TaxTMI 
TaxTMI 
2013 (8) TMI 440
X X X X Extracts X X X X
X X X X Extracts X X X X
....nds of appeal submitted that the Commissioner of Income Tax (Appeals) should have deleted the entire disallowance made under sec.14A of the Act. 4. The Departmental Representative supports the order of Commissioner of Income Tax (Appeals). 5. We have heard both sides. Perused the materials on record and the orders of authorities below. The Commissioner of Income Tax (Appeals) while restricting the disallowance to Rs. 3,58,035/- observed as under :- "4.3 As regards the quantum of such disallowance, the A.O. has applied rule 8D and determined Rs. 4,37,363/- as amount disallowable to earn tax-free income of Rs. 93,22,845/-. The amounts determined under clauses (i), (ii) and (iii) of rule 8D(2) were Rs.Nil, Rs. 79,328/- and Rs. 3,58,035/- respectively. There is no dispute regarding clause (i) because it was "Nil. The appellant, in its submission, has argued that all the investments during the year were made from its own fund and no borrowed fund was utilized for investments. I have considered the above contention and perused the details submitted by the appellant. The appellant had sufficient own funds and internal accruals to meet its investments. The share capit....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nditure. 10. We have heard both sides. Perused the materials on record and the orders of authorities below. The assessee incurred various expenses on repairs and replacements in the course of its business of running a hotel and such expenditure was incurred in replacing the Kitchen utensils, paintings, sculptures, repairs to buildings, furniture etc., and claimed such expenditure allowable as revenue expenditure either under sec.31(1) of the I.T. Act or under sec.37 of the Act. We find that in almost similar circumstances the Madras High Court in the case of CIT v. Ooty Dasaprakash (supra) held that the expenditure incurred for repairs and modernization of hotel, replacing the existing components of the building, furniture etc., is revenue expenditure. The assessee in this case contended that no part of the expenditure is capital in nature because it was spent only for repairing and replacing and modernizing the hotel and replacing the existing components of the buildings, furniture etc. The Revenue contended that the modernization programme involved large amounts spread over three years and, therefore, it should have definitely given the assessee enduring benefit and, therefore....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nder section 37 of the Income Tax Act. In the instant cases, the expenditure was incurred solely for repairs and modernising the hotel and replacing the existing components of the building, furniture and fittings, with a view to create a conducive and beautiful atmosphere for the purpose of running of a business of a hotel. Taking into consideration the rationale or reasonings, as had been provided for by a Division Bench decision of this court cited supra, in the assessee's own case in CIT v. Dasaprahash (1978) 14 ITR 210, it goes without saying that the expenditure incurred by the assessee for the relevant assessment years in repairing and modernising the hotel and replacing the existing components of a portion of the building, furniture and fittings cannot at all be stated to be of enduring in nature, in the nature of being a "capital expenditure" ; but, definitely such an expenditure would fall under the category of "revenue expenditure" in nature to be allowed, as a deduction under section 37 of the Income Tax Act." 11. As could be seen from the above, the High Court in an almost identical facts held that repairing and replacing the existing components o....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... agreed for such disallowance in the course of assessment proceedings. We are also in agreement with the view of the Commissioner of Income Tax (Appeals) that the assessee could not prove that these expenses were incurred for the purpose of business of the assessee. Thus the grounds raised by the assessee are rejected on this issue. 17. The next issue in the grounds of appeal of the assessee is that the Commissioner of Income Tax (Appeals) erred in sustaining the disallowance of Rs. 43,500/-, applying the provisions of Explanation to sec.37(1) of the I.T. Act. 18. At the time of hearing, the Counsel for the Assessee submitted that this ground is not pressed and may be disposed off as not pressed. Accordingly, this ground of appeal is dismissed as not pressed. Similarly, the Counsel for the Assessee submitted that the ground taken by the assessee in this appeal with regard to proper opportunity not given by the Commissioner of Income Tax (Appeals) is also not pressed and may be dismissed as not pressed. Accordingly, this ground is also dismissed as not pressed. 19. The last issue in the grounds of appeal of the assessee is on deduction under sec.80IA of the I.T. Act with re....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ng Officer observing as under :- "8.2 I have carefully considered the facts of the case and the submissions of the ld.AR. I have also gone through the decisions relied on by the Id.AR and the AO. The appellant has relied on the decision of the Hon'ble Madras High Court in the case of Velayudhasamy Spinning Mills P. Ltd v. ACIT (340 ITR 477). In the said case, the AO had disallowed deduction of Rs. 1,70,76,945/- claimed u/s 80-IA on the ground that the eligible income was a negative figure. The CIT(A) allowed the appeal on the ground that the unabsorbed depreciation of the 'earlier years, which had already been absorbed, could not be notionally carried, forward and taken into consideration for computing deduction u/s 80-IA. The Tribunal set aside the order of CIT(A) and restored the order of AO. On further appeal, the Hon'ble High Court allowed the appeal of the assessee., It held that there was no dispute that losses incurred by the assessee were already set ,off and adjusted against the profits of the earlier years. During the relevant assessment year, the assessee exercised option u/s 80-IA(2). During this period, there was no unabsorbed depreciation o....