TMI Blog2016 (5) TMI 426X X X X Extracts X X X X X X X X Extracts X X X X ..... the cost of repairs to the business, the amounts paid on such repairs is to be allowed as deduction under section 30(a)(i) of the Act. As regards the restriction to the effect that only current repairs can be allowed, it is set out in section 30(a)(ii). It refers to a situation when the premises are occupied by the assessee otherwise than as a tenant. Clearly section 30(a)(ii) does not apply to the facts of the case. The assessee was occupying the premises as a tenant. In this view of the matter, it cannot be said that the repair expenses which are to be allowed as deduction when the assessee is restricted to only current repairs. As stated earlier, on a careful perusal of the material before us, we are satisfied that the repair expenses incurred by the assessee, which have been termed as leasehold improvement, are revenue expenditure in nature. - Decided in favour of assessee - I.T.A. No.1432/Mum/2014 - - - Dated:- 31-3-2016 - Pramod Kumar AM and Pawan Singh JM For The Appellant : M.P. Lohia, Nikhil Tiwri Ankit Kochar For The Respondent : Mallikarjun Utture ORDER Per Pramod Kumar, AM: By way of this appeal, the assessee appellant has challenged corr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eeded to decline deduction of an amount of ₹ 9,00,511/- and granted deprecation @ 5% (being half of 10% i.e. addition made during the second half) which works out to ₹ 45,026/- and the balance amount of lease hold improvement i.e. ₹ 8,55,485/- was disallowed. Aggrieved by the stand so taken by the Assessing Officer, the assessee carried the matter in appeal before the ld. CIT(A) but without any success. Learned CIT(A) confirmed the findings of the Assessing Officer and observed as follows :- 3.4 I have considered the facts of the case, submissions of the appellant as against the findings/observations of the AO in the order u/s.143(3) of the I.T. Act. The contentions and submissions of the appellant are being discussed and decided here in under: i. The appellant contended that as per lease agreement dated 22.2.2007 and 5.12.2007 it has taken office premises on lease which was renovated. In this connection it is mentioned that in the copy of lease deed filed it is nowhere mentioned that the appellant would be responsible for undertaking repairs of the premises. ii. The appellant further contended that the AO has disallowed the amount u/s. 32 read wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee otherwise than as a tenant. Clearly section 30(a)(ii) does not apply to the facts of the case. The assessee was occupying the premises as a tenant. In this view of the matter, it cannot be said that the repair expenses which are to be allowed as deduction when the assessee is restricted to only current repairs. As stated earlier, on a careful perusal of the material before us, we are satisfied that the repair expenses incurred by the assessee, which have been termed as leasehold improvement, are revenue expenditure in nature. In view of these discussions, as also bearing in mind entirety of the case, we deem it fit and proper to delete the amount of ₹ 8,55,485/-. Assessee gets the relief accordingly. Ground no.1 is thus allowed. 6. Ground no.2 was not pressed by the assessee and is dismissed as such. 7. In ground no.3, the assessee has raised the following grievance:- On the facts and Circumstances of the case and in law, the learned C.I.T. (A) erred in confirming the addition of ₹ 13,49,009/- on account of transfer pricing adjustment without appreciating the facts that it was the prerogative of the assessee to decide whether expenditure or serv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7.1 The TPO has denied the claim of the assessee on the ground that the assessee failed to establish the need and actual avail of services from the AE. It is pertinent to note that when the services provided by the assessee to its clients involves highly technical services then the nature of business activity of the assessee itself demonstrates the requirement of technical design engineer in the field. As the assessee was not having such experienced design engineers in its own organization then availing the services for performing the business activity is otherwise part and parcel of the business activity of the assessee. Thus, the mode and actual service availed by the assessee cannot be doubted keeping in view the nature of business activity and the peculiar fact that the assessee is at its initial stage of providing services that too by the import of the said system and then to provide to the clients. Therefore, when the assessee has produced the relevant record including the nature of work, the design of the work to be carried, the technical nature of the services and assessee s inability to execute such a service on its own then determining the ALP of the expenditure by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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