Aforesaid appeal by assessee for Assessment Year (AY) 2016-17 arises out of the order learned Commissioner of Income-Tax (Appeals)-49, Mumbai [CIT(A)], dated 24/01/2020 in the matter of assessment framed by Ld. Assessing Officer (AO) u/s 143(3) r.w.s. 147 on 28/12/2018.
I.T.A. No. 1704/Mum/2020
IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, MUMBAI
BEFORE HON’BLE SHRI C.N. PRASAD, JM AND HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM (Hearing Through Video Conferencing Mode)
I.T.A. No. 1704/Mum/2020
Assessment Year: 2016-17
Apurva Natvar Parikh & Co. Pvt. Ltd. 411B, Hemu Kalani Marg Near Bhakti Bhavan, Chembur, Mumbai-400 071
DCIT Cen Cir – 7(1), R. No. 657, 6th floor Aaykar Bhavan, M. K. Road, Mumbai-400 020
Appellant by : Shri Madhur Agarwal – Ld. AR
Respondent by : Shri Brajendra Kumar -Ld. Sr. DR
Date of Hearing : 23/09/2021
Date of Pronouncement:01/10/2021
O R D E R
The assessee is stated to be engaged in service sector and entertainment industry. The assessee earned exempt dividend income of Rs.96.29 Lacs and offered suo-moto disallowance of direct expenses for Rs.0.07 Lacs in the return of income. However, Ld. AO making a contrary observation that the assessee did not offer any disallowance, computed aggregate disallowance of Rs.11.88 Lacs as per Rule 8D which is direct expense disallowance u/r 8D(2)(i) for Rs.0.07 Lacs and disallowance u/r 8D(2)(ii) being 1% of the annual average of the monthly averages value of investments, income from which does not or shall not form part of total income. The action of Ld. AO, upon confirmation by Ld. CIT(A), is in further challenge before us.
2. Upon perusal of Profit & Loss account, it transpired that the assessee incurred expenditure of Rs.53.12 Lacs which was in the nature of installation of lawn tennis court, repairs of boundary wall, supply of aluminum sheets, electrical works, purchase of water closet, fabrication charges, hardware items etc. The same was claimed by the assessee as revenue expenditure.
3. Upon perusal of relevant material on record, we find that the expenditure on installation of tennis court is nothing but re-laying of the surface of the courts. The repairs to boundary wall is on account of plastering, painting, water proofing, stone fixing, chemical coating etc. The aluminum sheets are for the purpose of window replacement etc. Similar is the nature of other expenses. All these expenses, in our opinion, are not capital expenditure by which the assessee has acquired any new assets but the same are more in the nature of repair & renovation expenses. The benefit may be enduring in nature but nevertheless, the expenditure could not be termed as capital expenditure. Similar is the view of Tribunal in assessee’s own case for AY 2009-10, ITA No.2093/Mum/2013 order dated 21/12/2017. Therefore, we direct Ld. AO to allow the same as revenue expenditure and reverse the depreciation granted on these items. This ground stand allowed.
4. The appeal stand partly allowed in terms of our above order. Order pronounced on 1st October, 2021.
Please find attached the enclosed file for the full judgement