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2021 (10) TMI 1135 - AT - Income TaxTDS u/s 194B or 194BB - disallowance in respect of payment of stake money under section 40(a)(ia) - stake money and cups disbursed to horse owners without deducting TDS - HELD THAT:- As decided in own case [2020 (12) TMI 1280 - ITAT BANGALORE] CBDT Circulars are binding on the Department as it clarifies the understating of the provisions of the Act by the Revenue which cannot be disregarded by the income-tax authorities while construing the provisions of the Act. The ld. DR was not able to point out why the interpretation given in the CBDT Circular relied upon by the assessee should not prevail. We find that the Department has tried to indirectly tax what cannot be taxed by virtue of Circular issued by the CBDT, a situation which is impermissible in law. Thus, on this aspect also, we hold that 'stake money' is not liable to TDS u/s 194B of the Act. - we also hold that stake money paid by assessee to the horse owners are not liable to TDS under section 194B or section 194 BB of the Act. Consequentially no disallowance could be made under section 40 (a) (ia) of the act in the hands of assessee. Nature of expenditure - Expenditure on modification of TV towers - claim un/s 37 - AR submitted that, during the year six TV towers were modified to fit the technology cameras which could be used during horse races and there is no enduring benefit in the hands of assessee and that, amount paid for purchase of technological camera are capitalised the books of account on which depreciation is claimed in accordance with section 32 - HELD THAT:- In present facts assessee incurred expenses on re-modification of TV towers which might, undergo further modification as and when the technologically upgraded camaras are brought in. It is submitted that the towers were remodified to fit in the new camaras purchased. Admittedly, the cameras purchased by assessee were capitalised on which depreciation is claimed. Thus in our view though expenditure do not have the character of enduring benefit, the advantage is not for indefinite future. Accordingly, respectfully applying the principles laid down in EMPIRE JUTE COMPANY LIMITED VERSUS COMMISSIONER OF INCOME-TAX [1980 (5) TMI 1 - SUPREME COURT] we hold the expenditure to be revenue in nature. We direct the Ld.AO to delete the disallowance made on expenses towards re-modification of TV towers. Nature of expenditure - expenditure incurred on constructing temporary stables, repairs to existing stables and gun greeting of such stables - HELD THAT:- We agree with the argument advanced by the Ld.Sr,DR that the structures are permanently made for outstation horses that come to Bangalore for races and therefore to be catagorised as capital asset. We also note that assessee incurred repair work towards existing stables. We direct the Ld.AO to allow the expenditure incurred is towards repair work as revenue expenditure. Expenditure incurred on upgrading of UPS system u/s 37 - HELD THAT:- We note that the server installed in the racecourse premises was originally supported by UPS of 8 KVA. Assessee upgraded it to16 KVA in the year 2012. The upgradation of UPS has brought into effect a new asset for advantage of assessee and therefore has to be treated as capital asset. However, assessee is eligible for depreciation. We direct the Ld.AO to grant depreciation to assessee on the UPS. Expenditure incurred towards maintenance of betting systems and other equipments and asphalting of roads - Revenue or capital expenditure - HELD THAT:- We note that both these expenditure are incurred by assessee for maintenance of existing asset. It cannot be ignored that, there would arise ware and tear of machines used and the road on which horse racing takes place. These needs to be maintained on regular basis for the purposes of business. We are therefore convinced with the view of Ld.CIT(A) that they are in the nature of revenue expenditure.
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