TMI Blog2013 (5) TMI 438X X X X Extracts X X X X X X X X Extracts X X X X ..... e profitably run its business. One day, the leased land has to go back to the MHADA. Hence, the impugned expenditure constitutes revenue expenditure - appeal of the assessee allowed pro-tanto. - ITA. No. 8418/M/2011 - - - Dated:- 5-4-2013 - Shri D. Karunakara Rao And Dr. S. T. M. Pavalan,JJ. For the Appellant : Shri Satish R. Mody For the Respondent : Shri Sanjay Agarwal, DR ORDER Per D. Karunakara Rao, AM:- This appeal filed by the assessee on 12.12.2011 is against the order of CIT (A)-17, Mumbai dated 13.9.2011 for the assessment year 2008-2009. 2. In this appeal, assessee raised the following grounds which read as under:- "1. On the facts and in the circumstances of the case and in law, the Ld CIT (A) erred in upholding the disallowance of Rs.3,38,240/- u/s 14A r.w.r.8D. (a) Without prejudice to the above, the ld CIT (A) erred in upholding the above addition calculated by including other financial charges of Rs. 3,19,885/- in the formula used for calculating the interest to be disallowed under rule-8D and upholding disallowance of Rs. 28,430/- as part of the total disallowance of Rs. 3,38,240/-. (b) Without prejudice to the above, Ld CIT (A) erred i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the expenditure pertaining to playground, AO noticed that assessee paid a amount of Rs. 25,21,000/- to a contractor by name M/s. Era Infra Engineering Ltd towards the expenditure on play ground filling, leveling, removing of bushes and repairing of gutters etc and claimed the same as an allowable revenue expenditure. In this regard, assessee submitted that the assessee runs an International School, for which there is need for a play ground for the students. Therefore, assessee got an allotment of piece of land from MHADA on lease basis for a period of 15 years with yearly rent payable. It is claimed that it is for the assessee to repair the said land fit for use as play ground and spend for the removal of bushes and the trees and also spend for their disposal, land filling with soil, leveling and also for spend for construction of compound walls and establishing the proper drainage etc. For these purposes, assessee engaged M/s. Era Infra Engg. Ltd as per the agreed terms and conditions. As per the assessee, since, the ownership of the land is with MHADA and assessee is only a lessee, the expenditure in question cannot be capitalized. Ex consequenti, assessee preferred to write off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , un-reconciled amount from SBI is confirmed. Aggrieved with the above, assessee filed an appeal before the Tribunal with the above mentioned grounds. 9. During the proceedings before us, on the issue of applicability of section 14A and the computation thereof as per Rule-8D of Income Tax Rules, 1962, Ld Counsel mentioned that the income in question is not an exempt income as the same is not covered by the provisions of section 10(38) of the Act. In this regad, Ld Counsel mentioned that the issue may be set aside to the files of the AO for examining the income in question is whether exempt income or otherwise. We find no reason to reject the claim of the assessee for the limited purpose of examining the issue if the dividend income in question does not constitute exempt income for forming part of the total income. In case, the dividend income is not completely examined, it is obvious that the provisions of section 14A do not come into picture. Therefore, the AO is directed to examine the issue afresh and re-adjudicate the same after considering the relevant provisions as well as existing laws if any in force. AO shall grant a reasonable opportunity of being heard to the assessee. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The quantum of expenditure was not relevant for determining the issue in question. On appreciation of evidence both the fact finding authorities, i.e., the Commissioner of Income-tax (Appeals) as well as the Tribunal had found that the expenditure in question was revenue expenditure. The expenditure incurred by the assessee was not for the purpose of bringing into existence any asset or advantage but for running the profession effectively and in a smooth manner. The expenditure was deductible. Empire Jute Co. Ltd. Vs Commissioner of Income-tax (SC) Held,_ reversing the decision of the High Court, that the allotment of loom hours, under the working time agreement to different mills constituted not a right conferred but merely a contractual restriction on the right of every mill to work its looms to their full capacity, and purchase of loom hours by a mill had, therefore, the effect of relaxing the restriction on the operation of looms to the extent of the number of working hours per week transferred to it, so that the transferee-mill could work its looms for longer hours than permitted under the working time agreement and increase its profitability. The expenditure incurred by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order of the Special Bench and find that the same is in connection with the payment of premium. We find that the impugned issue in hand is not on the leased premium but the expenditure incurred in connection with the bringing out fitness to the leased asset. The expenditure of Rs.25,21,000/- has no segment of leased premium which is undisputed. In that sense, the Special Bench decision in the case of Mukund Ltd (supra) has no applicability to the present issue. 13. So far as their enduring nature is concerned, it is relevant to mention here the ratio of the judgment in the case of Empire Jute Co Ltd (124 ITR 1)(SC) that 'even where expenditure is incurred for enduring benefit, the expenditure may be revenue expenditure unless the advantage is in the capital field. If advantage was merely facilitating asessee's trading operation or enabling it to efficiently or more profitably run its business, leaving the fixed capital untouched, the expenditure will be revenue expenditure. It was observed that by procuring a playground on lease basis and expending on the said land for making fit for use for students of the school, in our opinion does not constitutes addition to the profit making ..... X X X X Extracts X X X X X X X X Extracts X X X X
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