TMI Blog2014 (12) TMI 294X X X X Extracts X X X X X X X X Extracts X X X X ..... rected. Expenses on Air Condition and renovation of lease hold premises disallowed – Held that:- Out of amount of ₹ 4,80,000/- in respect of painting and ₹ 1,24,785/- in respect of sign board has been allowed by AO as Revenue expenditure - The balance ₹ 38,14,000/- was held to be capital expenditure, which has been allowed by the ld CIT(A), except a sum of ₹ 5,50,000/- on ducting of air condition - The nature of expenditure reveals that they were in respect of interior work of an office premises - The office premise of the assessee is a leased premise - The lessor has provided the air-conditioning - Only the ducting was carried out by the assessee - no asset was created so as to hold the expenditure to be capital expenditure – relying upon COMMISSIONER OF INCOME TAX Versus M/S AMWAY INDIA ENTEPRISES [2011 (11) TMI 4 - DELHI HIGH COURT] expenditure incurred and claimed was for carrying out interior of a leased premise is revenue expenditure – Decided in favour of assessee. - ITA No. 331/Del/2013, ITA No. 181/Del/2013 - - - Dated:- 5-12-2014 - Shri S. V. Mehrotra And Shri A. T. Varkey,JJ. For the Appellant : Sumant Chadha, CA For the Responde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equiring daily analysis of market trends, research and analysis. Decisions relate to acquisition holding period and redemption of investment at the opportune time. These decisions are generally taken in the meetings of Board of Directors, for which administrative expenses are incurred. The Hon'ble Bombay High Court in the case of Godrej Boyce Manufacturing Co. Ltd. vs. DCIT 328 ITR 81 has held that rule 8D is applicable from AY 2008-09. Rule 8D considers three circumstances under which disallowance is required to be made which are as under:- (I) The amount of expenditure directly relating to income which does not form part of total income; (II) Secondly, proportionate disallowance of interest which is not directly attributable to any particular income or receipt, and; (III) Thirdly, an amount equal to one-half percent of the average of the value of the investment, income from which does not form part of the total income, as appearing in the balance sheet of the assessee, on the first day and the last day of the previous year. Disallowance has been made by the AO in terms of clause (iii) on account of indirect expenses. The contention of the appellant that no di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Section 14A cannot be invoked when no exempt income was earned. The second decision is of the Gujarat High Court in Commissioner of Income Tax-I Vs. Corrtech Energy (P) Ltd. [2014] 223 Taxmann 130 (Guj). The third decision is of the Allahabad High Court in Income Tax Appella No.88 of 2014, Commissioner of Income Tax (ii) Kanpur, Vs. M/s. Shivam Motors (P) Ltd. decided on 05.05.2014. In the said decision it has been held: As regards the second question, Section 14A of the Act provides that for the purposes of computing the total income under the Chapter, no deduction shall be allowed in respect of expenditure incurred by the assessee in relation to income which does not form part of the total income under the Act. Hence, what Section 14Aprovides is that if there is any income which does not form part of the income under the Act, the expenditure which is incurred for earning the income is not an allowable deduction. For the year in question, the finding of fact is that the assessee had not earned any tax free income. Hence, in the absence of any tax free income, the corresponding expenditure could not be worked out for disallowance. The view of the CIT(A), which has been affirm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 34,32,600/- out of expenses claimed by the appellant as being capital in nature. 12. On appeal, the ld CIT(A) held that the perusal of the details of expenses filed by the appellant show that the expenses have been incurred on renovation and repairs on leased premises. He held that these expenses are expenses which have been incurred during the regular course of business. No expenditure of capital nature is observed in the expenses. He concluded that the AO has not brought any facts on record to show that the appellant was deriving any benefits of enduring nature by incurring these expenses. 13. In the light of the above, he concluded as under In the instant case, it is observed that the appellant had incurred expenditure on walled partitions, ceilings, flooring works, light fittings, telephone line setting, fire fighting works, glass, AHU ducting and civil works. The hon ble High Court in the case of M/s. Escorts Finance Ltd. (206 (IT4) GJX-0341-Del) has held that expenditure incurred on providing wooden partition, painting, glass work another repairs to the lease hold premises was revenue expenditure. In the case of M/s. Modi Spinning and Weaving Mills Ltd. 200 ITR 544 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 50,000 Wall Partition 1 445,000 445,000 Ceilings 1 519,000 519,000 Flooring work 1 650,000 650,000 ELEC C/ Lighting Fitting 1 850,000 850,000 Networking/ Tel Line setting 1 210,000 210,000 Painting work (plastic/ Duco 1 480,000 480,000 AHU Ducting 1 550,000 550,000 Fire Fighting work s 1 240,000 240,000 Sinage Board/ Sheet/ETG/Glass 1 124,785 124,785 Total 44,18,785/- 16. Out of above an amount of ₹ 4,80,000/- in respect of painting and ₹ 1,24,785/- in respect of sign board has been allowed by AO as Revenue expenditure. The balance ₹ 38,14,000/- was held to be capital expenditure, which has been allowed by the ld Pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that is, was it incurred for maintenance or preservation of an asset or was it expended otherwise. It thus concluded tha6 if the expenditure incurred is made on revenue account or otherwise one would have to bear in mind the nature of the expenditure, that is, was it incurred for maintenance or preservation of an asset or was it expended otherwise. It thus concluded that if the expenditure was of the former kind it would be in the nature of a revenue expenditure. In the very same judgement, the observations made in Gulamhussein Ebrahim Matcheswalla Vs. CIT ITAs 1344/2009 and 1363/2009 Page 4 of 5 (1974) 97 ITR 24 (Bom) were also noticed whereby, the court rejected the submission that it is the amount spent on repairs which would determine the nature of the expenditure. 6.3 Therefore, having regard to the principles laid down in the aforementioned judgment and the nature of the expenses in issue, we are of the view that the revenue s appeal, on this issue, as well would have to be rejected. 17. In the light of the ratio laid by the jurisdictional High Court, we conclude that expenditure incurred and claimed was for carrying out interior of a leased premise on the facts of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
