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2019 (7) TMI 223 - AT - Income TaxDisallowing hoarding construction charges - capital expenditure OR revenue expenditure - construction of hoardings per sq. ft. is as high as ₹ 200/ - huge expenses were made for construction of hoarding, the same should be giving usefulness / utility for more than one financial year - income from display charges - on enquiry Inspector's report the hoarding at 113, Dilkhusha Street near Park Circus was approximately of 1200 sq. ft, huge structure, made with angles of steel and the hoarding had been there for almost 2 years similarly the other hoardings HELD THAT:- The hoardings are temporary structures and are made with angles of steel and iron rods to affix them to the ground since these are vulnerable to rain, storm, theft and other damages. As such, affixation of the same using steel angles and iron rods was a necessity else the assessee would have not received any advertising orders. To receive advertising orders, these hoardings were required to be maintained by the assessee in a good quality condition. Further, in order to avoid corrosion of the structure and other adverse weathering effects, replacement of parts and other incidental expenses is regularly required to be done. It is also relevant to note that such expenditure is a recurring expenditure which is required to be incurred by the assessee regularly and the same therefore cannot be said to have given any enduring benefit to the assessee in capital field. The Inspector has based his findings in the impugned report by watching a hoarding after a time gap of three years. The said hoardings had underwent changes in this long time span of three years. Repair works and replacement of parts had taken place in the last few years as per the demand of the advertising business. As such, the structure existing on the date the Inspector visited the site can in no circumstances be compared with the structure which existing in the relevant AY, being AY 2012-13. We note that the assessee has been following this practice of claiming the hoarding expenses as revenue expenses in all the earlier years also and the same was not disturbed by the learned AO in any of the preceding years. There is no change in the accounting policies of the assessee in the current year vis a vis the earlier years, hence consistency should be maintained by the assessing officer. Apart from this, on identical facts, Coordinate Bench of Mumbai ITAT in the case of M/s Empress Advertising [2014 (7) TMI 1191 - ITAT MUMBAI] has held such expenditure is a recurring expenditure which is required to be incurred by the assessee regularly and the same therefore cannot be said to have given any enduring benefit to the assessee in capital field. Applying the ratio of the above noted judicial precedents, to the facts of the assessee`s case, it is abundantly clear that hoarding expenses incurred by the assessee are revenue in nature and are not capital in nature. Disallowance u/s 40A(2)(b) - salary to the wife of assessee - HELD THAT:- We note that Nidhi Kejriwal, being a BSC. Graduate, has benefitted the company in a number of ways and hence, the salary of ₹ 16,000/- per month was commensurate with the type of services provided by her to the assessee firm and was not unreasonable. The AO made addition purely on surmises and conjectures without bringing comparable persons having same education and experience on record to judge fair market value of Nidhi Kejriwal services. No finding was recorded by the AO that the sum of ₹ 50,000/- is unreasonable u/s 40A(2)(b). - we delete the addition
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