TMI Blog2019 (10) TMI 388X X X X Extracts X X X X X X X X Extracts X X X X ..... incur depending upon the nature of legal advice they may require. Therefore, in our considered view, all these expenditures are relevant for the purpose of business. Therefore, we are in agreement with the findings of CIT(A) and accordingly, ground raised by the revenue on this count is dismissed. Maintenance expenditure - In this AY, as per the concession agreement entered by the assessee, with the MP Govt., assessee has to maintain roads on periodical basis and at least it has to carry out relaying of roads as per the agreement on regular basis. Assessee has incurred expenditure on maintenance over the years and the department has always accepted the same as revenue expenditure and only in this AY, AO has taken it as capital expenditure considering the quantum of expenditure without any basis. Since the assessee is maintaining roads in order to collect tollway fees, it is the responsibility of the assessee to maintain the roads as per the concession agreement. Therefore, this is the regular business expenditure, we are inclined to accept the findings of CIT(A) in this regard. - Appeal of revenue disallowed. - ITA No. 1273/Hyd/2018 - - - Dated:- 9-8-2019 - Smt. P. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ness and hence, he disallowed the amount of ₹ 20,82,628/-. 3.2 On verification of the statement of schedule for Routine Maintenance, the AO noticed that the assessee company has claimed an amount of ₹ 5,93,30,447/-. When the AO asked the same to explain, in response assessee explained that it is for overlay works and also stated that as per the agreement for every three years they have to lay road on already laid. AO observed that, hence the above expense are nothing but to meet the duty of the assessee company as per the agreement entered into and whatever expenses spent on this overlay works should be treated as capital in nature but not current repairs. If it is current repairs it would be small in nature but not in crores worth unless they lay road and undertook any big work which render the assessee company enduring benefit of business, it is not necessary to spend such a huge amount for administration in addition to the above amount the assessee claimed expenses separately for other departments of company. He, therefore, was of the view that the above amount has to be treated as capital in nature and as per the directions and circular of the Hon&# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment, it was the responsibility of the appellant company M/s. Rewa Tollway Private Limited, to maintain the road project during the concession period. In this context, the appellant company, incurred operations and maintenance expenses for the purpose of business and for the contractual obligations entered with Madhya Pradesh Rajya Sethu Nirman Nigam Limited (which was a Government of Madhya Pradesh undertaking). It was the responsibility of the appellant company to maintain the roads in terms of the concession agreement. The appellant company had incurred from the year of operations the maintenance expenditure. It was brought to note by the appellant at the time of the appeal that the department had accepted the maintenance expenditure as revenue expenditure. The Assessing Officer had held the expenses incurred to be capit.al in nature and not current expenses. The operational expenses incurred by the appellant based on the contractual agreement were to be treated as revenue expenditure. In this context, the appellant said that this is as per the contractual agreement. The Assessing Officer's observation in para-e of the assessment order that such work should be treated as cap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mitted that all these expenditures were actually incurred by the assessee in order to secure bank guarantee and retainer fees for the lawyers, which are essential in this line of business. 9.1 With regard to travel expenditure, he submitted that all these expenses are domestic travel by air and train, which are relevant for the business and incurred for entertainment of visitors and travelling by the company staff. 9.3 With regard to ground No. 3, he brought to our notice the concession agreement entered by the assessee with MP Rajya Setu Nirvana Nigam Ltd. and brought to our notice Clause 18 i.e. operation and maintenance clause, as per which, assessee has to incur with regard to maintenance expenditure on a periodical basis. He submitted that all these expenditures are explained in detail before the CIT(A) and he supported the order of ld. CIT(A). 10. Considered the rival submissions and perused the material on record. We notice that AO has disallowed the travel expenditure considering it as foreign travel and legal expenditure as AR of the assessee has not appeared at the time of verification of the vouchers, however, accounta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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