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Income Tax Appellate Tribunal, “A” Bench, Mumbai
O R D E R Per B.R. Baskaran (AM) :-
The revenue has filed this appeal challenging the order dated 23.7.2014 passed by Ld CIT(A)-21, Mumbai and it relates to the assessment year 2010-11. The revenue is aggrieved by the decision rendered by Ld CIT(A) on the following issues:- (a) Disallowance u/s 14A of the Act (b) Disallowance made out of repair expenses
We heard the parties and perused the record. The assessee is running a hospital. The first issue relates to the disallowance made u/s 14A of the Act. The assessee received dividend income of Rs.21.74 lakhs and did not make any disallowance u/s 14A of the Act. Hence the AO computed the disallowance as per the provisions of Rule 8D, i.e., he disallowed a sum of Rs.39,97,384/- out of interest expenditure in terms of Rule 8D(2)(ii) and Rs.7,87,129/- out of 2 Asian Heart Institute & Research Centre Pvt. Ltd.
administrative expenses in terms of Rule 8D(2)(ii). In the appellate proceedings, the Ld CIT(A) noticed that the own funds available with the assessee is more than the value of investments. Accordingly he deleted the disallowance made out of interest expenditure under rule 8D(2)(ii) and confirmed the disallowance made under Rule 8D(2)(iii). Aggrieved by the decision of Ld CIT(A), the revenue has filed this appeal.
We notice that the Ld CIT(A) has given finding that the own funds available with the assessee is more than the value of investment. Hence no disallowance is required to be made as per the decision rendered by Hon’ble Bombay High Court in the case of HDFC Bank Ltd (366 ITR 505). Since the decision rendered by Ld CIT(A) is in accordance with the decision rendered by the Hon’ble Bombay High Court, we do not find any reason to interfere with his order passed on this issue.
The next issue contested by the revenue relates to the deletion of disallowance made out of building repairs expenses by the AO treating them as capital in nature. The assessee had incurred building repair expenses of Rs.15,38,563/-. The AO treated the same as capital in nature and accordingly disallowed the said claim. However he allowed depreciation thereon and accordingly the net disallowance worked out to Rs.13,65,679/-. The Ld CIT(A) held that the repair expenses are revenue in nature and accordingly deleted the disallowance. The revenue is aggrieved by this decision of Ld CIT(A).
We notice that the assessee has furnished item wise explanation about the nature of work carried on. A perusal of the same would show that the assessee has incurred expenses on regular items, like Polishing of tiles, temporary cabins, water proofing, gardening, renovation etc. We notice that the assessee has incurred these expenses on existing structures. There is no material to show
3 Asian Heart Institute & Research Centre Pvt. Ltd. that the assessee has brought into existence any new structure which has enduring benefit. Hence the Ld CIT(A) has taken the view that these expenses are revenue in nature. On a perusal of the assessment order, we also notice that the assessing officer has not given any reasoning to treat the repair expenses as capital in nature. Hence we do not find any reason to interfere with the order passed by Ld CIT(A) on this issue also.
In the result, the appeal filed by the revenue is dismissed. Order has been pronounced in the Court on 8.5.2017.