Appeal partially allowed: Rs. 8,00,000 for repairs, 10% vehicle expenses disallowed for personal use.

The Tribunal allowed the appeal in part, directing the allowance of Rs. 8,00,000 as revenue expenditure for repairs and reducing the disallowance of vehicle expenses to 10% for personal use.

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Issues Involved:
1. Disallowance of current repairs as capital expenditure
2. Disallowance of vehicle expenses on an ad-hoc basis

Analysis:

Issue 1: Disallowance of Current Repairs as Capital Expenditure
The appeal was filed against the order of CIT(A) confirming the disallowance of Rs. 8,00,000 as capital expenditure instead of revenue expenditure for repairs. The Tribunal examined the details provided by the assessee regarding repairs and maintenance expenses amounting to Rs. 49,60,053. The assessee claimed that the repairs were necessary for preserving and maintaining the existing building, "Shabnam Apartments." The Tribunal noted that the expenditure was incurred on repairs, reinforcement, and replacement of dilapidated parts of the building without creating any new asset. Referring to relevant court decisions, the Tribunal concluded that the expenditure was revenue in nature and should be allowed as a deduction under Section 37(1) of the Income Tax Act. The Tribunal found that the Department failed to provide evidence supporting the presumption that the expenditure was for erecting a new structure. Therefore, the Tribunal allowed the claim and reversed the lower authorities' orders.

Issue 2: Disallowance of Vehicle Expenses on an Ad-hoc Basis
The second ground of appeal involved the disallowance of 15% of vehicle expenses on an ad-hoc basis. The AO initially disallowed 20% of the expenses for personal use, which was reduced to 15% by CIT(A). The Tribunal, considering the nature of the assessee's business and the possibility of personal use, restricted the disallowance to 10% for personal use. Consequently, the Tribunal partially allowed the appeal on this issue.

In conclusion, the Tribunal allowed the appeal in part, directing the allowance of Rs. 8,00,000 as revenue expenditure for repairs and reducing the disallowance of vehicle expenses to 10% for personal use. The judgment was pronounced on 08/01/2018 by Shri R.C. Sharma, AM, and Shri Amarjit Singh, JM.

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