TMI Blog2014 (11) TMI 3X X X X Extracts X X X X X X X X Extracts X X X X ..... to Haryana Govt. u/s 43(B) – Held that:- The CIT(A) has noted that the assessee’s case apparently does not fall under any of the clauses mentioned u/s 43B of the Act which is not a proper and judicious approach - the authorities below have not adjudicated the issue as per letter and spirit of the provisions of section 43B of the Act - The AO ought to have verified and examined the claim of the assessee mainly on two counts, i.e. whether the claimed sum was actually paid and the amount was actually paid by the assessee on or before the due date applicable in its case for furnishing the return u/s 139(1) of the Act – thus, the matter is to be remitted back to the AO for proper verification and examination of claim of the assessee as per section 43B – Decided in favour of assessee. Payment of auditors fees – Held that:- The auditor’s fees is a necessary business expenditure which is allowable u/s 37(1) of the Act and additions made in this regard are not sustainable – the AO is directed to allow the expenditure incurred by the assessee towards payment of auditors fees – Decided in favour of assessee. - I.T.A. No. 3130/Del/2010 - - - Dated:- 20-10-2014 - Shri G. D. Agrawal And ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) and 142(1) of the Income Tax Act, 1961 (for short the Act) along with detailed questionnaire were issued to the assessee. The AO noticed that the assessee debited ₹ 23,21,314/- under the head of repair and maintenance to the profit and loss account which was very high as compared to last year figure of ₹ 6,95,345/-. The AO observed that no justification has been given by the assessee in respect of increase in these expenses and no bills and vouchers regarding these expenses have been produced and the AO disallowed an amount of ₹ 16,26,000/- out of these expenses and added the same to the income of the assessee. During the first appellate proceedings, the CIT(A) adjudicated the issue and enhanced the disallowance to ₹ 19,58,785/- but the CIT(A) allowed admissible depreciation thereon. 4. The AO also noticed that the assessee has shown interest payment to the bank and other financial institutions at ₹ 4,98,20,072/- and the liability of interest during the year under consideration has been increased amounting to ₹ 1,43,95,657/- which are mainly in respect of loans taken from Banks and financial institutions. The AO held that under the provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... matter of fact and law, the entire expenditure was incurred by the assessee on account of repair and maintenance of non-factory building which is allowable as a revenue expenditure under the provisions of the Act. 8. The AR has also drawn our attention towards appellant s submissions available on page no. 4 to 10 and submitted that the assessee owns a nonfactory building in the form of godown no. 1, 2 and 3 for storing sugar into it. The building was constructed and capitalized during the financial year 2002-03 and 2003-04 and subsequently in a strong storm on 25.5.2004, the roof of godown no. 1 and 3 was badly damaged, hence the assessee constructed roof thereon and incurred total expenditure of ₹ 19,58,735/- on reconstruction of it. The AR also submitted that the approval of this expenditure has been given by the Haryana State Federation of Cooperative Sugar Mills Ltd. Panchkula vide its letter dated 6.6.2006 and 15.11.2006. The assessee also claimed insurance against the said damages caused due to storm on 25.05.2004 which was sanctioned at ₹ 7,14,479/- and credited to the repair and maintenance account (Paper Book page no. 84). 9. Replying to the above, ld. DR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany as compensation for the damages caused due to storm. Under these circumstances, we are inclined to hold that such kind of expenditure incurred towards major repair and maintenance to restore the proper functioning and useability of the non-factory building of the assessee company cannot be held as capital expenditure because we are unable to see any fact brought out by the authorities below to support this contention of the department that either the capacity was increased or any new asset came into existence as a result of expenditure so incurred by the assessee. 13. Under these circumstances, we are of the considered view that the explanation, details, bills and vouchers of the assessee and adjustment of insurance claim require examination and verification at the end of the AO for proper quantification of the revenue expenditure on the basis of relevant principles for allowability of the claim of the assessee as discussed above. Therefore, orders of the authorities below are set aside and ground no. 1 of the assessee is restored to the file of AO for a fresh adjudication after affording due opportunity of hearing for the assessee and without being prejudiced by the obser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apply in relation to any sum referred to in clause (a) 8 or clause (c)] 9 or clause (d)] which is actually paid by the assessee on or before the due date applicable in his case for furnishing the return of income under sub- section (1) of section 139 in respect of the previous year in which the liability to pay such sum was incurred as aforesaid and the evidence of such payment is furnished by the assessee along with such return:] 17. From bare reading of the impugned order, we observe that the CIT(A) upheld the addition with following observations and conclusion:- 4. Ground of appeal no. 2 pertains to disallowance of ₹ 1,42,97,973/- u/s 43B of the IT Act. The AO has discussed the issue in para 3 of the assessment order and has disallowed the amount because the same is 'payable'. As per the appellant this is not a statutory liability coming under section 43B of the IT Act. It has been submitted that the Mill has taken loan from Haryana Govt. for making the cane payment of Sugar Cane growers in different financial years and on the loan, interest of ₹ 1,42,97,973/- has been claimed because it has accrued to the Govt. It has also been submitted that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l apply in relation to any sum referred to in clause (a) or clause (c) or clause (d) which is actually paid by the assessee on or before the due date applicable in his case for furnishing the return of income under sub- section (1) of section 139 of the Act. On the basis of foregoing discussion, we are of the view that the authorities below have not adjudicated the issue as per letter and spirit of the provisions of section 43B of the Act. The AO ought to have verified and examined the claim of the assessee mainly on two counts: i) whether the claimed sum was actually paid and; ii) the amount was actually paid by the assessee on or before the due date applicable in its case for furnishing the return u/s 139(1) of the Act. Thus, we find it just and proper to restore the issue to the file of AO for proper verification and examination of the claim of the assessee in the light of provisions of section 43B of the Act. Accordingly, orders of the authorities below on the issue are set aside and the issue is restored to the file of AO for a fresh adjudication as per directions as stated above after affording due opportunity of hearing for the assessee. 19. In the result, ground no. 2 of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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