HERTZ CHEMICALS LTD,MUMBAI vs. DCIT 8(2), MUMBAI

The present appeal is filed by the assessee against the order of CIT(A)-17, Mumbai dated 22.04.2014 in respect of Assessment Year (AY) 2010-11 against confirming the adhoc allowance of Rs. 13,15,950/- being 15% of Repairs and Maintenance Expenses.

The brief facts of the case are that the assessee filed its return of income for AY-2010-11 declaring total income of Rs. 20,00,31,170/-. Return of income was selected for scrutiny and the Assessing Officer (AO) while making the addition/disallowance, disallowed 15% on account of Repair and Renovation out of Rs. 87.73 Lakhs i.e. total of Rs. 13,15,950/- in the assessment order against which the first appeal was filed before the CIT(A) and the same was dismissed, confirming the disallowance by the CIT(A) in its order dated 22.04.2014 against which the present appeal is filed before us.

We have heard Ld. Authorised Representative (AR) of the assessee and Ld. Departmental Representative (DR) for the Revenue and perused the material available on record.

The AR of the assessee has argued that AO disallowed 15% of Repair and Renovation Expenses arbitrarily and without any substance which was ultimately confirmed by the CIT(A).

We have perused the order of AO, the assessee submitted the details of Repair and Renovation Expenses which includes demolition and removal of damage internal cement plaster allowing cement plaster in the existing structure, labour charges, water proofing demolition and making of concrete road along with invoices of the expenditure and the AO while considering it that substance of renovation gives enduring benefits to the assessee and accordingly 15% of the amount was disallowed.

The Ld. CIT(A) while dealing with this ground concluded that nature of such expenses are creation of assets of enduring in nature and by incurring the said expenditure new assets was created and confirmed the addition.

We have carefully considered the order of authorities below and the submission made by AR of the assessee and find that the assessee made the repair and maintenance expenses in Daman Unit which is located nearby site creating the Sea water and due to heavy and consistent rain fall the existing structure and internal wall of the factory due to rush may become weaken and required periodical maintenance after monsoon session.

We have also seen that the assessee has filed complete details of works along with the invoices and details of expenditure. The AO or the CIT(A) has not disputed cost of such items or invoices or the rate of the item, hence, the disallowance made at 15% is without any substance and is not sustainable and the same is deleted.

In the above discussion, the disallowance made by the AO and confirmed by the CIT(A) is set-aside and the appeal filed by the assessee is accepted.

""यथ"/ The Respondent. 3. आयकरआयु"त(अपील) / The CIT(A), Mumbai. 4. आयकरआयु"त/ CIT आदेशानुसार/BY ORDER,

"वभागीय""त"न"ध, आयकरअपील"यअ"धकरण, मुंबई/ DR, ITAT, Mumbai 6. गाड"फाईल / Guard file. उप/सहायकपंजीकार स"या"पत""त /// (Asstt.