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Income Tax Appellate Tribunal, “B” BENCH, MUMBAI
Before: SHRI R.C. SHARMA, AM & SHRI SANDEEP GOSAIN, JM
आदेश / O R D E R Per R.C. SHARMA, A. M.: This is an Appeal by the Revenue directed against the Order by the Commissioner of Income Tax (Appeals)- VI, Mumbai (‘CIT(A)’ for short) dated 04.03.2009 for the assessment year (A.Y.) 2005-06, on the following grounds:- 1. “On the facts and circumstances of the case as well as in law, the learned CIT(A) has erred in holding that the expenses of Rs.1.60 crores incurred on repairs are allowable as deduction u/s 30 of the I.T. Act without appreciating the fact that the repairs were not the “current repairs.”
2 (A.Y. 2005-06) Dy. CIT vs. M/s. Banner Pharma Caps Pvt. Ltd. 2. On the facts and circumstances of the case as well as in law, the learned CIT(A) has erred in not appreciating that the issue involved in the matter was whether the repairs were in the nature of “current repairs” or otherwise”.
In this appeal revenue is aggrieved for deleting the disallowance of Rs.1,06,25,008/- made by AO out of current repairs by treating the same as capital in nature.
We have considered rival contentions and gone through orders of authorities below. In the assessment order, the A.O. has noted that the assessee has constructed warehouse and undertaken repairs which is actually re-construction, making heavy additions on already existing building. Hence, according to the AO, the repairs are not current repairs but they amount to improvement or addition thereof, therefore not allowable as revenue expenses.
By the impugned order CIT(A) deleted the disallowance after recording following findings:
“I find that these repairs are not capital in nature not only replacement of old worn out parts. No new asset has been acquired by the assessee. The assets which have been acquired has been capitalized by the assessee. Hence, no expenditure can be disallowed on this ground. Reliance is placed on the decision of Bombay High Court in the case of CIT vs. Oxford
We have considered rival contentions and found from record that the assessee has constructed a ware house and also incurred expenses on repairs and maintenance. However, out of total expenditure of Rs.2,66,60,885/- the assessee himself has capitalized a sum of Rs.1,60,35,877/-. The expenses amounting to Rs.6,25,384/- also have been capitalized for construction of warehouse building.
The details of repair undertaken showing that none of them has resulted in acquisition of new asset but these are repairs to the current assets only were filed before the AO. The CIT(A) after considering various judicial pronouncements as referred at page no.2 of the appellate order and after applying the same to the facts of the case recorded the finding to the effect that the repairs undertaken by the assessee were not capital in nature but replacement of old worn out parts and no new assets has been acquired by the assessee. The finding so recorded by CIT(A) has not been controverted by ld. DR by bringing any positive material on record.
Accordingly we do not find any reason to interfere into the order of CIT(A) deleting the disallowance made on account of repair expenditure.
In the result, appeal of the revenue is dismissed.
Sd/- Sd/- (SANDEEP GOSAIN) (R.C. SHARMA) �या�यक सद�य / Judicial Member लेखा सद�य / Accountant Member मुंबई Mumbai; �दनांक Dated :22.07.2016 Ps. Ashwini आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent 3. आयकर आयु�त(अपील) / The CIT(A) 4. आयकर आयु�त / CIT - concerned 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, मुंबई / DR, ITAT, Mumbai 6. गाड� फाईल / Guard File आदेशानुसार/ BY ORDER,