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2016 (12) TMI 179 - AT - Income TaxDisallowance of Building - Repairs, Renovation & Maintenance expenses - Held that:- A perusal of the detail of expenditure reveals that the same is primarily incurred for maintenance and/or repairing/upgrading of existing structures. Though the Assessing Officer has canvassed that it results in creation of a new asset, but the details do not reflect so. Even with regard to the enduring benefit brought out by the Assessing Officer, it is to be understood that the enduring benefit in the case of repairs and maintenance may spread beyond one financial year, but that itself would not justify the characterisation of expenditure as capital in nature so long as it does not result in creation of any new asset or a benefit, in capital field. Apart therefrom, it is also to be appreciated that the expenditure in question, viz. plastering work, providing grills, granite flooring in corridors, terrace waterproofing, etc. are expenses which facilitate the upkeep of the premises and the enduring benefit, if any, is in the revenue field. Therefore, considering the fact-position, we find no reason to uphold the stand of the Revenue that the impugned expenditure is of capital in nature. Thus, the order of CIT(A) is set-aside and the Assessing Officer is directed to delete the addition. - Decided in favour of assessee. Disallowance u/s 14A - assessee had made a suo moto disallowance - Held that:- It is a well settled proposition that before the Assessing Officer proceeds to determine the disallowance u/s 14A of the Act by applying the formula contained in Rule 8D of the Rules, it is imperative that a satisfaction is recorded by him with regard to the incorrectness or otherwise of the stand of assessee, having regard to its accounts. In the present case, assessee had suo moto disallowed a sum of ₹ 13,000/- and the same has been mechanically brushed aside by the Assessing Officer and instead, disallowance has been worked out in terms of Rule 8D of the Rules. The aforesaid approach is clearly inconsistent with the mechanics of Sec. 14A(2) of the Act and, therefore, the said action is hereby set-aside and Assessing Officer is directed to retain the disallowance to the extent of ₹ 13,000/- suo moto disallowed by the assessee itself. Also assessee raised a point of law to the effect that the formula specified in Rule 8D(2)(iii) of the Rules prescribing disallowance @ 0.5% of the average value of investments should only take into consideration those investments on which assessee has received exempt income and not the investments on which no exempt income has been received. The aforesaid point of law raised by the assessee is kept open as assessee has been allowed the necessary relief otherwise - Decided in favour of assessee. Life membership fee treated as revenue receipt - Held that:- The said issue is a recurring issue and in the past years, the same has been held in favour of the assessee following the judgment of the Hon'ble Bombay High Court in assessee’s own case reported in (1979 (1) TMI 5 - BOMBAY High Court).
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