TMI Blog2022 (12) TMI 575X X X X Extracts X X X X X X X X Extracts X X X X ..... dent by: Shri Alok Kumar, CIT DR ORDER PER T.R. SENTHIL KUMAR, JUDICIAL MEMBER: This appeal is filed by the Revenue against the order dated 09.07.2018 passed by the Commissioner of Income Tax (Appeals)- 8, Ahmedabad relating to the Assessment Year 2015-16. 2. Solitary ground raised by the Revenue is that the Ld. CIT(A) erred in law and on facts in treating capital expenditure of Rs. 10,48,11,003/- as revenue expenditure. 3. The brief facts of the case is that the assessee is engaged in the business of sales and services of Skoda cars and spares. The assessee company during this Financial Year has renovated its four showrooms at Ahmedabad, Rajkot, Surat and Baroda as per Skoda Company s Corporate Identity Look Policy. The assessee had to change the signboard, logo, color, tiles, furniture, etc. completely with that of the old one. Thus, the assessee claimed under repair and maintenance of building expenses account, Rs. 11,29,19,528/-. The Assessing Officer issued a show-cause notice why the renovation expenses of four showrooms should not be treated as capital expenditure and allow appropriate depreciation. In response the assessee replied that it has not br ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 Fees to various Consultants 7,48,965/- 7 Bills of Design Council, Shreeji Construction, and other labour charges for re-doing plaster, breaking/shifting, etc. 37,85,257/- 8 Misc. expenses 1,33,161/- Total 1,11,58,689/- It is to be appreciated that by incurring these expenses, the appellant has not acquired any new capital asset. Out of the major expenses of Rs.71,86,752/-, only 45% is disallowed being capital expenses which is not in accordance with law. Under the scheme of the Income Tax Act, the expenses can be either a capital expenditure or revenue expenditure but there is no provision to hold very same expenditure partially as capital and partially as revenue. The treatment to 45% expenditure as capital is purely subjective and without any basis. If major part thereof i.e. 55% is considered as revenue expenditure, it supports the view of the appellant that the entire expenditure which is purely for renovation of the existing bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o existence This test is fulfilled as no new asset has come into existence but the expenses incurred are only for preserving or maintaining an already existing asset. Another test noted in the said decision is that they are such repairs as are attended to as when need arises which must be by test of commercial expediency. Here also, this test is complied with. The expenses are incurred on the basis of Dealer Development Guide set-up by Honda Company and since the assessee being in the sole business of dealing in Cars / Spares of Honda Company can legitimately think it expedient to prepare its show room, workshop in accordance with such standards The Hon'ble Supreme Court in the case of Alembic Chemical Works Co. Ltd. V/s. CIT 177 ITR 377 held, It would, in our opinion, be unrealistic to ignore the rapid advances in researches in antibiotic medical microbiology and to attribute a degree of endurability and permanence to the technical know-how at any particular stage in this fast changing area of medical science. The state of the Art in some of these areas of high priority research is constantly updated so that the know-how cannot be said to be the element of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be build as a necessity for running of the business, the expenses were incurred more in the nature of repair rather than creation of a new capital asset and hence allowable as revenue expenses. In the case of Ahmedabad Mfg. Calico Pvt. Ltd. V/s. CIT 162 ITR 800, the Hon'ble Gujarat High Court was considering the case as to whether the expenses incurred for reconditioning of the existing room to accommodate IBM Machines was capital or revenue expenditure. The authorities below observed that though new room has been created, since no new asset came into existence but merely to accommodate installation of IBM machine, the expenses were held to be revenue in nature. Most of the decisions of Hon'ble Supreme Court as well as Hon'ble Gujarat High Court supports the case of the assessee. Since in the present case, the expenses were incurred for efficiently using the existing space in a better manner as also to suit the principles requirement, and since no new floor area has been added or any capital asset has come into existence and hence, the expenses on repairs renovation are allowable as revenue expenditure. The AO was also not justified in partially treati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he appeal of the Revenue is dismissed. 5. Aggrieved against the same the Revenue is in appeal before us. None appeared on behalf of the assessee in spite of services of notice through Income Tax Department that too by affixture. So with the help of the Ld. D.R. we proceed with to decide this appeal with materials available on record. The Ld. D.R. appearing for the Revenue supported the order of the Assessing Officer and pleaded that the expenses are capital in nature. However, he could not produce any contra judgment as relied by the Ld. CIT(A) in its order or any judicial pronouncement in favour of the Revenue. 6. We have given our thoughtful consideration and perused the materials available on record. On perusal of the material and the facts is the case in Landmark Automobiles Pvt. Ltd. are identical in nature. The Coordinate Bench followed jurisdictional High Court judgment in the case of Desai Bros. (cited Supra) and other High Court judgments. In our considered view this issue is no more res integra. Therefore, respectfully following the ratio of the judgment rendered by the Coordinate Bench in the case of Landmark Automobiles Pvt. Ltd. we have no hesitation in confir ..... X X X X Extracts X X X X X X X X Extracts X X X X
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