TaxTMI 
TaxTMI 
2013 (5) TMI 438
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....8D and disallowing 0.5% of the average value of investments, amounting to Rs. 3,09,810/-. 2. On the facts and in the circumstances of the case and in law, the Ld CIT (A) erred in upholding the disallowance of Rs. 23,52,993/-, out of the total expenditure of Rs. 25,21,000/- claimed by the appellant on account of expenditure for repairs to playground by only allowing 1/5th of the same ie Rs. 1,68,067/-. The net expenditure disallowed by the Assessing Officer and upheld by the CIT (A) works out to Rs. 23,52,933/-. 3. On the facts and in the circumstances of the case and in law, the Ld CIT Z(A) erred in upholding the addition of Rs. 21,400/- based on certain ITS details received by him, without establishing that any such income was received by your appellant." 3. From the above mentioned grounds, it is evident that there are three issues, which are to be adjudicated by us in this appeal. They are (i) applicability of provisions of section 14A read with Rule-8D of the Act; (ii) the justification for disallowance of expenditure incurred on play ground; and (iii) justification for disallowance of Rs. 21,400/- for want of some details. 4. Briefly stated, relevant facts of the c....
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....oks of account as revenue expenditure as the same does not constitute a capital expenditure. During the scrutiny assessee, AO called for details and examined the above submissions of the assessee and found that the lease was for a period of 15 years and the amount involved was 25.21 lacs and came to the conclusion that the expenditure in question has an enduring benefit to the assessee. He accordingly allowed only 1/5th of the said expenditure ie Rs. 1,68,067/- and added the rest of Rs. 23,52,933/- to be written off over the period of 15 years. 7. Finally, regarding the addition of Rs. 21,400/- it was noticed that the AO made the said addition in view of the failure of the assessee to reconcile the said amounts with the State Bank of India vis-à-vis books of account. Aggrieved with the above additions, assessee filed an appeal before the first appellate authority. 8. During the course of proceedings before the first appellate authority, CIT (A) confirmed the view of the AO so far as the applicability and conclusions of the disallowable expenditure after applying the provisions of Rule-8D. Regarding the play ground related expenditure, it was submitted that no new asses....
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.... Similarly, regarding the issue of addition of Rs. 21,400/-, Ld Counsel submitted that if an opportunity is granted the assessee shall try to reconcile the said sum of Rs. 21,400/- and prayed for setting aside this issue also to the files of Assessing Officer. In the interest of justice, we find merit in the arguments of the Ld Counsel and accordingly remand the issue to the files of AO with the similar direction given above. Accordingly, both the issues are set aside. 10. Regarding the issue relating to the capital nature of the expenditure of Rs 25,21,000/- spend on the play ground, which was leased from MHADA, Ld Counsel mentioned that the said land is being used for the purpose of assessee's business of running of school. With play ground in place, the School's reputation is high and therefore, it constitutes valuable addition and therefore, the same is for the business purposes of the assessee. Hence the expenditure is allowable revenue expenditure. It is also mentioned that the play ground facility to any school is a value addition so far as the business of the assessee is concerned he also mentioned that the school is not being run on the charitable funds. Further, Ld Cou....
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....ion on the number of working hours for which it could operate its looms with a view to increasing its profits was revenue in nature and allowable as deduction under s. 10(2)(xv). By the purchase of loom hours no new asset was created and there was no addition to or expansion of the profit-making apparatus of the appellant. The acquisition of additional loom hours did not add to the fixed capital of the appellant; the permanent structure of which the income was the product of fruit remained the same; it was not enlarged nor did the appellant acquire a source of profit or income when it purchased the loom hours. The expenditure incurred for the purpose of operating the looms for longer working hours was primarily and essentially related to the operation or working of the looms which constituted the profit-making apparatus of the appellant and was expenditure laid out as part of the process of profit earning. It was an outlay of a business in order to carry it on and to earn a profit out of this expense as an expense of carrying it on; it was part of the cost of operating the profit earning apparatus and was clearly in the nature of revenue expenditure. 11. On the other hand, Ld DR....