TMI Blog2014 (5) TMI 35X X X X Extracts X X X X X X X X Extracts X X X X ..... 8D is w.e.f. assessment year 2008-09 as per the decision of Godrej & Boyce Mfg. Co. Ltd. Vs. DCIT, [2010 (8) TMI 77 - BOMBAY HIGH COURT] - the matter has been remitted back to the AO for fresh adjudication in the subsequent assessment year – Decided in favour of Assessee. Taxability of income - Income from publication in yellow pages – Held that:- The revenue is to be booked when the work is completed - the work undertaken gets spilled over in the next year, wherein, the assessee books its revenue & declares it - if the orders of the revenue authorities are to be sustained, the department will have a revenue gain, because, the AO has not made any adjustment to the income pertaining to the preceding year and has been booked in the current year - In effect, the assessee is being taxed for the preceding year, and as per the orders, for the current year as well - to keep the consistent approach and most importantly there being no revenue loss, the view of the revenue cannot be accepted – thus, the order of the CIT(A) set aside and the AO is directed to delete the addition – Decided in favour of Assessee. Disallowance of renovation and civil expenses – Held that:- The premises r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... med of Rs. 1,26,563/-. 5. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in sustaining the disallowance made by the AO of gratuity payment amounting to Rs.13,08,005/-. 6. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in dismissing the ground of appeal pertaining to the disallowance of Rs.43,029/- u/s 144A of the IT Act. 7. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in upholding the action of the AO in disallowing renovation and civil expenses amounting to Rs. 38,56,361/-. 8. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in approving the action of the AO in disallowing an amount of Rs.15,000/- being fees paid to Registrar of companies. 9. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in approving the action of the AO in disallowing Franchisee Termination amounting to Rs. 18,50,000/-. 10. On the facts and in the circumstances of the case and in law, the interest charged u/s 234B of the I.T. Act, 1961 is invalid and bad in law. 11. On the facts an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 007-08, wherein, the coordinate Bench held, 3.4 It is now well settled that the application of Rule 8D is w.e.f. assessment year 2008-09 as per the decision of the Hon'ble jurisdictional High Court in the case of Godrej Boyce Mfg. Co. Ltd. Vs. DCIT, reported in (2010) 328 ITR 81 (Bom). Therefore, respectfully following the aforesaid decision of the Hon'ble jurisdictional High Court, we restore this issue back to the file of the AO. The AO is directed to compute a reasonable disallowance without invoking Rule 8D. Ground No. 4 is allowed for statistical purposes . 15. Since the issue has been restored to the file of the AO in the subsequent assessment year, we feel that to maintain consistency, it would be appropriate that in the current year as well, the issue be restored to the AO, who shall compute the disallowance on a reasonable basis. 16. Ground no. 6 is therefore allowed for statistical purposes. 17. Ground no. 3 pertains to taxability of income of Rs. 9,13,635/- in the year under consideration. 18. The facts are that the assessee brings about classified advertisements giving brief details of the nature of business or profession or service that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso pointed out that since the system is being consistently followed by the assessee, actually there is no revenue loss, because, the receipts of the preceding year is brought to tax in the current year and receipts of the current year is deferred to the next year and so on. He, therefore, submitted that the addition is uncalled for. He placed reliance on the decisions of: S. No. Citation Case Law 1 73 TTJ 738 S. Priyadarshan Vs Jt. CIT 2 33 ITR 684 (Bom) CIT Vs Nagri Mills Co. Ltd 3 304 ITR 295 (AT) (Del) K K Khullar Vs DCIT 4 38 Taxman 100 CIT Vs Excel Ind. Ltd. (SC) 24. The DR on the other hand submitted that the issue has been rightly dealt with by the revenue authorities and no interference is called for. 25. We have heard the arguments and have perused the orders of the revenue authorities and the cases cited before us in the APB. 26. The courts have consistently held in various ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4,74,022 Chennai 9,42,413 38,56,360 From the details produced, the CIT(A) observed that the bills produced pertained to plumbing, painting, flooring and false ceiling. These could not be said to be mere repairs and placed reliance on the decision of CIT vs Saravana Spinning Mills (P) Ltd. reported in 293 ITR 201 (SC) wherein the Hon'ble Supreme Court held that it is of no importance, that the assessee is the owner or user of the premises. If a new asset is come into being, an asset so generated, goes out of the purview of current repairs. 34. The revenue authorities held that actually, the assessee had carried out complete civil construction work in incurring expenditure on paints, sanitary ware, flooring ceiling. Hence it has to be treated as capital expenditure and not current repairs under section 31(1), as claimed by the assessee. 35. Against this, the assessee is before the ITAT. 36. Before us, the AR reiterated that whatever renovation work was done at different locations, was done on leased premises, which the assessee had taken for its office premises. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fixing, dust opening repair, carpentry and plumbing, repair of false ceiling, etc. The assessee has also changed the marble flooring, incurred expenditure on cleaning material, payment to temporary employees, watch and ward, etc. It was held that Expenditure incurred by assessee on leasehold cinema theatre is only for the purpose of carrying on of the business and does not bring any capital asset into existence, therefore, to be allowed as revenue expenditure . Further, in the case of CIT vs Line Pens (P) Ltd, reported in 306 ITR 182, wherein, Hon'ble Delhi High Court, held, In the above case the assessee incurred expenditure on leased premises towards false ceiling, fixing tiles replacing glasses, woodworks partition, replacement of electrical wirings, and replacement of GI pipes etc. and claimed the same as expenditure under section 30(a)(i) of the Act. However the aforesaid expenditure was disallowed by the AO as the same were not in ambit of 'current repairs. In allowing expenditure under section 30(a)(i) of the Act the High Court stated as follows It has not brought about any new asset and more importantly it was not the intention of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Expenditure so incurred by assessee has direct nexus with earning of income from hiring of studios to producers -Receipts on account of use of studio is taxable -Such types of expenditure can, by no stretch of imagination, be capitalized - In no year AO has treated such expenditure to be of capital nature . Conclusion: Expenditure incurred by assessee on painting relaying of damaged floors, partitions, etc, is leasehold premises is allowable as revenue expenditure . 38. The AR therefore, relying on the decisions, submitted that the repairs as undertaken by the assessee on the leased premises, were allowable deduction. He also submitted that the case in hand was distinguishable on facts, and therefore, cannot be relied upon. 39. On the other hand, the DR vehemently supported the orders of the revenue authorities and submitted that the kind of civil work conducted by the assessee fell clearly in the realm of capital expenditure incurred to acquire benefit of enduring nature. The DR also placed reliance on the decisions, wherein, the courts have held that renovation conducted by the assessee to give benefit of enduring nature is a capital expenditure, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e refund of Rs.1,00,000/- interest free deposit. Later on at the time of termination of franchise, the assessee paid another sum of Rs.9,50,000/-, which aggregated to Rs.18,50,000/-. The assessee relying on the decision of CIT vs Eicher Ltd. reported in 302 TTR 249 (Del) claimed that the payment was made for licensee exigency and hence allowable. 48. The CIT(A) while dealing with the issue, observed that the payment made in the year 2000, at Rs. 9,50,000/-, could only be considered as compensation for termination. But he disallowed that too, because no material was furnished. On that basis, the CIT(A) rejected the contentions of the assessee and rejected the claim. 49. The assessee is now before the ITAT. 50. Before us, the AR submitted the termination agreement and appended the same in the APB, to prove its case. 51. At this juncture, we find that there is an agreement for termination, but the amount as claimed is at variance, because as per the impugned orders, the amount paid aggregates to Rs.19,50,000/- and not Rs.18,50,000/-. In these circumstances we feel it appropriate that the issue be examined by the AO afresh, in the light of the documents placed before us and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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