SH. KRISHAN KUMAR BUDHWAR,HARYANA vs. ITO, REWARI

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ITA 723/DEL/2016Status: DisposedITAT Delhi09 March 2017AY 2011-126 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that expenses incurred for building repairs and maintenance were revenue in nature and allowable. It also found no reason to reject the assessee's claim of payments made in installments below Rs. 20,000, thus allowing the ground related to Section 40A(3).

What were the facts?

The assessee, a job work contractor, filed a return declaring an income of Rs. 2,11,020. The assessment was completed at Rs. 17,37,100 with additions for building repairs, disallowance under Section 40A(3), and disallowance of loss on sale of fixed assets.

What were the issues?

Whether expenses claimed for building repairs and maintenance are capital or revenue expenditure, and whether payments split to fall below Rs. 20,000 violate Section 40A(3).

Which sections of the Income-tax Act were involved?

Section 40A(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH “SMC”, NEW DELHI

Before: SHRI S.V. MEHROTRA

For Appellant: Shri Ashwani Kumar, CA
For Respondent: Ms. Bedobina Chaudhuri, Sr.DR

per books primarily represented written down value of building. The assessee had explained that the building was more 10-15 years old. The assessee had incurred these expenses throughout the year and since the building was old, therefore, it required regular repairs. Under these circumstances, I am of the considered opinion that the expenses incurred by assessee were only for the purposes of repair and maintenance of building and, therefore, allowable as revenue expenditure. In the result, this ground is allowed.

6.

Brief facts apropos ground no.3 are that the assessee had claimed expenses on account of vehicle running and maintenance of Rs.2,20,891/-.

1.

From the details furnished by assessee, the Assessing Officer noticed that assessee had incurred expenses on 22.01.2011 of Rs.1,71,354/- (83519+87835) to M/s Harsh Auto Care for car repair. The Assessing Officer noted that the assessee had shown the payments in cash for less than Rs.20,000/- from 22.01.2011 to 10.03.2011 in its ledger account on different dates. Keeping in view the details of M/s Harsh Auto Care and vouchers of the same amount and same bill, he concluded that whole payment was made in one go and this was an afterthought to bifurcate the payments below Rs.20,000/-. He, accordingly, held that assessee had violated the provisions of section 40A(3) and disallowed the sum of Rs.1,71,354/-. Ld. CIT(A) confirmed the Assessing Officer’s action after allowing the claim of Rs.32,533/- which was payable as on 31.03.2011.

7.

I have considered the submissions of both the parties and perused the record of the case. In the present set of facts, the Assessing Officer primarily doubted that the payment was made in one go but was split over different dates because payment had been made against two bills of M/s Harsh Auto Care of Rs.83,519/- plus Rs.87,835/-. The credibility of assessee’s regular books of account could be rejected only by bring on record a concrete evidence from M/s Harsh Auto Care by Assessing Officer.

It is true that the onus lies on assessee to substantiate its claim but at the same time if assessee has discharged its primary onus then it is for the Assessing Officer to bring evidence on record to contradict the assessee’s claim. It is well settled law that suspicion, howsoever strong, cannot replace the evidence. I, therefore, do not find any reason for rejecting the assessee’s claim of payment being made for less than Rs.20,000/- over the period as

per ledger account. In the result, this ground is also allowed.

8.

Resultantly, the appeal of the assessee is partly allowed. Order pronounced in the open court on this 09th day of March, 2017.

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