2011 (4) TMI 1439 - AT - Income Tax

Revenue's appeals dismissed as Tribunal upholds CIT(A)'s decision on structures as revenue expenditure.

The ACIT, Co. Circle (4), Chennai Versus M/s Nippo Batteries Co. Ltd.

The ACIT, Co. Circle (4), Chennai Versus M/s Nippo Batteries Co. Ltd. - TMI Issues involved: Appeal by Revenue against CIT(A) orders allowing claim of assessee on structures as temporary in nature u/s 30(a)(i) of Income-tax Act, 1961.Details of the Judgment:1. Issue 1 - Revenue's Grievance: Revenue contended that CIT(A) wrongly allowed the claim of the assessee on structures costing `49,36,976/- for Asst. Year 2006-07 and `24,75,200/- for Asst. year 2007-08 as temporary in nature u/s 30(a)(i) of the Income-tax Act, 1961. Revenue argued that the items involved had a long period of life and the reliance on a previous court decision was inappropriate as the facts were not comparable.2. Relevant Facts: The assessee claimed depreciation on certain building structures as purely temporary erections, at a rate of 100% as per Income-tax Rules, 1962. However, the AO disagreed, stating that the items were not temporary wooden structures but included glass and aluminum frame works, false ceiling, interior work, beds, and other structures. The AO held that normal depreciation for buildings alone should be considered.3. CIT(A)'s Decision: The CIT(A) considered the argument that the items were temporary erections and not capital assets, citing relevant court decisions. He noted that the additions were made in the company's rented office and concluded that the expenditure should be allowed as revenue expenditure, not capital.4. Arguments Before Tribunal: The DR argued that the structures provided an enduring benefit to the assessee, while the AR supported the CIT(A)'s decision, citing precedents where renovation/repair expenditure for business purposes was allowed as revenue outgoings.5. Tribunal's Analysis: The Tribunal found that the items like glass and aluminum framework, carpets, and wooden structures did not provide an enduring benefit to the assessee. The renovations were done in rented premises, supporting the CIT(A)'s view that the claim was revenue in nature. Citing relevant court decisions and precedents, the Tribunal upheld the CIT(A)'s decision, stating that the expenditure was revenue in character.6. Conclusion: The Tribunal dismissed the Revenue's appeals for both years, affirming the CIT(A)'s decision to allow the claim as revenue expenditure. The Tribunal found no reason to interfere with the CIT(A)'s decision.Final Verdict: Appeals of the Revenue for both years were dismissed by the Tribunal.