TaxTMI 
TaxTMI 
2014 (7) TMI 755
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....use as to why the claim of the assessee of Rs. 17,32,436/- should not be disallowed. The assessee submitted that the amount represents the replacement of the old lift belonging to the society and civil work relevant thereto. The assessee owns two premises namely flat no. 601 and 701 in the said society. Due the frequent break down of lift in the building the assessee as well as people visiting him were facing substantial hardship. This was causing damage to his professional as well. To overcome this difficulty the assessee offered to replace the lift of the society with a new lift. The society allowed him to replace the lift with the condition that the new lift would belong to the society and will be allowed for use to all the members. Thus the assessee contended that in the interest of profession, the assessee agreed to this arrangement and got the new lift installed. It was submitted that the expenditure was fully incurred for smooth functioning of assessee's profession, therefore, it is an allowable expenditure. The AO did not accept the explanation and contention of the assessee and held that the elevators installed was at the cooperative housing society and an essential pa....
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....he cost of the lift amounting to Rs. 17,32,436/- 5. Revenue has raised following grounds as under:- (i) "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) Mumbai erred in treating 50% of society development charges incurred on the purchase of a lift as capital expenditure, when the said assets belongs to the society and not to the assessee. (ii) The appellant prays that the order of CIT(A) on the above grounds be set aside and that of the Assessing Officer restored." 6. Before us, the Ld. AR of the assessee has submitted that though the assessee does not own the lift in question, however the expenditure has been incurred by the assessee for smooth professional work of the assessee as the old lift was not working properly which caused a substantial hardship and damage to the assessee on its professional front. The assessee purchased the office in the society only three years back and the proper functioning of the lift in the building was the requirement of the assessee's profession because of a number of persons used to visit the assessee in connection with his profession. The expenditure has been incurred for ....
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....e amount of Rs. 50,000 was contributed by the assessee for the purpose of facilitating the conduct of the business of the assessee and making it more efficient and profitable and it was clearly an expenditure on revenue account. The Ld. AR has submitted that the Hon'ble Supreme Court has analysed the object and purpose of the expenditure and its true nature and held that the expenditure was of revenue nature. Since the expenditure incurred by the assessee is for the benefit of its profession, therefore, the same is allowable as revenue expenditure. The Ld. AR has also referred the Special Bench decision of this Tribunal in the case of Amway India Enterprises Vs. DCIT (111 ITD 112) (Delhi)(SB) and submitted that the special bench has observed that the cardinal rule is that the question whether a certain expenditure is on capital or revenue account, should be decided from the practical and business view-point and in accordance with sound accountancy principles and this rule is of special significance in dealing with expenditure on expansion and development of business. If the expenditure is resulting merely in acquisition or creation of asset without the assessee becoming owner t....
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....he same one time expenditure incurred by the assessee was allowed by the Hon'ble Supreme Court being revenue expenditure. The Ld. DR has pointed that in case of L.H. Sugar Factory & Oil Mills (P.) Ltd. Vs. CIT (supra), the assessee contributed a sum of Rs. 50,000/- to a scheme of Government under which the roads were to be constructed around the factory of the assessee. Therefore, the expenditure on account of contribution to the Government scheme was mandatory in the said case. The assessee itself did not construct the road as it was constructed under the scheme of the Government. Therefore, these decisions are not applicable in the facts of the case of the assessee. As regards the decision of Special Bench of Tribunal in the case of Amway India Enterprises Vs. DCIT (supra), there was not dispute about the purpose of expenditure and the only question was regarding the nature of expenditure whether revenue or capital and that too in respect of expenditure incurred on software. The Ld. DR has relied upon the order of AO and submitted that when the expenditure is in the nature of personal expenditure and not wholly or exclusively for the purpose of business of the assessee then t....
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.... para 2.5 and 2.5.1 is as under:- "2.5 Facts and material on record are considered. It is seen that Appellant has resided in the said building for a number of years on the top floor. The premises used as office have been bought in the year 2001 and 2003. In the submission made before AO as well, it is apparent that the breaking down of the old lift was causing hardship to Appellant as well as people visiting him. Though stated that the lift installed is for the purpose and interest of his profession only, it is seen that the lift installed would benefit Appellant himself and his family members in their personal capacity and other members of the society as well. It therefore, cannot be held that the purpose of purchase of the asset was for business/professional purpose only. In fact, the installation and use of the lift was for Appellant's and his family's personal purpose as well. The Society's letter also indicates that substantial hardship was caused to Appellant and his visitors. 2.5.1 The lift installed is definitely not a revenue expenditure but is a capital asset. However, there are instances when expenses have been capitali....