KALYANI DISTRIBUTIONS SERVICERS,POLLACHI V. DEPUTY COMMISSIONER OF INCOME TAX, COIMBATORE

ITA 1821/CHNY/2025

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The case involves Kalyani Distributions Services, a firm engaged in the wholesale distribution of pharmaceuticals, which appealed against the order of the Commissioner of Income Tax (Appeals) dismissing their appeal on an assessment order that disallowed certain repair expenses claimed. The Assessing Officer had initially disallowed Rs. 47,83,942 claimed for repairs on rented properties, asserting that the expenses were capital in nature and the responsibility of the property owners, not the tenant. The Tribunal, after reviewing the evidence and submissions, disagreed with the lower authorities, finding that the expenses were for routine maintenance and thus should be treated as revenue expenditure.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 822907 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-12-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2021-2022
• Appeal Filed On: 24-06-2025
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GOUTHAMI MANIVASAGAM
• Assessee Lawyers: A. SURAJ NAHAR
• Keywords: Set aside; Revenue expenditure

Judgement Text

" आयकर अपील य अ धकरण, ‘बी’ \u000eयायपीठ, चे\u000eनई IN THE INCOME TAX APPELLATE TRIBUNAL ‘B’ BENCH, CHENNAI \u0015ी एबी ट वक\u0019, \u000eया\u001aयक सद य एवं \u0015ी एस. आर. रघुनाथा, लेखा सद य क े सम$ BEFORE SHRI ABY T VARKEY, JUDICIAL MEMBER AND SHRI S. R. RAGHUNATHA, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.:1821/Chny/2025 \u001aनधा%रण वष% / Assessment Year: 2021-22 Kalyani Distributions Services, 75/1, DR Ansari Street, Pollachi, Coimbatore – 642 001. vs. DCIT, NCC-4, Coimbatore. [PAN:AAMFK-0290-Q] (अपीलाथ'/Appellant) (()यथ'/Respondent) अपीलाथ' क* ओर से/Appellant by : Shri. A. Suraj Nahar, C.A. ()यथ' क* ओर से/Respondent by : Shri. Gouthami Manivasagam, JCIT सुनवाई क* तार ख/Date of Hearing : 10.12.2025 घोषणा क* तार ख/Date of Pronouncement : 22.12.2025 आदेश /O R D E R PER S. R. RAGHUNATHA, AM : The present appeal is filed by the assessee against the order dated 02.06.2025 passed by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi (hereinafter referred to as “ld.CIT(A)”), dismissing the appeal filed by the assessee against the assessment order dated 26.12.2022 passed u/s.143(3) read with section 144B of the Income Tax Act, 1961 (hereinafter referred to as the “Act”), pertaining to Assessment Year (A.Y.) 2021-22. Printed from counselvise.com :-2-: ITA. No:1821/Chny/2025 2. The brief facts of the case leading to the present appeal are as follows. The assessee is a firm engaged in the business of wholesale dealer in pharmaceuticals and drugs and has filed its return of income by admitting a total income of Rs.5,07,20,330/-. The case was taken up for scrutiny and various notices u/s.142(1) of the Act were issued and the assessee had replied to them from time to time and finally the assessment order came to be passed by making a disallowance of Rs.47,83,942/- in respect of expenses claimed on building repairs. 3. The assessee was aggrieved by this assessment order and hence filed an appeal before the ld.CIT(A), which came to be dismissed and thus leading to the present appeal before us. 4. The case of the Assessing Officer is that the assessee had failed to substantiate the claim of repairs done on rented properties with evidence and that it is the assessee and not the owner who is liable for such repairs. The ld.CIT(A) concurred with the view of the Assessing Officer and further held that the expenses are capital in nature and accordingly, dismissed the appeal. 5. Aggrieved by the order of the ld.CIT(A) the assessee is in appeal before us. 6. The ld.AR for the assessee contended that the views taken by the Assessing Officer and ld.CIT(A) are erroneous and contrary to records and took us through the paperbook filed by him. It was submitted that the authorities below had not appreciated the documentary evidence filed by the assessee. The invoices in respect of the expenses incurred clearly demonstrate that the expenses were incurred and the confirmation letter from the contractor specifies the list of work done by him for the assessee. The owners of the premises had also provided their confirmation in respect of the rentals received and further stated that there is no written agreement on the lease of the premises. Further, the owners had permitted the assessee to carry out the repair, and the Printed from counselvise.com :-3-: ITA. No:1821/Chny/2025 expenditure shall be borne by the assessee towards repairs and maintenance. It was further argued that by no stretch of imagination, these routine maintenance expenses could be treated as capital in nature and relied on various case laws in support of his proposition. The written submissions filed by the assessee before the ld.CIT(A) had addressed all these issues, which were ignored by the authorities below. 7. Per contra, the ld.DR relied on the orders of the authorities below and submitted that the Assessing Officer is right in rejecting the claim of the assessee and further argued that capital expenses cannot be treated as an allowable expense and thus prayed that the appeal may be dismissed. 8. We have heard the rival contentions of both the parties, perused the orders of the authorities below, paper book and case law book filed by the assessee. Admittedly the assessee is carrying on the business in the same premises for more than two decades. The land lords have confirmed the rent payments made by the assessee and also the AO has allowed the rent expenses. From the confirmation provided by the owners, it can be seen that they had permitted the assessee to incur repairs at the cost of the assessee. The tax invoice point out the SAC code of the services. The confirmation provided by the contractor specifies the list of repair work carried out by them and these works are as follows.  Removing and paving of paver blocks in ways and means  Flooring tiles removal and laying new tiles in ground, first and second floor.  Removing old flooring and laying shabad stones in godowns.  Strengthening the platform in godown for the rail movement  Fresh flooring of the generator bed  All the walls in and out patti and painting  Carpentry and electrical services  Relaying of tiles in all washrooms including closets. Printed from counselvise.com :-4-: ITA. No:1821/Chny/2025 9. On perusal of the above details and records, in our view these expenses incurred on these activities cannot be treated as capital in nature. No enduring benefit or bringing about a new asset / profit-making apparatus could be seen from the activities. All the repairs stated above are for the day-to-day operations and are recurring in nature and are incurred based on the normal wear and tear. 10. We are not in agreement with the views taken by the authorities below. In our view, they have not appreciated the evidence on record in proper perspective. Since the necessary evidence exist in respect of the claim of the expenditure incurred, with clear demonstration of the fact that it is the assessee’s responsibility to incur these expenses and not that of the owner’s and the expenses are not in the nature of capital, we are inclined to hold that the expenditure incurred on account of repairs and maintenance on the rented premises is an allowable expenditure. 11. In view of the above findings, we set aside the order of the ld.CIT(A) and direct the AO to allow the expenditure of repairs and maintenance as revenue expenditure. 12. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 22nd December, 2025 at Chennai. Sd/- Sd/- (एबी ट वक\u0019 ) (ABY T VARKEY) \u000eया\u001aयक सद य/Judicial Member (एस. आर. रघुनाथा) (S. R. RAGHUNATHA) लेखासद य/Accountant Member चे\u000eनई/Chennai, .दनांक/Dated, the 22nd December, 2025 SP Printed from counselvise.com :-5-: ITA. No:1821/Chny/2025 आदेश क* (\u001aत0ल1प अ2े1षत/Copy to: 1. अपीलाथ'/Appellant 2. ()यथ'/Respondent 3.आयकर आयु3त/CIT– Chennai/Coimbatore/Madurai/Salem 4. 1वभागीय (\u001aत\u001aन ध/DR 5. गाड% फाईल/GF Printed from counselvise.com "