THE DCIT-2(1), BHOPAL vs. M/S. M.P. STATE TOURISM DEVELOPMENT CORP. LTD., BHOPAL

आदेश /O R D E R

PER SHRI C.M. GARG, JM This appeal has been filed by the assessee against the order of the learned CIT(A)-I, Bhopal, dated 23.3.2016 in First Appeal No. CIT(A)-1/Bhopal/IT-68/14-15 for the assessment year 2011-12.

M.P. State Tourism Dev.Co. ITA No. 685/Ind/2016 2. The sole effective ground raised by the assessee–

appellant reads as follows :-

“Commissioner of Income tax Appeal erred in disallowing Rs. 1,50,00,000/- out of repairs and maintenance expenses of Building, Garden and others in spite of fact that details regarding above have already been furnished atg the time of assessment and before Commissioner Appeal. All the expenses are of revenue nature fully vouched and verifiable by auditors appointed by Learned CIT(A)&AG. Instances as pointed out by Hon'ble CIT(A)-I, Bhopal are of revenue nature and no discrepancies have been pointed out by auditors.

On the facts and circumstances of the case adhoc disallowance is illegal, unjustified and liable to be deleted.”

perused the relevant material placed on record of the Tribunal,

inter-alia, impugned assessment order, first appellate order

and the order of the ITAT, Indore Bench, dated 8.9.2016

passed in the assessee’s own appeal for the assessment year

2009-10 in ITA No. 265/Ind/2013.

submitted that the issue of disallowance out of repairs and

maintenance expenses of building, garden and others has

been decided by the learned CIT(A) against the assessee by

M.P. State Tourism Dev.Co. ITA No. 685/Ind/2016 upholding the order of the Assessing Officer despite the fact

that all the relevant details pertaining to the claim of the

assessee have already been furnished during the assessment

proceedings and first appellate proceedings. The learned

counsel for the assessee further submitted that all the expense

are revenue in nature which were fully vouched and also

verifiable from the report of the auditors appointed by the

Comptroller & Auditor General of India. The learned counsel

for the assessee vehemently pointed out that the instances

pointed out by the first appellate authority for upholding the

disallowance have no basis as no discrepancy has been

pointed out by the auditors in the audit report.

assessee drew our attention towards order of the ITAT, Indore

Bench, dated 8.9.2016 and submitted that the issue of

expenditure on building repairs, other repairs and garden

maintenance has been restored to the file of the Assessing

Officer to decide the same afresh after giving the assessee an

opportunity of being heard. He fairly accepted that in this

order the Tribunal has observed that the learned CIT(A) 3

M.P. State Tourism Dev.Co. ITA No. 685/Ind/2016 following his earlier order for the assessment year 2007-08

has upheld part disallowance of 48.12% of expenditure

treating the same as capital in nature and added the same

back to the total income of the assessee and on the disallowed

part, depreciation has been allowed to the assessee.

supported the order of the Assessing Officer which was

confirmed by the learned CIT(A) by passing the impugned

order. However, he could not controvert this factual situation

that by the order dated 8.9.2016 of ITAT, Indore Bench, for the

assessment year 2009-10, the issue has been restored to the

file of the Assessing Officer with the following directions :-

“14. The first ground taken by the assessee is that the learned CIT(A) was not justified in confirming the action of the Assessing Officer that the sum of Rs.1,31,81,008/- out of total expenditure of Rs.2,36,51,306/- claimed on account of building repairs, other repairs & garden maintenance are of capital nature and disallowable. 15. The Assessing Officer noticed that the assessee company had claimed expenses on buildings repair and maintenance amounting to Rs.1,67,33,389/-.The Assessing Officer noted that the assessee had included expenses of capital nature in the repairs and maintenance expenses. these expenses. However, the Assessing Officer made the 4

M.P. State Tourism Dev.Co. ITA No. 685/Ind/2016 addition. On appeal, the learned CIT(A) following the decision of the CIT(A) for the assessment year 2007- 08 the Assessing Officer disallowed 48.12% of the expenditure treating the same as capital in nature and added back the same to the total income of the assessee. On appeal, the learned CIT(A) considering the fact that the CIT(A) and the Tribunal had confirmed similar disallowance in the earlier years, confirmed the disallowance made by the Assessing Officer. Now the assessee is before us. 16. We have heard both the sides. We find that the Tribunal has confirmed the similar disallowance in the earlier years in the case of the assessee itself. We, therefore, find no flaw in the order of the learned CIT(A) and confirm the same. This ground is, therefore, rejected. 17. The next ground relates to confirmation of depreciation by the learned CIT(A) on Rs.1,13,81,008/- in case the said amount is treated as an expenditure 18. We have heard both the sides. We find that when the learned CIT(A) is justified in treating the expenditure of Rs.2,36,51,306/- as building repairs, other repairs and garden maintenance as capital in nature, therefore, the assessee is entitled to depreciation as per law. We, therefore, set aside the orders of the authorities below and restore this issue to the file of the Assessing Officer to decide the same as per law after giving the assessee an opportunity of being heard.” 7. In view of the above, we are of the view that that learned

CIT DR could not controvert the factual situation that the

impugned disallowance of building repairs, garden and others

has been restricted to 48.12% of the total expenditure for the 5

M.P. State Tourism Dev.Co. ITA No. 685/Ind/2016 assessment year 2007-08, 2009-10 and 2010-11 and for the

assessment year 2009-10 the cross objection of the assessee

challenging the part disallowance of 48.12% has been rejected

by the Tribunal and the issue has been restored to the file of

the Assessing Officer for the limited purpose, by observing that

the assessee is entitled to depreciation on the amount of part

disallowance as per the provisions of the Act and thus the

issue has been restored to the file of the Assessing Officer to

decide the same afresh after affording due opportunity of

hearing to the assessee. Respectfully following the order of the

coordinate Bench of the Tribunal dated 8.9.2016 (supra) in the

assessee’s own case for the assessment year 2009-10, the

issue is restored to the file of the Assessing Officer for the

limited purpose with the direction that the assessee is entitled

to depreciation as per law on the amount of disallowance and

the Assessing Officer is directed to calculate and allow the

same as per the facts, circumstances and provisions of the

Act.

disallowed by upholding the disallowance of 48.12% of total 6

M.P. State Tourism Dev.Co. ITA No. 685/Ind/2016 impugned expenditure and partly allowed for statistical

purposes on the issue of allowability of depreciation on the

amount of disallowance.

The order has been pronounced in open Court on 28th

February, 2017.

Sd/- sd/-

लेखा सद�य �या�यक सद�य (O.P.Meena) (C.M. Garg) Accountant Member Judicial Member

February 28th , 2017. Dn/