK HAD DELIBERATED UPON THE LEGALITY OF THE CLAIM OF THE ASSESSEE AND THEREAFTE R VIDE PARA 54 AND 55 AT PAGE 165 OF THE PAPER BOOK HAD DIRECTED THE ASSESSI NG OFFICER TO GIVE A FACTUAL FINDING IN RESPECT OF THE CLAIM OF THE EXPE NDITURE. ADMITTEDLY, THE ASSESSEE HAD CLAIMED THE EXPENDITURE TOTALING R S.5.21 CR UNDER THE HEAD REPAIR/RENOVATION OF TWO OFFICE PREMISES WHI CH HAD BEEN TAKEN ON LEASE BY THE ASSESSEE. THE LD. AR FOR THE ASSESSEE POINTED OUT THAT EVEN IF THE PROVISIONS OF THE EXPLANATION TO SECTION 32( 1) ARE APPLIED, THEN CERTAIN EXPENSES WHICH ARE RELATABLE TO THE LEASED PREMISES ARE TO BE ALLOWED AS A REVENUE EXPENDITURE IN THE HANDS OF TH E ASSESSEE. THE LD. AR FOR THE ASSESSEE THEREAFTER, ELABORATELY TOOK US THROUGH THE VARIOUS HEADS OF EXPENDITURE CLAIMED BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION AS REVENUE EXPENDITURE, WHICH ARE TAB ULATED AT PAGES 14 AND 15 OF THE PAPER BOOK. IT WAS POINTED OUT BY THE LD. AR FOR THE ASSESSEE THAT TWO OFFICES IN LEASED PREMISES WERE E STABLISHED BY THE ASSESSEE DURING THE YEAR I.E. ONE AT DLF, GURGAON A ND THE OTHER AT JSR, DELHI AND THE ENTIRE EXPENDITURE WAS INCURRED IN SE TTING UP THE OFFICE PREMISES AND THE EXPENDITURE INCURRED BY THE ASSESS EE WAS CLAIMED TO BE ALLOWABLE IN THE HANDS OF THE ASSESSEE. FURTHER, T HE LD. AR FOR THE ASSESSEE POINTED OUT THAT EVEN CONSULTANCY FEE WAS PAID BOTH FOR ARCHEOLOGICAL DESIGN AND OTHER SERVICES IN ORDER TO PLAN THE LAY OUT OF THE OFFICE PREMISES. IT WAS VEHEMENTLY POINTED OUT BY THE LD. AR FOR THE ASSESSEE THAT THE ASSESSING OFFICER IS INCORRECT IN HOLDING THAT NO EVIDENCE EXCEPT THE PAPER SHEET WERE FILED DURING T HE COURSE OF ASSESSMENT PROCEEDINGS. OUR ATTENTION WAS DRAWN TO THE ALLEGED PAPER 7 SHEET WHICH IS FILED AT PAGES 14 AND 15 OF THE PAPE R BOOK AND IS ALSO ANNEXED AS ANNEXURE 1 TO THE ORDER OF THE COMMISSIO NER OF INCOME TAX (APPEALS). THE LD. AR FOR THE ASSESSEE POINTED OUT THAT THE LAST COLUMN OF THE SAME WOULD REFLECT THAT SAMPLE BILLS WERE EN CLOSED IN RESPECT OF THE VARIOUS EXPENDITURES AND THE COPIES OF THE BILL S ARE PLACED AT PAGES 16 TO 92 OF THE PAPER BOOK. THE LD. AR FOR THE ASS ESSEE POINTED OUT ALL THESE DETAILS WERE FILED BEFORE THE ASSESSING OFFIC ER ALONGWITH THE REPLY DATED 30.04.2007 DURING THE RE-ASSESSMENT PROCEEDIN GS FOR THE RELEVANT YEAR. THE COPIES OF THE REPLY FILED BEFORE THE ASS ESSING OFFICER IN THE SECOND ROUND OF PROCEEDINGS DATED 30.04.2007 ALONGW ITH THE COPIES OF THE EARLIER REPLIES ARE ENCLOSED AT PAGES 1 TO 13 O F THE PAPER BOOK. THE LD. AR FOR THE ASSESSEE FURTHER POINTED OUT THAT TH E COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN ADJUDICATING THE ISSUE OF APPLICABILITY OF EXPLANATION TO SECTION 32(1) OF THE ACT, AS THE TRIBUNAL HAD ELABORATELY CONSIDERED THE ISSUE OF THE APPLICABILI TY OF THE SAID PROVISIONS OF THE ACT AND THEREAFTER HAD GIVEN FIND INGS IN PARA 54 AND 55 OF THE PAPER BOOK. THE COMMISSIONER OF INCOME TAX (APPEALS) WHILE DECIDING THE ISSUE HAD ELABORATED THE SCOPE OF THE PROCEEDINGS WHICH HAD TO BE DECIDED IN LINE WITH THE DIRECTIONS OF THE TR IBUNAL. FURTHER, THE RELIANCE OF THE COMMISSIONER OF INCOME TAX (APPEALS ) ON VARIOUS CASE LAWS WAS HELD TO BE DISTINGUISHABLE AND THE LD. AR FOR THE ASSESSEE POINTED OUT THAT THE SAID DECISIONS WERE NOT APPLIC ABLE TO THE FACTS OF THE PRESENT CASE. THE LD. AR FOR THE ASSESSEE FURTHER FILED A GIST OF BROAD PROPOSITIONS OF THE CASE AND WENT THROUGH THE SAME AND POINTED OUT THAT THE EXPENDITURE INCURRED BY THE ASSESSEE AT RS. 5.2 1 CR WAS ON ACCOUNT OF VARIOUS HEADS OUT OF WHICH CERTAIN EXPENDITURES HAVE BEEN ALLOWED BY THE COMMISSIONER OF INCOME TAX (APPEALS) AS REVENUE EXPENDITURE AND THE BALANCE HAS BEEN HELD AS EXPENDITURE OF CAPITAL NATURE. THE LD. AR FOR THE ASSESSEE FURTHER PLACED RELIANCE ON VARIOUS CASE LAWS IN RELATION 8 TO THE ALLOWABILITY OF EACH SUB-HEAD OF EXPENDITURE BOOKED UNDER THE HEAD REPAIR/RENOVATION EXPENSES AND WE SHALL MAKE R EFERENCE TO THE SAME AT THE RELEVANT TIME. THE LD. AR FOR THE ASSESSEE HAS ELABORATED UPON THE DISTINGUISHING FEATURES OF THE CASE LAWS RELIED UPO N BY THE COMMISSIONER OF INCOME TAX (APPEALS). 10. THE LD. DR FOR THE REVENUE POINTED OUT THAT THE TRIBUNAL HAD SET ASIDE THE MATTER BACK TO THE FILE OF ASSESSING OFFI CER BUT THE ASSESSEE FAILED TO FURNISH ANY DETAILS BEFORE THE ASSESSING OFFICER EXCEPT ONE PAPER. IT WAS POINTED OUT TO THE LD. DR FOR THE RE VENUE DURING THE COURSE OF HEARING THAT THE ASSESSEE HAD FURNISHED THE PAPE R BOOK CONTAINING THE DOCUMENTS NUMBERING 1 TO 192 IN PAPER BOOK WITH A C ERTIFICATE THAT ALL THESE DOCUMENTS ANNEXED IN THE PAPER BOOK WERE FILE D BEFORE THE LOWER AUTHORITIES AND NO NEW EVIDENCE WAS BEING ADDUCED A ND THE REVENUE HAS FAILED TO CONTROVERT THE SAID CERTIFICATE OF THE AS SESSEE. IT WAS FURTHER POINTED OUT BY THE LD. DR FOR THE REVENUE THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ALSO REFERS TO ONE PAGE WHICH IS ANNEXED TO THE APPELLATE ORDER AND THE SAID DOCUMENT WAS FILED BEF ORE THE AUTHORITIES BELOW. THE LD. DR FOR THE REVENUE, HOWEVER PLACED S TRONG RELIANCE ON THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) A ND THE CASE LAWS RELIED UPON BY THE COMMISSIONER OF INCOME TAX (APPE ALS). 11. IN REJOINDER, IT WAS POINTED OUT BY THE LD. AR FOR THE ASSESSEE THAT THE DOCUMENT ITSELF REFLECTS THAT SAMPLE BILLS WERE BEING ENCLOSED AND THE SAME WERE ENCLOSED BY THE ASSESSEE BEFORE THE A SSESSING OFFICER AND ALSO BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS ). IT WAS FURTHER POINTED OUT BY THE LD. AR FOR THE ASSESSEE THAT EIT HER THE ASSESSING OFFICER OR THE COMMISSIONER OF INCOME TAX (APPEALS) FAILED TO ASK FOR ANY FURTHER DETAILS AND IN THE ABSENCE OF THE SAME, THERE WAS NO MERIT IN THE PLEA OF LD. DR FOR THE REVENUE. 9 12. IN RESPECT OF THE APPEAL FILED BY THE REVENUE, THE PLEA OF THE LD. DR FOR THE REVENUE WAS THAT THOUGH THE TRIBUNAL HAD SE NT BACK THE ISSUE TO THE FILE OF ASSESSING OFFICER BUT NOTHING WAS FILED EITHER BEFORE ASSESSING OFFICER OR BEFORE COMMISSIONER OF INCOME TAX (APPEALS) VIS- -VIS THE CLAIM OF ENTERPRISE EXPENSES. THE LD. DR FOR THE REVENUE PLACED STRONG RELIANCE ON THE ORDER OF ASSESSING OFFICER I N THIS REGARD. THE LD. AR FOR THE ASSESSEE, HOWEVER POINTED OUT THAT AS TH E EXPENDITURE HAS BEEN PAID FOR THE USAGE OF THE LEASED LINES, THE SA ID EXPENDITURE WAS ALLOWABLE AS REVENUE EXPENDITURE. STRONG RELIANCE WAS PLACED UPON THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) BY THE LD. AR FOR THE ASSESSEE. 13. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURE AND SALE OF FOOD AND HEALTHCARE PRODUCTS. THE ISSUES RAISED IN THE PRES ENT APPEAL ARE PURSUANT TO THE ISSUE BEING SET ASIDE BY THE CHANDIGARH BENC H OF TRIBUNAL IN ASSESSEE'S OWN CASE VIDE ORDER DATED 21.03.2007 RE PORTED IN 112 TTJ 94. THE ONLY ISSUE RAISED IN THE APPEAL FILED BY THE AS SESSEE IS AGAINST THE ALLOWABILITY OF THE RENOVATION EXPENDITURE INCURRED ON THE LEASED PREMISES. 14. DURING THE YEAR UNDER CONSIDERATION, THE ASSESS EE HAD INCURRED EXPENSES ON REPAIR AND RENOVATION OF LEASED PREMISE S AT DLF CENTRE AND JSR DELHI WHICH WERE TREATED AS DEFERRED REVENUE EXPENDITURE IN THE BOOKS OF ACCOUNT AT RS. 5.21 CR IN ASSESSMENT YEAR 2000-01 AND RS. 47,41,243/- IN ASSESSMENT YEAR 2001-02. IN THE FIR ST ROUND OF ASSESSMENT PROCEEDINGS, THE SAID EXPENDITURE WAS HELD TO BE CA PITAL IN NATURE BY BOTH THE ASSESSING OFFICER AND THE COMMISSIONER OF INCOME TAX (APPEALS). THE TRIBUNAL (SUPRA) VIDE ORDER DATED 2 1.03.2007 VIDE PARAS 49 TO 55 HAD DELIBERATED UPON THE ISSUE AT LENGTH. THE ASSESSING OFFICER 10 HAD DISALLOWED THE CLAIM OF THE ASSESSEE IN VIEW OF THE EXPLANATION 1 TO SECTION 32(1) OF THE ACT AND HELD THE SAME TO BE CA PITAL EXPENDITURE, WHICH REASONING WAS ALSO APPLIED BY THE COMMISSIONE R OF INCOME TAX (APPEALS) TO DECIDE THE ISSUE. THE TRIBUNAL VIDE P ARA 54 TO 55 CONSIDERED THE AMBIT OF THE PROVISIONS OF EXPLANATI ON 1 TO SECTION 32(1) OF THE ACT AND OBSERVED AS UNDER : 54. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISS IONS. THE ENTIRE CASE OF THE REVENUE IS BUILT ON THE PROVISIO NS OF EXPLANATION 1 TO SECTION 32(1) OF THE ACT. WE, THER EFORE, DEEM IT EXPEDIENT TO REPRODUCE THE SAME WHICH IS AS UNDER: WHERE THE BUSINESS, OR PROFESSION OF THE ASSESSEE IS CARRIED ON IN A BUILDING NOT OWNED BY HIM BUT IN RESPECT OF WHICH THE ASSESSEE HOLDS A LEASE OR OTHE R RIGHT OF OCCUPANCY AND ANY CAPITAL EXPENDITURE IS INCURRED BY THE ASSESSEE FOR THE PURPOSES OF THE BUSINESS OR PROFESSION ON THE CONSTRUCTION OF ANY STRUCTURE OR DOING OF ANY WORK IN OR IN RELATION TO , AND BY WAY OF RENOVATION OR EXTENSION OF, OR IMPROVEMEN T TO, THE BUILDING, THEN THE PROVISIONS OF THIS CLAUS E SHALL APPLY AS IF THE SAID STRUCTURE OR WORK IS A BUILDIN G OWNED BY THE ASSESSEE. 55. SHORN OF OTHER DETAILS, IT IS EVIDENT FROM THE BARE PERUSAL OF THE AFORESAID EXPLANATION THAT IT PROVID ES IN RELATION TO BUILDING TAKEN ON RENT BY THE ASSESSEE, THAT AN Y CAPITAL EXPENDITURE INCURRED THERETO IS TO BE TREATED AS IF THE BUILDING IN QUESTION IS OWNED BY THE ASSESSEE. MOREOVER THE EXPLANATION ALSO REFERS TO THE EXPENDITURES ON THE CONSTRUCTION OF ANY STRUCTURE OR DOING OF ANY WORK IN OR IN RELATION TO AND BY WAY OF RENOVATION OR EXTENSION OR IMPROVEMENT TO THE BUILD ING IN QUESTION. IN OTHER WORDS, EXPLANATION IS ATTRACTED IN THE CASE OF AN ASSESSEE WHO INCURS EXPENDITURE OF THE TYPE SPEC IFIED IN THE SAID EXPLANATION ON A BUILDING WHICH IS NOT OWNED B Y THE ASSESSEE. THE EXPENDITURES HAVE BEEN INCURRED ON P REMISES TAKEN ON LEASE BY THE ASSESSEE FOR ITS BUSINESS PUR POSE. THIS CONDITION IS EVIDENTLY FULFILLED BY THE ASSESSEE BE FORE US. THE SECOND CONDITION WHICH WE HAVE NOTED ABOVE IS THAT THIS IS NOT EACH AND EVERY EXPENDITURE WHICH FALLS WITHIN THE R EALM OF THE EXPLANATION. IT IS ONLY ANY CAPITAL EXPENDITURE WHICH IS COVERED WITHIN THE PURVIEW OF THE SAID EXPLANATION. MOREOVER, THE EXPENDITURE ENVISAGED IN THE EXPLANATION INTER- ALIA INCLUDES EXPENDITURE BY WAY OF RENOVATION OR EXPANSION OR OF IMPROVEMENT TO THE BUILDING PROVIDED OFCOURSE THAT THE SAME IS TO BE OF CAPITAL NATURE. IN OTHER WORDS THE PLEA O F THE ASSESSEE THAT SINCE THE IMPUGNED EXPENDITURE IS INCURRED AT RENOVATION AND REPAIRS AND IS, THEREFORE, TO BE TREATED AS REV ENUE CANNOT BE ACCEPTED FORTHWITH. THE CORRECT IMPORT OF THE EXPLA NATION IS THAT EVEN THE EXPENDITURE INCURRED ON RENOVATION AND REP AIRS OF A LEASED BUILDING IS INCLUDIBLE IN THE PURVIEW OF THE EXPLANATION 11 1, PROVIDED THE SAID EXPENDITURE IS OF CAPITAL NATU RE. IF IT IS FOUND THAT THE EXPENDITURE IS OF REVENUE EXPENDITUR E, THEN NOTWITHSTANDING THAT IT IS INCURRED ON A LEASED BUI LDING, THE SAME WILL NOT FALL WITHIN THE PURVIEW OF THE EXPLAN ATION 1 TO SECTION 32(1) OF THE ACT. NOW THEREFORE, IT WOULD B E OF UTMOST IMPORTANCE TO ASCERTAIN THE NATURE OF THE EXPENSES INCURRED BY THE ASSESSEE IN THIS REGARD. THE DETAILS OF THE EX PENSES IN QUESTION HAVE BEEN PLACED AT PAGE 64 TO 65 OF THE P APER BOOK. WE HAVE ALSO PERUSED THE ORDERS OF THE LOWER AUTHOR ITIES AND FIND THAT THE ASSESSING OFFICER AS WELL AS THE CIT( APPEALS) HAD PROCEEDED ON THE ASSUMPTION, EVIDENTLY WITHOUT MAKI NG ANY VERIFICATION, THAT THE EXPENSES ARE OF CAPITAL NATU RE MERELY BECAUSE THEY ARE INCURRED ON A LEASED PREMISES. THE ASPECT AS TO WHETHER OR NOT THE EXPENDITURE IS OF REVENUE OR CAP ITAL IN NATURE IS DEPENDING ON ITS FACTUAL CONTOURS WHICH HAS NOT BEEN SUBJECTED TO ANY VERIFICATION BY THE LOWER AUTHORIT IES. A MERE PERUSAL OF THE DETAILS OF EXPENDITURE LISTED OUT AT PAGES 64 AND 65 OF THE PAPER BOOK REVEALS THAT THE HEADS OF EXPE NDITURE LISTED OUT ARE NUMEROUS AND INTER-ALIA INCLUDE TRAVEL EXPE NSES, STATUTORY EXPENSES, SHIFTING/INSTALLATION EXPENSES ETC. WHICH PURPORTEDLY ARE OF REVENUE NATURE. HOWEVER THERE A RE OTHER EXPENDITURE HEADS WHICH WOULD NEED VERIFICATION OF FACTS SINCE THE REQUISITE DETAILS ARE NOT ON RECORD. THEREFORE , FOR THIS PURPOSE WE DEEM IT FIT AND PROPER TO SET ASIDE THE ORDER OF THE CIT(APPEALS) AND DIRECT THE ASSESSING OFFICER TO CA RRY OUT THE NECESSARY EXERCISE IN THIS REGARD. THE ASSESSING OF FICER SHALL CARRY OUT THE VERIFICATION EXERCISE TO ASCERTAIN WH ICH EXPENDITURES ARE FALLING WITHIN THE PURVIEW OF EXPL ANATION 1 TO SECTION 32(1) OUT OF THE EXPENDITURE IN QUESTION. THE ASSESSING OFFICER SHALL BEAR IN MIND THAT ONLY SUCH EXPENDITU RES WHICH ARE OF CAPITAL NATURE ALONE ARE INCLUDIBLE WITHIN THE P URVIEW OF EXPLANATION 1 TO SECTION 32(1). THE ASSESSEE SHALL PROVIDE THE NECESSARY DETAILS IN THIS REGARD AND ALSO HAVE LIBE RTY TO MAKE SUCH FURTHER SUBMISSIONS IN SUPPORT OF THE RETURN O F INCOME ON THIS ISSUE. THE ASSESSING OFFICER SHALL ALSO TAKE I NTO CONSIDERATION THE CASE LAWS ADVERTED TO BY THE ASSE SSEE BEFORE US IN DETERMINING THE NATURE OF THE EXPENDITURE IN QUESTION. THUS ON THIS ASPECT WE CONCLUDE BY HOLDING THAT THE ASSESSEE SUCCEEDS FOR STATISTICAL PURPOSES. 15. THE TRIBUNAL HELD THAT THE EXPLANATION WAS ATTR ACTED IN THE CASE OF AN ASSESSEE WHO INCURS EXPENDITURE OF THE TYPE SPEC IFIED IN THE SAID EXPLANATION ON A BUILDING WHICH IS NOT OWNED BY THE ASSESSEE. THE EXPENDITURE THUS, WAS HELD TO HAVE BEEN INCURRED ON PREMISES TAKEN ON LEASE FOR THE BUSINESS PURPOSES OF THE ASSESSEE. T HE FINDING OF THE TRIBUNAL IN THIS REGARD WAS THAT THE CONDITION WAS FULFILLED BY PRESENT ASSESSEE. IT WAS FURTHER HELD BY THE TRIBUNAL THAT THE SECOND CONDITION IN THE SAID EXPLANATION WAS THAT NOT EACH AND EVERY EXPENDITURE WHICH FALLS WITHIN THE REALM OF EXPLANATION IS TO BE DISA LLOWED. WHERE THE 12 EXPENDITURE INCURRED IS OF CAPITAL NATURE, THE SAME WAS HELD TO BE INCLUDIBLE IN THE PURVIEW OF EXPLANATION 1 TO SECTI ON 32(1) OF THE ACT AND WHERE THE EXPENDITURE WAS OF REVENUE NATURE, TH EN NOT WITHSTANDING THE FACT THAT IT WAS INCURRED ON A LEASED BUILDING, THE SAME WOULD NOT FALL WITHIN THE PURVIEW OF EXPLANATION 1 TO SECTION 32(1) OF THE ACT. AFTER PERUSING THE DETAILS OF EXPENSES PLACED AT PA GES 64 TO 65 OF THE PAPER BOOK (THEN) THE TRIBUNAL OBSERVED THAT BOTH T HE ASSESSING OFFICER AND COMMISSIONER OF INCOME TAX (APPEALS) HAD DISALL OWED THE CLAIM OF THE ASSESSEE AS THESE WERE INCURRED ON A LEASED PRE MISES. IT WAS FURTHER HELD THAT THE ASPECT AS TO WHETHER OR NOT THE EXPEN DITURE WAS REVENUE IN NATURE WAS NOT CONSIDERED BY THE LOWER AUTHORITIES. THE FINDING OF THE TRIBUNAL WAS THAT THE HEADS OF EXPENDITURE WERE NUM EROUS AND INTER-ALIA INCLUDE TRAVEL EXPENSES, STATUTORY EXPENSES, SHIFTI NG/INSTALLATION EXPENSES ETC. WHICH PURPORTEDLY WERE OF REVENUE IN NATURE. HOWEVER, THE MATTER WAS SET ASIDE TO THE FILE OF ASSESSING O FFICER TO VERIFY THE FACTS VIS--VIS OTHER EXPENDITURE HEADS AS THE REQU ISITE DETAILS WERE NOT AVAILABLE ON RECORD. THE ASSESSING OFFICER WAS DIR ECTED TO ONLY EXCLUDE SUCH EXPENDITURE WHICH ARE OF CAPITAL NATURE WITHIN THE PURVIEW OF EXPLANATION 1 TO SECTION 32(1) OF THE ACT. THE ASS ESSING OFFICER WAS ALSO DIRECTED TO CONSIDER THE CASE-LAWS ADVERTED TO BY THE ASSESSEE BEFORE THE TRIBUNAL IN DETERMINING THE NATURE OF THE EXPEN DITURE IN QUESTION. 16. THE ASSESSING OFFICER IN SECOND ROUND OF PROCEE DINGS REPEATED THE ADDITIONS AS MADE IN THE FIRST ROUND OF ASSESSMENT PROCEEDINGS ON ACCOUNT OF THE FACTS THAT THE ASSESSEE HAD FAILED T O FURNISH THE REQUISITE EVIDENCE DURING THE ASSESSMENT PROCEEDINGS. THE CO MMISSIONER OF INCOME TAX (APPEALS) CONSIDERED THE NATURE OF EXPEN SES IN LINE WITH THE IMPORT OF EXPLANATION 1 TO SECTION 32 OF THE INCOME TAX ACT AND DISALLOWED THE EXPENDITURE BEING CAPITAL IN NATURE EXCEPT EXPENDITURE 13 INCURRED ON SECURITY SERVICES, TELECOMMUNICATION EX PENSES, ADVERTISEMENT EXPENSES AND MISCELLANEOUS EXPENSES. 17. THE FIRST ASPECT OF THE ISSUE RAISED BEFORE US IS THAT SINCE THE PRESENT PROCEEDINGS INITIATED FROM THE ORDER OF TRI BUNAL IN SETTING ASIDE THE ISSUE TO THE FILE OF ASSESSING OFFICER WITH NEC ESSARY DIRECTIONS AFTER DISCUSSING THE RELEVANT PROVISIONS OF THE ACT AND T HE CLAIM OF THE ASSESSEE VIS--VIS THE SAID PROVISIONS. THE TRIBUNA L HAD DELIBERATED UPON THE PROVISIONS OF SECTION 32(1) OF THE ACT AND THE EXPLANATION THEREUNDER AND HAD GIVEN A FINDING IN THE CASE OF THE ASSESSEE THAT EACH AND EVERY EXPENDITURE INCURRED ON THE LEASED PREMISES IN VIEW OF THE EXPLANATION UNDER SECTION 32(1) OF THE ACT COULD NOT BE SAID TO BE OF CAPITAL NATURE. NOW FACT SITUATION HAD TO BE VERIFIED TO DETERMINE WHETHER THE EXPENDITURE INCURRED ON THE LEASED PREMISES WAS OF CAPITAL OR REVENUE IN NATURE. THE TRIBUNAL HAD DIRECTED THE ASSESSING OF FICER TO VERIFY THE FACTUAL ASPECTS AND ALSO CONSIDER THE CASE LAWS IN RESPECT OF EACH ITEM OF EXPENDITURE AS THE ASSESSEE HAD INCURRED HUGE EXPEN DITURE UNDER VARIOUS HEADS WHICH WERE CLAIMED TO BE ON ACCOUNT OF REPAIR AND RENOVATION AND LEASED PREMISES. THE ASSESSING OFFICER HAS FAILED T O CONSIDER THE EVIDENCE FILED BY THE ASSESSEE. FURTHER, THE COMMI SSIONER OF INCOME TAX (APPEALS) HAS ENLARGED DOMAIN IN DECIDING THE I MPLICATIONS OF EXPLANATION 1 UNDER SECTION 32(1) OF THE ACT. IN T HE SECOND ROUND OF PROCEEDINGS, WHERE THE MATTER HAS BEEN SET ASIDE TO THE FILE OF ASSESSING OFFICER WITH DIRECTIONS BY THE TRIBUNAL, LIMITED MA NDATE IS AVAILABLE TO THE AUTHORITIES ADJUDICATING THE ISSUE. IN VIEW TH EREOF, WHERE THE TRIBUNAL HAS ALREADY GIVEN A FINDING THAT THE EXPEN DITURE OF REVENUE NATURE INCURRED BY A PERSON ON LEASED PREMISES IS A LLOWABLE AS AN EXPENDITURE UNDER THE PROVISIONS OF EXPLANATION 1 U NDER SECTION 32(1) OF THE ACT, THE SAME CANNOT BE DISTURBED WHERE THE REV ENUE HAS NOT CHALLENGED THE SAID ORDER OF THE TRIBUNAL BEFORE TH E HIGH COURT. IN VIEW 14 THEREOF, ONLY THE NATURE OF THE EXPENDITURE COULD B E GONE INTO BY BOTH THE ASSESSING OFFICER AND THE COMMISSIONER OF INCOM E TAX (APPEALS) TO ADJUDICATE THE ISSUE. ACCORDINGLY, WE PROCEED TO D ECIDE THE NATURE OF EXPENDITURE AND WHETHER THE SAME IS CAPITAL OR REVE NUE IN NATURE BY CONSIDERING EACH ITEM OF EXPENDITURE. 18. THE ASSESSEE HAS FURNISHED WRITTEN SUBMISSIONS AND THE RELEVANT PARA FOR ADJUDICATING THE ISSUE READ AS UNDER : - IN THE SET ASIDE PROCEEDINGS, THE ASSESSING OFFI CER AGAIN DISALLOWED THE ENTIRE EXPENSES ON THE GROUND THAT NO DETAIL/EVIDEN CE HAD BEEN MADE AVAILABLE, WHICH IS FACTUALLY INCORRECT. - THE ASSESSING OFFICER FAILED OF APPRECIATE THA T DETAILS OF THE AFORESAID EXPENDITURE INCURRED ON LEASED PREMISES AT DLF GURG AON AND NEW DELHI WERE DULY FILED VIDE LETTER DATED 30.04.2007 AND 03.04.2007 RESPECTIVELY [REFER ITO 13 OF PB FOR A.Y. 2000-01]. - ON PERUSAL OF THE DETAILS OF THE EXPENSES INCU RRED PLACED AT PAGES 14 AND 15 OF THE PAPER BOOK FOR ASSESSMENT YEAR 2000-01, IT W ILL KINDLY BE NOTICED THAT RENOVATION EXPENSES COMPRISES OF, INTE R ALIA, THE FOLLOWING: I. RS.4,18,27,604.75 TOWARD TEMPORARY/WOODEN PARTIT IONS/FITTINGS, WHITEWASHING, FALSE CEILING, INTERIOR WORK, SANITAR Y FITTINGS, FIRE DETECTION SYSTEM, DUCTING FOR AIR CONDITIONING, ETC : II. RS.41,86,755 TOWARDS CONSULTANCY EXPENSES PAI D TO CUSHMAN & WAKEFIELD, CURRIE & BROWN AND OTHER CONSULTANTS FOR RENDERING PROFESSIONAL ADVICE IN RELATION TO THE RENOVATION W ORK; III. RS.50,20,070 TOWARDS ARCHITECTURE FEES, TEM PORARY ART WORK; IV. RS. 72,12,870 TOWARDS CARPETS AND TILE; V. RS. 12,63,330 TOWARDS TRAVELLING AND SHIFTING /INSTALLATION EXPENSES; VI. RS.8,87,694 TOWARDS STATIONERIES, PLANTS, BO ARDS; VII. OTHER REVENUE EXPENSES LIKE TELECOMMUNIC ATION EXPENSES, EXPENDITURE ON SECURITY SERVICES AND OTHER MISCELLANEOUS EXPENS ES. OUT OF THE AFORESAID EXPENSES, THE CIT(A) ALLOWED E XPENSES ON STATIONERY, SECURITY SERVICE EXPENSES, TELECOMMUNIC ATION EXPENSES, ADVERTISEMENT AND MISCELLANEOUS EXPENSES, I.E., ITE MS NO'S (VI) AND (VII) ABOVE, AND UPHELD THE DISALLOWANCE OF ITEM NO'S (I) TO (V). IN THE PRESENT APPEAL PREFERRED BY THE ASSESSEE, TH E ONLY ISSUE THAT, THEREFORE, REQUIRES CONSIDERATION BY THE HON'BLE TR IBUNAL IS WHETHER RENOVATION EXPENSES ON ITEM NO'S I) TO (V) REFERRED ABOVE FALLS WITHIN THE SCOPE AND AMBIT OF EXPLANATION TO SECTION 32 OF THE ACT, IN THE LIGHT OF THE PRINCIPLES LAID DOWN BY THE HON'BLE TRIBUNAL VIDE O RDER DATED 21.03.2007. 15 19. THE PLEA OF THE ASSESSEE BEFORE US WAS THAT WHE THER A PARTICULAR EXPENDITURE CONSTITUTED CAPITAL EXPENDITURE OR REVE NUE IN NATURE HAD TO BE DETERMINED HAVING REGARD TO THE COMMERCIAL USE AND BUSINESS PRUDENCY OF INCURRING THE EXPENDITURE AND IRRESPECT IVE OF THE FACT THAT THE ASSESSEE MAY DERIVE ANY ENDURING ADVANTAGE AS A RESULT OF INCURRING SUCH EXPENDITURE. THE LD. AR FOR THE ASSESSEE HAS P LACED TABULATED DETAILS OF EXPENSES AT PAGES 14 AND 15 OF THE PAPER BOOK AND COPIES OF SAMPLE BILLS ARE ENCLOSED THEREAFTER AT PAGES 16 TO 92 OF THE PAPER BOOK. THE FIRST SUB-HEAD OF THE EXPENDITURE IS TEMPORARY/ WOODEN PARTITIONING/FITTINGS, WHITE WASHING, FALSE CEILING , INTERIOR WORK, SANITARY FITTING ETC. CARRIED OUT BY THE ASSESSEE AND THE TO TAL EXPENDITURE UNDER THIS HEAD WAS RS. 4,18,27,604/-. THE SUB-HEADS UND ER HEAD TEMPORARY PARTITIONING ARE BEING DEALT BY US TO ADJUDICATE T HE ISSUE. 20. THE PERUSAL OF THE DETAILS FILED BY THE ASSESSE E REFLECT THAT THE ASSESSEE HAS INCURRED EXPENDITURE OF RS. 71.31 LACS ON ELECTRICAL AND FIRE DETECTION SYSTEMS, AGAINST WHICH SAMPLE BILLS OF RS . 16.35 LACS WERE FILED UPON RECORD. THE ASSESSEE HAS FURTHER INCURR ED RS. 33.71 LACS ON SANITARY FITTINGS AT DLF GURGAON OFFICE AND THE BIL L OF RS. 18.08 LACS AND RS. 8.88 LACS HAD BEEN FILED ON RECORD. FURTHER, T HE ASSESSEE HAD INCURRED EXPENDITURE OF INTERIOR/PARTITION THROUGH M/S M.S. DECORATORS AT RS. 201.30 LACS AND RS. 49.24 LACS + RS. 40.51 LACS IN ASSESSMENT YEAR 2001-02 THROUGH M/S SACHDEVA SONS ON DOORS AND PART ITION TOTALING RS. 89.75 LACS. THE ASSESSEE HAS PLACED ON RECORD BILL FOR RS. 31.60 LACS AND FURTHER BILLS FOR RS. 16.24 LACS AND RS. 40.51 LACS . THE BILLS OF THE SAID PARTY M/S SACHDEVA SONS ARE PLACED ON RECORD FROM P AGE 42 TO 85. THE PERUSAL OF THE BILLS REFLECT THE SAID PARTY TO HAVE CARRIED ON BRICK WORK FOR WALLS, PILLARS, PARAKIT IN CEMENT MOTOR AND ALS O PROVIDING RCC FOR A.C. DUCTS/PIPES. FURTHER, IT HAS ALSO CARRIED OUT WORK UNDER THE SUB- HEAD CONCRETE I.E. PROVIDING AND LAYING M-20 GRAD E RE-ENFORCE CEMENT 16 PROVIDING FLOORING BY GRANITE I.E. LAYING OF GRANIT E, VITRIFIED TILES AS MARBLES ETC. AND FURTHER WOODWORK HAS BEEN CARRIED ON BY THE SAID CONCERN BY WAY OF FABRICATING AND FIXING IN POSSESS ION SELECTED WOOD AND FRAMES, GLAZED PANEL DOORS AND SHUTTERS ETC. F URTHER, IT HAS ALSO CARRIED ON THE WORK OF WALL FINISHING I.E. PROVIDIN G AND LAYING 12 TO 15MM THICK PLASTER IN CEMENT MOTOR AND ALSO PROVIDI NG AND APPLYING PLASTER OF PARIS. THE SAID CONCERN ALSO PROVIDED FA LSE CEILING AND INTERIOR WORKS I.E. PROVIDING AND FABRICATING VARIOUS FURNIT URE AND FIXTURES FOR WORK STATIONS AND IN ADDITION EXTRA ITEMS AND ALSO CARRYING OUT SANITARY WORKS AND SYSTEM OF WATER SUPPLY. THE OBSERVATION OF THE COMMISSIONER OF INCOME TAX (APPEALS) WAS THAT THE ASSESSEE HAD T AKEN ON LEASE LARGE HALL WHICH WAS CONVERTED INTO AN OFFICE WITH PROVIS IONS FOR BATHROOMS ETC., STANDS PROVED FROM THE PERUSAL OF THE SAMPLE BILLS PLACED ON RECORD BY THE ASSESSEE. THE PERUSAL OF THE BILL OF SPAZZIO DESIGN AT PAGE 27 REFLECTS ARCHITECTURAL FEE OF RS. 25 LACS BEING CHA RGED BY THE SAID CONCERN FROM THE ASSESSEE. IN ADDITION TO THE EXPEN DITURE INCURRED ON WOODEN PARTITIONINGS AND FITTINGS, THE ASSESSEE HAS ALSO BOOKED AN EXPENDITURE OF RS. 72,12,870/- TOWARDS CARPET AND T ILES. THE COPY OF THE BILL DATED 22.09.1999 PLACED AT PAGE 86 OF THE PAPE R BOOK REFLECTS THE ASSESSEE TO HAVE PURCHASED MODULAR CARPET TILES @ R S. 245/- PER SQ.FT. AND THE TOTAL INVOICE VALUE IS RS. 59,80,746/-. TH E PERUSAL OF THE BILL FOR TERRACE STRUCTURAL WORK OF RS. 509,530/- PLACED AT PAGE 85 OF THE PAPER BOOK REFLECTS THE ASSESSEE TO HAVE INCURRED THE EXP ENDITURE ON MANY ITEMS INCLUDING SUPPLYING, FABRICATING, ERECTING AN D POSITIONING M.S. STRUCTURES IN TRUSSESPURLINS ETC. AND ALSO P/F CHEC KERED PLOT. ANOTHER EXPENDITURE ON DUCTS FOR AIR CONDITIONERS AT RS. 15 .09 LACS HAS BEEN INCURRED BY THE ASSESSEE BUT NO BILL IN RESPECT THE REOF HAS BEEN PLACED ON RECORD. THE CLAIM OF THE ASSESSEE IS THAT THE ABOV ESAID EXPENDITURE INCURRED ON TEMPORARY/WOODEN PARTITION, FITTINGS, S ANITARY EXPENSES, 17 FLOOR TILES ETC. WAS REVENUE IN NATURE IN VIEW OF T HE VARIOUS JUDICIAL DECISIONS ON THEISSUE. 21. THE FIRST RELIANCE IS PLACED BY THE LD. AR FOR THE ASSESSEE ON THE RATIO LAID DOWN BY THE HON'BLE PUNJAB & HARYANA HIG H COURT IN REGAL THEATRE VS CIT [59 ITR 449 (P&H)] WHEREIN THERE WAS EXPENDITURE ON WALL PAINTING AND FIXTURES. IN THE SAID DECISION, THE ISSUE BEFORE THE HON'BLE COURT WAS WITH REGARD TO THE AMOUNT SPENT I N FIXING WOODEN PANELS TO COVER UP THE CRACKS AND UGLY SPOTS ON THE WALLS AND THE COURTS HELD THAT AS THE WOODEN PANELS ON REMOVAL WERE NOT OF MUCH VALUE AND COULD NOT BE RE-USED, SAID EXPENDITURE WAS OF REVEN UE IN NATURE. 22. THE NEXT RELIANCE WAS PLACED BY THE LD. AR FOR THE ASSESSEE ON ROGER ENTERPRISES (P) LTD. VS CIT [169 TAXMAN 41 (D EL)] WHEREIN THE ASSESSEE HAD UNDERTAKEN RENOVATION WORK ON LEASED P REMISES I.E. CHANGE IN FLOORING BY REPLACING MOSAIC MARBLE AND THE HON BLE COURT ALLOWED THE CLAIM OF THE ASSESSEE. 23. ANOTHER RELIANCE BY THE LD. AR FOR THE ASSESSEE WAS ON CIT VS HEDE CONSULTANCY PVT. LTD. [258 ITR 380] FOR THE PR OPOSITION THAT EXPENDITURE INCURRED ON CONVERSION OF GODOWNS INTO OFFICE PREMISES TAKEN ON LEASE WAS REVENUE EXPENDITURE. 24. THE LD. AR FOR THE ASSESSEE FURTHER PLACED RELI ANCE ON CIT VS ESCORTS FINANCE LTD. [205 CTR (DEL) 574] FOR THE PR OPOSITION THAT AMOUNT SPENT ON PROVIDING WOODEN PARTITION, PAINTIN G OF LEASED PREMISES, CARRYING OUT REPAIRS TO MAKE THE PREMISES WORKABLE WAS REVENUE EXPENDITURE AS THE NATURE OF REPAIRS WAS NO T OF ENDURING CHARACTER SO AS TO CATEGORIZE THE SAME AS CAPITAL E XPENDITURE. 25. IN THE FACTS OF THE CASE BEFORE THE HON'BLE DEL HI HIGH COURT IN CIT VS HI LINE PENS (P) LTD. 306 ITR 182 (DEL), THE REP LACEMENT WAS OF 18 CERTAIN PARTS SUCH AS INTERNAL WIRES AND G.I. PIPES AND AS THE EXPENSES WERE INCURRED TOWARDS LEVELING THE PREMISES TAKEN O N LEASE, SUCH EXPENSES WERE HELD TO BE REPAIRS TO THE PREMISES UN DER SECTION 30A(I) OF THE ACT. 26. THE LD. AR FOR THE ASSESSEE, THOUGH IN THE WRIT TEN SUBMISSIONS HAD PLACED RELIANCE ON SERIES OF DECISIONS BUT DURING T HE COURSE OF HEARING, THE ABOVESAID DECISIONS, AS REFERRED BY US WERE REF ERRED BY THE LD. AR FOR THE ASSESSEE. 27. IN RESPECT OF THE EXPENDITURE INCURRED ON TILES , WHETHER THE SAME IS CAPITAL OR REVENUE IN NATURE, THE LD. AR FOR THE AS SESSEE PLACED RELIANCE ON THE RATIO LAID DOWN IN INSTALLMENT SUPPLY PVT. L TD. VS CIT [149 ITR 52 (DEL)] AND CIT VS LAKE PALACE HOTELS & MOTELS PV T. LTD. [258 ITR 562 (RAJ)]. 28. THE LD. DR FOR THE REVENUE HAD PLACED RELIANCE ON THE CASE LAWS RELIED UPON BY THE COMMISSIONER OF INCOME TAX (APPE ALS) TO POINT OUT THAT THE SAID EXPENDITURE WAS NOT ALLOWABLE IN THE HANDS OF THE ASSESSEE BEING CAPITAL IN NATURE. THE FIRST DECISION RELIED UPON BY THE COMMISSIONER OF INCOME TAX (APPEALS) WAS IN UTTAR B HARAT WOOL EXCHANGE LTD. VS CIT [55 ITR 550 (P&H)] WHEREIN THE LEASE WAS FOR A SHORT PERIOD AND THE EXPENDITURE INCURRED FOR ERECT ION OF TEMPORARY STRUCTURE BY THE ASSESSEE WAS HELD TO BE CAPITAL IN NATURE. THE HON'BLE HIGH COURT IN THE SAID DECISION HAD LAID DOWN THE P RINCIPLE THAT THE TERM OF LEASE WOULD NOT DECIDE WHETHER THE EXPENDITURE W AS REVENUE OR CAPITAL IN NATURE. FURTHER, THE LD. DR FOR THE REVENUE PLA CED RELIANCE ON SILVER SCREEN ENTERPRISES VS CIT [85 ITR 578 (P&H)] WHEREI N IT HAS BEEN LAID DOWN THAT THE EXPENDITURE INCURRED ON MODERNIZATION OF CINEMA HOUSE BY REPLACING THE WOODEN CHAIRS WITH STEEL ONES AND BY CONSTRUCTING VERANDA, 19 OFFICE ROOM AND BATHROOM WERE OF ENDURING NATURE AN D THUS, CAPITAL IN NATURE. 29. THE LD. AR FOR THE ASSESSEE POINTED OUT THAT TH E SAID RATIO LAID DOWN BY THE HON'BLE PUNJAB & HARYANA HIGH COURT IN AN EARLIER DECISION DOES NOT STAND IN VIEW OF THE RATIO LAID DOWN BY TH E HON'BLE SUPREME COURT IN EMPIRE JUTE CO. LTD. VS CIT 124 ITR 1 (SC) WHEREIN IT WAS HELD THAT THE EXPENDITURE INCURRED FOR PURCHASE OF LOOM HOURS REPRESENTED REVENUE EXPENDITURE. THE COMMISSIONER OF INCOME TAX (APPEALS) FURTHER PLACED RELIANCE ON CIT VS SARVANA SPINNING MILLS VS CIT 293 ITR 201 (SC) AND BALLIMAL NAVAL KISHORE & ANOTHER VS CIT 22 4 ITR 414 (SC). IN THE ABOVE TWO CASES, THE ISSUE WAS IN CONNECTION WITH THE CURRENT REPAIRS UNDER SECTION 30(A)(I) OF THE ACT. THE LD. AR FOR THE ASSESSEE POINTED OUT THAT BOTH THESE DECISIONS HAVE BEEN REF ERRED BY THE DELHI HIGH COURT IN CIT VS HI LINE PENS (P) LTD. (SUPRA) AND THE KARNATAKA HIGH COURT IN CIT VS INFOSYS TECHNOLOGIES LTD. [246 CTR 371 (KAR)] AND THE TEST LAID DOWN BY THE HON'BLE SUPREME COURT IN EMPIRE JUTE CO. VS CIT [124 ITR 1 (SC)] WAS APPLIED AND AS THE ADVA NTAGE OBTAINED BY THE ASSESSEE WAS FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE AND NOT FOR ACQUISITION OF CAPITAL ASSET, THE SAME WAS HELD TO BE ALLOWABLE. IT WAS ALSO OBSERVED THAT WHERE AN AMOUNT IS SPENT BY THE ASSESSEE, OTHERWISE THAN AS TENANT, THE AMOUNT PAID BY HIM ON ONLY CURR ENT REPAIRS WOULD BE ALLOWABLE AND WHERE THE ASSESSEE WAS OCCUPYING THE PREMISES AS A TENANT, THE REPAIRS TO THE PREMISES WOULD BE ALLOWA BLE AS REVENUE EXPENDITURE. 30. THE NEXT SUB-HEAD ON EXPENDITURE IS UNDER WHICH CONSULTANCY EXPENSES HAVE BEEN PAID TO CUSHMAN & WAKEFIELD, CUR RIE AND BROWN AND OTHER CONSULTANTS FOR RENDERING PROFESSIONAL ADVICE IN RELATION TO THE RENOVATION WORK TOTALING RS. 41,86,755/-. THE LD. AR FOR THE ASSESSEE 20 HAS PLACED ON RECORD THE BILL RAISED BY CUSHMAN & W AKEFIELD DATED 14.06.2000 FOR RS. 220,500/- BEING 20% OF THE TOTAL FEE PAYABLE AFTER TWO MONTHS OF PROJECT COMPLETION FOR JSR PROJECT. T HE PERUSAL OF THE BILL PLACED AT PAGE 16 OF THE PAPER BOOK REFLECTS THAT T HE SAID CONCERN WAS A GLOBAL REAL ESTATE CONSULTANT AND IT WAS PUT TO THE LD. AR FOR THE ASSESSEE THAT WHAT IS THE CONNECTION WITH THE REPAIR AND REN OVATION WORK CARRIED OUT BY THE ASSESSEE AND THE SERVICES RENDERED BY TH E SAID CONCERN. THE LD. AR FOR THE ASSESSEE WAS UNABLE TO MEET THE SAME . THE TOTAL CONSULTANCY FEE PAID BY THE ASSESSEE WAS RS. 4,20,0 00/- AS BOOKED UNDER JSR, DELHI AND FURTHER EXPENDITURE HAS BEEN BOOKED AT RS. 26.98 LACS FOR DLF, GURGAON AND RS. 6.81 LACS FOR JSR DELHI FOR TH E PERIOD ENDING 31.3.2000 TOTALING RS. 31,80,000/- AGAINST WHICH BI LL OF RS. 22,05,000/- HAD ONLY BEEN FILED BY THE ASSESSEE. THE PERUSAL O F THE BILLS DOES NOT REFLECT THE EXPENDITURE TO BE REVENUE IN NATURE AND WE FIND NO MERIT IN THE CLAIM OF THE ASSESSEE VIS-A-VIS RS. 37,80,000/- . ANOTHER EXPENDITURE BOOKED UNDER THE HEAD CONSULTANCY EXPENSES IS PAY MENT OF RS. 80,580/- TO DLF BEING COST TOWARDS MODIFICATION WOR K OF ELECTRICAL TAP POINTS AND RS. 2 LACS BEING PROFESSIONAL CONSULTANC Y FOR UPS PAID TO IBM GLOBAL SERVICE AND OTHER MISCELLANEOUS EXPENSES . THE SAME ARE HELD ALLOWABLE AS REVENUE EXPENDITURE. THE TOTAL EX PENSES BOOKED UNDER THE SUB-HEAD IS RS. 41,86,755/- OUT OF WHICH EXPEND ITURE OF RS. 37,80,000/- IS DISALLOWED FOR WANT OF EVIDENCE AND THE BALANCE EXPENDITURE IS ALLOWED IN THE HANDS OF THE ASSESSEE . 31. AS REFERRED TO BY US IN THE PARAS HEREIN ABOVE, THE ASSESSEE HAS INCURRED SUM OF RS.25 LACS AS ARCHITECTURAL FEE PAI D TO SPAZZIO WHICH IS BOOKED BY THE ASSESSEE UNDER THE SUB-HEAD ARCHITEC TURAL FEE, TEMPORARY ART WORK ETC. THE COST OF THE TEMPORARY ART WORKS ARE RS. 4200/-, RS. 9200/-, RS. 12,000/- AND RS. 100,860/- AND RS. 6000 /- AND ALSO RS. 57,810/- IN JSR OFFICE WHICH ARE ALLOWABLE AS REVEN UE EXPENDITURE. 21 HOWEVER, THE ARCHITECTURAL FEE OF RS. 48,30,000/- B OOKED IN TWO OFFICES IN TOTALITY IS NOT ALLOWABLE AS AN EXPENDITURE IN T HE HANDS OF THE ASSESSEE. 32. THE TRIBUNAL IN THE FIRST ROUND HAD HELD THAT T HE EXPENDITURE INCURRED UNDER TRAVEL EXPENSES, STATIONERY EXPENSES , SHIFTING/INSTALLATION EXPENSES, WERE PURPORTEDLY REVENUE IN NATURE. THE C OMMISSIONER OF INCOME TAX (APPEALS) HAS ALLOWED THE EXPENDITURE OF STATIONERY, SECURITY SERVICES EXPENSES, TELECOMMUNICATION EXPENSES, ADVE RTISEMENT AND MISCELLANEOUS EXPENSES. HOWEVER, THE EXPENDITURE RE LATING TO TRAVELING AND SHIFTING/INSTALLATION EXPENSES OF RS. 12,63,330 /- WAS NOT ALLOWED IN THE HANDS OF THE ASSESSEE. WE FIND MERIT IN THE CLA IM OF THE ASSESSEE IN RESPECT OF THE TRAVELING AND SHIFTING/INSTALLATION EXPENSES AT RS. 12,63,330/- AND THE SAME IS DIRECTED TO BE ALLOWED AS REVENUE EXPENDITURE. 33. NOW THE ONLY ASPECT TO BE CONSIDERED IS THE ALL OWABILITY OF THE EXPENDITURE INCURRED ON TEMPORARY WOODEN PARTITION, FITTINGS, WHITE WASHING ETC. AND ON CARPET TILES AMOUNTING TO RS. 4.18 CR AND RS. 72.12 LACS. AS REFERRED TO BY US IN THE PARAS HEREIN ABOV E, THE EXPENDITURE INCURRED BY THE ASSESSEE ON THE RENOVATION OF ITS O FFICE HAS BROUGHT INTO EXISTENCE CERTAIN ITEMS OF ENDURING NATURE AND CERT AIN EXPENDITURE HAS BEEN INCURRED BY THE ASSESSEE ON RENOVATION OF BUIL DING WHICH IS REVENUE IN NATURE. THE ASSESSEE HAS FAILED TO PROVIDE THE COMPLETE DETAILS UNDER THE VARIOUS SUB-HEADS OF EXPENDITURE AND BOTH THE A SSESSING OFFICER AND THE COMMISSIONER OF INCOME TAX (APPEALS) HAVE FAILE D TO ADDRESS THE SAID ISSUE ON THE SURMISE THAT THE ASSESSEE HAD NOT FURNISHED COMPLETE DETAILS BEFORE THEM. EVEN BEFORE US, THOUGH THE ASS ESSEE HAS FURNISHED SAMPLE BILLS WHICH HAVE BEEN FILED BEFORE US AND RE FERRED TO BY US IN THE PARAS HEREIN ABOVE, BUT THE PERUSAL OF THE SAID BIL LS REFLECT THE 22 EXPENDITURE BEING INCURRED ON FLOORING, CEMENTING, PLASTERING OF WALLS, LAYING OF SANITARY LINES AND PIPES WHICH ARE ADMITT EDLY OF ENDURING BENEFIT OF THE ASSESSEE AND ARE CAPITAL IN NATURE. THE ASSESSEE HAS CONVERTED A LARGE HALL INTO AN OFFICE WITH ATTACHED BATHROOMS FOR WHICH THE INLAY WORK HAD BEEN CARRIED OUT BY THE EXPERTS ARRANGED BY THE ASSESSEE AND EVEN ARCHITECTURAL FEE OF RS. 25 LACS HAS BEEN PAID BY THE ASSESSEE FOR CARRYING OUT THE DIFFERENT OPERATIONS. IN THE TOTALITY OF THE ABOVESAID FACTS AND CIRCUMSTANCES, WE ARE OF THE VI EW THAT THE EXPENDITURE INCURRED BY THE ASSESSEE CONSIST OF BOT H CAPITAL AND REVENUE EXPENDITURE. HOWEVER, IN THE ABSENCE OF COMPLETE D ETAILS, WE ARE CONSTRAINED TO ESTIMATE THE DISALLOWANCE OF CAPITAL EXPENDITURE IN THE HANDS OF THE ASSESSEE. WE HOLD THAT OUT OF THE TOT AL EXPENDITURE, 30% OF THE EXPENDITURE INCURRED BY THE ASSESSEE IS CAPITAL IN NATURE AND THE SAME MERITS TO BE DISALLOWED IN THE HANDS OF THE ASSESSE E IN BOTH THE YEARS. THE SAID DISALLOWANCE IS IN RESPECT OF TWO SUB-HEAD S OF EXPENDITURE OF RS.4.18 CR AND RS. 72.12 LACS. IN RESPECT OF OTHER EXPENSES, WE HAVE ALREADY DEALT UPON THE ISSUES IN THE PARAS HEREIN A BOVE. THE ASSESSING OFFICER IS DIRECTED TO RECOMPUTE THE INCOME IN THE HANDS OF THE ASSESSEE IN LINE WITH OUR DIRECTIONS. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE THUS, PARTLY ALLOWED IN BOTH THE ASSESSMENT YEA RS. 34. THE REVENUE IS IN APPEAL AGAINST THE DELETION O F ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF ENTERPRISING EX PENSES. THE ASSESSING OFFICER HAD DISALLOWED THE CLAIM AS THE A SSESSEE HAD FAILED TO PRODUCE THE BILLS. THE COMMISSIONER OF INCOME TAX (APPEALS) HAS, VIDE PARAS 2.3 AND 2.3.1 HAS OBSERVED AS UNDER : 2.3 I HAVE CAREFULLY CONSIDERED THE RIVAL SUBMIS SIONS . THE ASSESSEE STATED THAT A REPLY DATED 30.4.07 WAS SUBMITTED BEFORE THE ASSE SSING OFFICER WHEREIN IT WAS SUBMITTED AS UNDER: 'IT IS RESPECTFULLY SUBMITTED THAT THE EXPENDITURE ON VOICE TELECOM CIRCUIT RS. 19,86,581/- AND DATA/TELECOM CIRCUIT US AGE RS. 23 69,16,888 WAS INCURRED ON ACCOUNT OF PAYMENT MADE T O BHARATI BT LTD. FOR LEASE LINE AND V-SAT CONNECTIVITY FOR THE PREVI OUS YEAR RELEVANT TO ASSESSMENT YEAR UNDER CONSIDERATION. THE AMOUNT HAD BEEN PAID FOR USAGE OF LEASED LINE WHICH ARE NECESSARY FOR ACCESS ING DATA FROM VARIOUS LOCATIONS. WITHOUT THE SAID CONNECTIVELY IT IS IMPOSSIBLE TO RUN AND ACCESS ERP PACKAGE. FURTHER IT IS TO BE APPRECI ATED THAT THE USAGE CHARGES ARE ONLY PERIOD COST AND HAVE NO BENEFIT OF ENDURING NATURE. SUCH EXPENDITURE WAS INCURRED BY ASSESSEE TO FACILI TATE AND STREAMLINE THE ASSESSEE'S DAY TO DAY MANAGEMENT AND TRADING OPERATIONS AND. WITH A VIEW TO INCREASE THE EFFICIE NCY OF THE OPERATIONS AND MAINTENANCE OF VITAL DATA, WHICH WAS NECESSARY FOR CARRYING ON THE BUSINESS MORE EFFICIENTLY AND DID NOT RESULT IN ANY ADDITION TO CAPITAL ASSETS. THE AFORESAID EXPENSES WERE PART OF ERP IMPLEMENTATION AND WERE NOT OF ENDURING NATURE. ONCE THE EXPENSES ON IMPLEMENTATION OF ERP PACKAGE ARE TREATED AS OF REVENUE NATURE THE RE CAN NOT BE ANY REASON NOT TO TREAT THE AFORESAID EXPENSES ALSO TO BE OF REVENUE NATURE. 2.3.1 IT APPEARS THAT THE ASSESSING OFFICER DID NOT ASK FOR ANY FURTHER DETAILS FROM THE ASSESSEE. THE ASSESSEE HAS ATTEMPTED TO EXPLAIN THE TRUE NATURE OF THE EXPENSES SAYING THAT THESE ARE THE EXPENDITURE ON ACCOUNT OF PAYMENTS MADE TO BHARTI AND V- SAT FOR THE PURPOSE OF CONNECTIVITY. IN MY OPINION, THE ASSESSEE HAS INCURRED A REVENUE EXPENDITURE ON VOICE TELECOM CIRCUIT AND DA TA TELECOM CIRCUIT USAGE. INITIALLY, IT WAS NOT CLEAR WHETHER THE SAID EXPEND ITURE IS ON ACCOUNT OF CERTAIN EQUIPMENT OR NOT. THE ASSESSEE CATEGORICALLY STATE D THAT THESE ARE THE PAYMENTS MADE TO TELECOM COMPANIES FOR THE USAGE OF LEASED L INES. IN MY OPINION, THE SAID EXPENDITURE IS REVENUE IN NATURE. THIS GROUND OF T HE ASSESSEE IS ALLOWED. 35. THE LD. AR FOR THE ASSESSEE WAS DIRECTED DURING THE COURSE OF HEARING TO PRODUCE THE BILLS TO VERIFY WHETHER THE EXPENDITURE HAS BEEN INCURRED FOR THE PURPOSE OF CONNECTIVITY OR FOR THE PURPOSE OF PURCHASE OF CERTAIN EQUIPMENTS. THE LD. AR FOR THE ASSESSEE HAS SHOWN HIS INABILITY TO PRODUCE RELEVANT BILLS AS THE SAME WER E NOT READILY RETRIEVABLE, BEING MORE THAN 15 YEARS OLD. HOWEVER, A CERTIFICATE HAS BEEN FILED BY THE DY. MANAGER (INFORMATION TECHNOLO GY) TO CONFIRM THAT THE SAID EXPENDITURE OF RS. 19,86,581/- PAID TO VOI CE TELECOM CIRCUIT AND RS. 69,16,888/- AND RS. 11,786/- BOOKED ON DATA TEL ECOM CIRCUIT USAGE WAS PAID TO BHARTI BT LTD. FOR LEASED LINE AND V-SA T CONNECTIVITY DURING THE FINANCIAL YEARS 1999-2000 AND 2000-01. THE SAID PAYMENTS WERE CLAIMED TO BE TOWARDS VOICE TELECOM CIRCUIT/DA TA USAGE AND NOT FOR PURCHASE/ACQUISITION OF ANY ASSET. THE CASE OF THE ASSESSEE BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) WAS ALSO THE S AME AND THE 24 ADDITION HAS BEEN DELETED BY THE COMMISSIONER OF IN COME TAX (APPEALS) ON THE SUBMISSIONS OF THE ASSESSEE IN THE ABSENCE O F ANY EVIDENCE. 36. THE REVENUE IS AGGRIEVED BY THE SAID RELIEF ALL OWED BY THE COMMISSIONER OF INCOME TAX (APPEALS). 37. IN THE TOTALITY OF THE FACTS AND CIRCUMSTANCES, WHERE THE ASSESSEE HAS FAILED TO PRODUCE THE BILLS TO PROVE ITS STAND AND IN LINE WITH OUR OBSERVATIONS IN PARAS HEREIN ABOVE, WE DIRECT THE A SSESSING OFFICER TO ALLOW 70% OF THE EXPENDITURE IN THE HANDS OF THE AS SESSEE AND THE BALANCE IS TO BE TREATED AS CAPITAL EXPENDITURE. 38. IN THE RESULT, THE CROSS APPEALS FILED BY ASSES SEE AND REVENUE IN BOTH THE YEARS ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 6 TH MARCH,2014. SD/- SD/- ( T.R.SOOD) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUD ICIAL MEMBER DATED: 6 TH MARCH, 2014 POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT, DR. ASSISTANT REGISTRAR ITAT,CHD.