TMI Blog2016 (6) TMI 285X X X X Extracts X X X X X X X X Extracts X X X X ..... er Prashant Maharishi, Accountant Member 1. This appeal is filed by the revenue against the order of Ld. CIT(A) XIII New Delhi vide order dated 30th September, 2010 treating the expenditure on repair and maintenance of ₹ 1,44,25,239/- as revenue expenditure and deleting the addition made by the Ld. AO. The following grounds of appeal have been taken :- i. The order of Ld. CIT (A) is wrong, perverse, illegal and against the provisions of law, liable to be set aside. ii. The Ld. CIT (A) erred in treating the expenditure on repair and maintenance of ₹ 1,44,25,239/- as revenue expenditure and deleting the addition made by the Ld. AO. iii. The appellant craves leave to add, alter or amend any ground of appeal raised above at the time of hearing. 2. The brief facts of the case is that assessee is a company engaged in the business of trading of different products such as carpets, textile, metal, plastic items etc. The company purchases these products locally and exports them. For the assessment year 2005-06 it filed its return of income on 28th October, 2005 declaring an income of ₹ 15,88,70,103/-. During the course of assessment proceedings, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e sample evidences of the expenditure is submitted and not all details of expenditure was provided which does not justify the deletion of the addition. He further stated that the expenditure of ₹ 15,76,638/- incurred on the premises are in the nature of the accumulated repairs, personal expenses of employees, speed money and prior period expenses. He further submitted the details of expenditure at page No. 762, 765, 771, 786-790, 836, 842 846, 866 and 1277 to 1280. These pages show that expenses are of the accumulated repairs, personal expenses of employees, speed money and prior period expenses. Therefore, it was submitted that these expenses should not have been allowed as revenue expenditure and the Ld. CIT (A) has deleted the disallowance after admitting the additional evidences. He relied up on the decision of honourable supreme court in CIT V Savarana Spinning mills Limited [293 ITR 201(SC)] to state that accumulated repairs is a not allowable. He further referred to the decision of Honourable Supreme court in case of Deepak Agro Foods V State Of Rajasthan ( 2008-TIOL-134-SC-CT] and Hon Delhi high court in case of CIT V Jan samparak Advertising Limited [ 56 taxmann.co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T [ 337 ITR 368 (del)] where repairs expenditure was allowed considering the decision of honourable supreme court. 7. In the rejoinder Ld. DR submitted that it has for the first time come to the notice of the revenue that building is not owned by the assessee and Ld. CIT(A) has deleted the addition after admitting the new evidences without going into the details of such expenditure and therefore disallowance deleted by the Ld. CIT(A) is incorrect. He further submitted that it is for the higher authorities to cure the defect in the order of lower authorities and therefore relying on the decision of the Hon ble Supreme Court in the case of M/s. Deepak Agro Foods vs. State of Rajasthan Ors (2008)-TIOL-134-SC-CT and Hon ble Delhi High Court in the case of CIT vs. M/s. Jansampark Advertising and Marketing (P) Ltd. (supra) requested that matter may be set aside back to the file of the AO. He further submitted that according to sub rule 3 of Rule 46A no evidence can be taken into account unless the AO has been given reasonable opportunity to examine and rebut the same. For these propositions, he relied on the decision of Hon ble Delhi High Court in the case of CIT vs. Manish Build We ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid for its office premises to an outsider monthly basis. Ld. CIT(A) has deleted this disallowance after obtaining remand report from the Ld. AO . In the remand report the Ld. AO has reiterated the argument on which disallowance is made. On examination of the evidence submitted by the Assessee and on the basis of remand report submitted by the ld. AO , Ld. CIT(A) has deleted the disallowance in para 2.1 of his order as under :- 2.1 Finding on Ground of Appeal No. 2 :- I have carefully gone through the submissions filed by the appellant as also the break up of the payments under the head EDP maintenance cost: lease rentals: security cost: repair and maintenance of office premises, cleaning charges and upkeep maintenance and office building. Further the bills/vouchers filed by the appellant vide paper book on several occasions and the balance vouchers filed vide letter dated 27.9.10 have also been cross verified by me with reference to the break up of the above expenses. It is clear from the break up and upon verification of vouchers that EDP maintenance cost amounting to ₹ 22,32,507/- has been on account of expenditure towards payment of annual maintenance cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n detail above none of these expenses are capital in nature and therefore the question of these expenses falling within the meaning of section 32 of the IT Act itself and therefore capitalization of these expenses and allowing depreciation thereon do not arise. In view of the above the addition on account of expenditure on repair and maintenance for ₹ 1,44,25,239/- is directed to be deleted. Accordingly 10% depreciation allowed by the AO shall also be withdrawn. According to us these expenditure are purely of revenue in nature and the assessee obtains no advantage of enduring nature. These are purely routine, miscellaneous expenditure, rent charges, cleaning charges and repairs on computer other equipments and cannot be held to capital expenditure by any stretch of imagination. On perusal of the order of LD CIT (A) and details of expenditure shown to us, we are not inclined to uphold that these expenditure are of capital in nature. The contention of the revenue that Hon ble Supreme Court has held in CIT vs. M/s. Saravana Spinning Mills Pvt. Ltd. 293 ITR 201 pleading that the most of the expenditure are not in the nature of current repair expenditure but accumula ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of M/s. Deepak Agro Foods vs. State of Rajasthan Ors (2008)-TIOL-134-SC-CT(supra) do not apply to the facts of this case. Furthermore the request of revenue to set aside the appeal to the file of ld. AO also cannot be accepted as that would not serve any purpose as the ld.AO has got an opportunity to frame its case against the assessee at the assessment stage and further next time at the stage of hearing before CIT (A) where the remand report is submitted. Now we do not find that setting aside issue to the file of ld. AO will serve any purposes as on the first two occasions either the ld OA has not carried on proper examination or on examination nothing adverse against the assessee has been found. On examination of the details of expenditure, we also could not find that any of the expenditure incurred by the assessee are capital in nature. Further, during the course of hearing before us the Ld DR has also referred the various vouchers and bills extensively and could not point out that how these expenditure are capital in nature and what kind of benefit of enduring nature is derived by the assessee. Therefore setting aside the issue back to the file of the ld. AO does not se ..... 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