TMI Blog2010 (8) TMI 307X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal in Income Tax Appeal No.3149/Mum/2001, by which order, the said Appeal came to be decided against the Assessee and the order passed by the Assessing Officer, came to be confirmed by the Tribunal. 2 The following substantial questions of law arise for consideration in the above Appeal: "i. Whether on the facts and the circumstance of the case, the Tribunal was justified in restricting the allowance for deduction of expenditure incurred on repairs to the roof of the building commensurate with the area that was occupied by the assessee for the purpose of his business. ii. Whether on the facts and in the circumstances of the case the Tribunal having found that the expenditure incurred was in the revenue field and it being an admitted position that the Appellant was occupying a major part of the commercial premises in the building, for the purpose of his business was the Tribunal justified in not allowing the reduction claimed in its entirety." 3 The facts leading to the filing of the above Appeal can be stated thus: The building in question in respect of which the Assessee i.e the Appellant above name has carried out the repairs to the roof and in respect of the expe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that since the Appellant occupied 3700 sq,ft, area out of the total area of 30,000 sq.ft., the Appellant was not entitled to a deduction of two entire expenditure on repairs and if any deduction was to be allowed, it was only to the extent of the Appellant's share fixed on prorata basis having a nexus to the area occupied by him. The Assessing Officer on the premise that there was an enduring benefit which would accrue to the Appellant over a period of time, determined the said expenditure as on capital account and hence was not allowable in computing the profits chargeable under the head "profits and gains of business or profession". The Assessing officer concluded that of out the total expenditure of Rs. 17,63,280/, the Appellant was entitled to a deduction only of Rs.3.26 lacs and even the said expenditure was not allowable as a deduction in view of the fact that it was in the capital field. The Assessing Officer accordingly directed the allowance of the deduction by way of depreciation in respect of the said amount of Rs.3.26 lacs. Being aggrieved by the said order dated 31st January 2000 passed by the Assessing Officer, the Appellant had preferred an Appeal to the Commissione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... airs. Therefore, in any event according to the revenue the entire amount cannot be allowed as deduction. The Tribunal inter alia held that even though the Appellant was a trustee as well as the beneficiary of the trust, he was occupying a part of the building for the purpose of his business. Relying upon a Judgment of the Apex Court in CIT vs. Madras Auto Stores, 23 ITR page 468, the Tribunal has held that the expenditure incurred by the Appellant was the expenditure in the revenue field. The Tribunal on the premise that the fundamental duty to carry out the repairs of that of the Landlord and that the other tenants had also a duty to share in the expenditure and further the Tribunal was of the view that the Appellant was entitled to deduction only on prorata basis. The Tribunal proceeded on the basis that in fact the repair work was also carried out by the Landlord trust but the expenditure was debited in the books of account of the Appellant. The Tribunal was of the view that the tenant incurring the expenditure for the entire building cannot be treated as expenditure wholly and exclusively for the purpose of the tenants business. The Tribunal, therefore, has by its said Ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ary to show that the expenditure was a profitable one or that in fact any profit was earned : Moore V. Stercarts and Lloyds and Usher's Case (c) it is enough to show that the money was expended "not of necessity and with a view to a direct and immediate benefit to the trade, but voluntarily and on the ground of commercial expediency, and in order indirectly to facilitate the carrying on of the business." British Insulated and Helsby Cables Ltd. V Anthrton and(d) beyond that no hard and fast rule can be laid down to explain what is meant by the word "solely." Clauses (b) and (d) of the said principles according to the Learned Counsel are relevant for the purpose of the instant Appeal. 9 The Learned Senior Counsel for the Appellant has further relied upon the Judgment of the Apex Court in Commissioner of IncomeTax, Bombay v/s. Walchand and Co. Private Ltd. , reported in 9167 I.T.R. (SC) 381 wherein the Apex Court has held that in applying the test of commercial expediency of determining whether an expenditure was wholly and exclusively laid out for the purpose of the business, reasonableness of the expenditure has to be adjudged from the point of view of the businessman ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions. It would be gainful to reproduce the part of the order of the Tribunal wherein reasons have been mentioned by the Tribunal as to why the Appellant would be entitled to only a proportionate deduction on prorata basis. The same is reproduced hereunder. "16. Now coming to the quantum of the expenditure we have to see that even though the assessee is carrying on business in his individual capacity, he is a beneficiary of the trust as well as trustee of the trust which owned the building. Therefore, there is no much conviction in stating that the landlord of the building was not willing to cooperate with the assessee in undertaking the repairing work of the roof and thereby the assessee alone was constrained to shoulder the entire expenditure. Other tenants also, if at all so warranted, had a duty to share the expenditure. It is the basic duty of the landlord to undertake the repair work. Here in this present case, even though the expenditure has been claimed by the assessee as an individual business man, the trust which owned the building had to repair it. Therefore, it is also possible, not erroneously, to hold that in fact the debited in the books of account of the assessee. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction under subclause (i) of claue (a) of section 30, in the cae of rent, shall be such amount as the (Assessing) Officer may determined having regard to the proportionate annual value of the part used for the purpose of the business or profession, and in the case of any sum paid for repairs, such sum as is proportionate to the part of the premises used for the purpose of the business or profession; (b) the deduction under clause (b) of section 30 shall be such sum as the (Assessing) Officer may determine having regard to the part so used. (2) Where any building, machinery, plant or furniture is not exclusively used for the purposes of the business or profession, the deductions under subclause (ii) of clause (a) and clause (c) of section 30 clauses (i) and (ii) of section 31 and (clause (ii) of sub section (1)) of section 32 shall be restricted to a fair proportionate part thereof which the (Assessing) Officer may determine, having regard to the user of such building, machinery, plant or furniture for the purposes of the business or profession." It is required to be mentioned that the Appellant is occupying the 4th floor flat below the terrace for his residence and as mentioned her ..... X X X X Extracts X X X X X X X X Extracts X X X X
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