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M/s PEAREY LAL AND SONS (P) Ltd. Versus DCIT, CIRCLE 14 (1) , NEW DELHI AND DCIT, CIRCLE 19 (2) , NEW DELHI Versus M/s PEARLEY LAL AND SONS PVT. LTD.

2017 (1) TMI 621 - ITAT DELHI

Disallowance of expenses pertaining to guest house maintenance and repair maintenance - it relates to cash payment which the assessee did not provide vouchers/bills - Held that:- It is evident that the disallowance made is completely ad-hoc without specific finding as to how the expenditure incurred is not for business purpose. It is not the case of the AO that the expenditure claimed is not genuine. Since all bills/vouchers and ledger accounts were before the AO, it would have been appropriate .....

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n all bills/vouchers etc. were produced before the AO - Decided in favour of assessee - Addition on account of repair and maintenance - Held that:- CIT(A) has perused the bills/vouchers produced before the AO and noted that expenditure incurred is purely on repair and maintenance of the roof and outer areas and cannot be treated as capital expenditure providing benefit of enduring nature or leading to creation of capital asset. Therefore, Ld. CIT(A) has rightly held that the disallowance of .....

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s incurred for dismantling and grading of roof. It appears that entire roof has been recast. Further note that Ld. CIT(A) has treated a sum as revenue in nature and therefore the disallowance made by the AO was rightly directed to be deleted which does not need any interference on our part. - ITA No. 6784/Del/2015, ITA NO. 6863/Del/2015 - Dated:- 9-1-2017 - SHRI H.S. SIDHU, JUDICIAL MEM FOR THE DEPARTMENT : SH. R..M. MEHTA, CA FOR THE RESPONDENT : SH. ANIL KUMAR SHARMA, SR. DR ORDER The Assess .....

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ure. 2. That the appellant reserves to itself, the right to add, alter, amend, substitute, withdraw and / or any ground(s) of appeal on or before the date of hearing. 2. The grounds raised by the Revenue in its Appeal read as under:- 1. On the facts and in the circumstances of the case, the erred in deleting disallowance of ₹ 4,31,517/- made by the AO on account of expenses claimed in the profit and loss account under the head repair and maintenance by ignoring the fact the expenses were n .....

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stances of the case, the Ld. CIT(A) has erred in deleting the part disallowance of ₹ 24,66,305/- out of ₹ 32,26,630/- made by the AO on account of expenses claimed in the profit and loss account under the head repair and maintenance treating it as capital in capital in nature by not appreciating the fact that the expenditure resulted in an enduring nature. 4. The appellant craves to be allowed to add any fresh ground(s) of appeal and / or delete or amend any of the gorund(s) of appea .....

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of the notice, copy of ITR allongwith all financial details were filed. Subsequently, notice u/s. 142(1) of the Act alongwith questionnaire was issued and information in support of its claim was called for. In response thereto, the assessee s AR attended the proceedings from time to time and filed the details/information. During the period, the assessee company is stated to be engaged in the business of retail distribution of petrol, LPG and related products, fast food business and letting of pr .....

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and partly allowed the appeal of the assessee. 5. Against the order of the learned CIT(A) the Assessee & Revenue are in Cross appeals before the Tribunal. 6. Ld. Counsel of the assessee has stated that action of the Ld. CIT(A) in treating a sum of ₹ 11,18,840/- as capital expenditure being the routine repair expenses incurred on leased premises used for business purposes and which did not bring into existence any asset of an enduring nature. Therefore, the same may be deleted. 7. On th .....

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nce on the ground that it relates to cash payment which the assessee did not provide vouchers/bills. The AO has however stated that ledger account and bills/vouchers for the impugned expenditure were furnished by the assessee vide letter 10.11.2014. The assessee had also stated before the AO that the expenses incurred were normal routine business expenses. The AO however, was of the view that in the absence of proper vouching, the claim of expenses is not entirely correct. He therefore, disallow .....

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was made. The assessee had incurred the expenditure on a lease property used as holiday home for the employees of the company. The expenses incurred in cash or through DD are towards electricity, water, house tax charges etc. and are for business purposes. Similar is the nature of expenses claimed under repairs and maintenance. Therefore, I am of the view that Ld. CIT(A) has rightly held that there is no justification for making an ad-hoc disallowance when all bills/vouchers etc. were produced b .....

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ouse disallowed ₹ 11,83,955/- by holding the same to be expenditure of capital nature. I find that Ld. CIT(A) has perused the bills/vouchers produced before the AO and noted that expenditure incurred is purely on repair and maintenance of the roof and outer areas and cannot be treated as capital expenditure providing benefit of enduring nature or leading to creation of capital asset. Therefore, Ld. CIT(A) has rightly held that the disallowance of the impugned expenditure by treating the sa .....

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at 42, Janpath used by the assessee as its office by treating it as capital expenditure. I find that Ld. CIT(A) has observed that the expenditure has been incurred on painting, polishing, repair of false ceiling, water proofing treatment, tile work, dismantling of roof and other miscellaneous repairs. On careful examination of the bills/vouchers, it was noted that sum of ₹ 11,18,840/- is incurred for dismantling and grading of roof. It appears that entire roof has been recast. I further n .....

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