CITIGROUP GLOBAL MARKETS INDIA P.LTD,MUMBAI vs. ASST CIT 4(2), MUMBAI
In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.
What did the Tribunal hold?
The Tribunal held that the expenditure incurred on leasehold premises for repairs and maintenance was revenue in nature and not capital, as it did not create an asset with enduring benefit. Therefore, the addition made by the AO was deleted.
What were the facts?
The assessee incurred expenditure on repairs and maintenance of leasehold premises. The Assessing Officer treated this expenditure as capital in nature and added it to the total income, which was upheld by the CIT(A).
What were the issues?
Whether expenditure incurred on repairs and maintenance of leasehold premises is revenue or capital expenditure.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “ C ” BENCH, MUMBAI
Before: SHRI AMIT SHUKLA, JM & SHRI RAJESH KUMAR, AM
PER RAJESH KUMAR, AM : This is an appeal filed by the assessee against the order dated 1.11.2012 passed by the ld.CIT(A)-8, Mumbai and it relates to the assessment year 2008-
The sole issue raised in the grounds of appeal is against the confirmation of addition of Rs.1,17,93,430/- by the ld.CIT(A) as made by the assessing officer on account of expenditure incurred on the leasehold premises on the ground that the benefit of said expenditure would extend to the assessee over a period of time.
2
The facts of the case in brief are that the assessee filed its return of income on 30.9.2008 declaring a total income of Rs.6,94,12,48,982/-. The case of the assessee was selected for scrutiny and the notices u/s 142(1) and 143(2) of the Income Tax act, 1961 was issued and served upon the assessee. During the course of assessment proceedings, the AO found that the assessee had incurred a sum of Rs.1,17,93,430/- on repairs and maintenance of the leasehold premises the details whereof was incorporated in para 3.2 of the assessment order. The AO added the same to the total income of the assessee by rejecting the plea of the assessee that the said nature of expenditure was of revenue in nature and did not result in creation of any asset with enduring benefit of long term nature. The said expenditure did not create any asset of enduring nature but was incurred to make leasehold premises more habitable and workable so that it could be put to use. Moreover, the assessee submitted before the AO that the term of the lease did not permit the assessee company to carry out any infrastructural changes or install any permanent furniture of fitting. Aggrieved by the order of the AO, the assessee preferred an appeal before the ld.CIT(A), who in turn dismissed the appeal of the assessee. Being aggrieved by the order of ld.CIT(A), the assessee is in appeal before us.
At the outset, the ld.Counsel appearing on behalf of the assessee pointed out that the issue raised in this appeal is covered by the decision of the Co- ordinate Bench of the Tribunal in assessee’s own case in the earlier assessment year in ITA No.829/Mum/2012 (AY-2007-08) dated 28.9.2015 which was not opposed by the ld. DR. The ld. Counsel for the assessee finally submitted that a similar issue being covered and therefore the addition of Rs.1,17,93,430/- be deleted.
We have heard the rival contentions and perused the material available before us. We find that the similar issue of disallowance of repairs and maintenance of the leasehold premises arose in the assessment year 2007-08 in assessee’s own case in ITA No. 829/Mum/2012 (supra) and it was decided by 3 the co-ordinate Bench of the Mumbai Tribunal in favour of the assessee. For the sake of convenience, the relevant para No. 23 of the said order is extracted below:
“23. After considering the rival submissions and on perusal of the relevant finding given in the impugned order as well as material placed on record, it is noticed from the details of expenditure incurred on the leasehold premises, that these are in the nature of electrical works, Civil work and fees paid to architects and municipal charges. Undoubtedly these expenditure have been incurred on a leased premises which was taken for short duration of 33 months. Once these expenditures are purely in the nature of repair works for making the office in habitable position, such an expenditure cannot be held to be capital in nature. Simply because a benefit of repair is extended beyond the period of 1 year that does not entail that it is giving enduring benefit to the assessee and hence is capital expenditure. Thus, we agree with the contention of Ld. Counsel that the expenditure incurred on leasehold premises is allowable as revenue expenditure and accordingly, the finding of the Ld. CIT(A) is set aside and ground raised by the assessee is allowed.”
We, therefore, respectfully following the decision of the co-ordinate Bench of the Tribunal delete the addition of Rs.1,17,93,430/- by allowing the plea of the assessee. The AO is directed accordingly. The appeal of the assessee is allowed.
In the result, the appeal filed by the assessee stands allowed.
Order pronounced in the open court on 24th Feb, 2016 . आदेश की घोषणा खुरे न्मामारम भें ददनांकः को की गई । (AMIT SHUKLA) ( RAJESH KUMAR ) न्मायमक सदस्म / JUDICIAL MEMBER रेखा सदस्म / ACCOUNTANT MEMBER भुंफई Mumbai; ददनांक Dated 24th /02/2016 व.यन.स./ SRL , Sr. PS
4 आदेश की प्रनिलऱपऩ अग्रेपषि/Copy of the Order forwarded to : अऩीराथी / The Appellant 1. प्रत्मथी / The Respondent. 2. 3. आमकय आमुक्त(अऩीर) / The CIT(A)- आमकय आमुक्त / CIT 4. ववबागीम प्रयतयनधध, आमकय अऩीरीम अधधकयण, भुंफई / DR,
ITAT, Mumbai 6. गार्ड पाईर / Guard file. आदेशान सार/ BY ORDER,उऩ/सहायक ऩुंजीकार (Dy./Asstt.
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