TaxTMI 
TaxTMI 
TaxTMI 
2016 (5) TMI 426
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....nce:- "On the facts and circumstances of the case and in law, the learned CIT(A) erred in confirming the disallowances of leasehold improvement expenditure of Rs. 8,55,485/- without appreciating the facts that the expenditure were incurred by the appellant on leasehold premises to make it more conducive to its business activity." 3. The assessee is company is engaged in the business of supply of formwork and scaffolding material. During the course of assessment proceedings, the Assessing Officer noticed that the assessee has shown expenditure of Rs. 9,00,511/- on account of leasehold improvement. This amount was spent on the premises which was taken on lease towards repairs and furnishing. The claim of the assessee was that this amount ....
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....lf) which works out to Rs. 45,026/- and the balance amount of lease hold improvement i.e. Rs. 8,55,485/- was disallowed. Aggrieved by the stand so taken by the Assessing Officer, the assessee carried the matter in appeal before the ld. CIT(A) but without any success. Learned CIT(A) confirmed the findings of the Assessing Officer and observed as follows :- "3.4 I have considered the facts of the case, submissions of the appellant as against the findings/observations of the AO in the order u/s.143(3) of the I.T. Act. The contentions and submissions of the appellant are being discussed and decided here in under: i. The appellant contended that as per lease agreement dated 22.2.2007 and 5.12.2007 it has taken office premises on lease which....
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....g, for metal, cement & bricks for mockup, for replacing of tiles and allied expenses. In our considered view, these expenses cannot be treated as capital expenditure, particularly when, given facts of this case, they have limited useful life. As regards the Assessing Officer's reliance upon Explanation-1 to section 32, it could come into play only when the capital expenditure is incurred in connection with a leased premises, but then, merely because it is an expense incurred in connection with the leased premises, it cannot be inferred that it is a capital expenditure. The authorities below have been thus swayed by the considerations which are not relevant. Section 30(a) categorically provides that when a premises used for the purposes of t....
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....thout appreciating the facts that it was the prerogative of the assessee to decide whether expenditure or services are required for business expediency or not. Without prejudice to above, appellant also submitted relevant details to prove the bonafide and genuineness of expenses but the Assessing Officer without considering it disallowed the claim of the appellant on the basis of earlier year's T.P.O. order. 8. Learned representatives fairly agree that this issue is squarely covered by the decision of the co-ordinate bench in assessee's own case for the immediately preceding assessment year i.e. 2008-09. As a matter of fact, in the impugned orders before us, the authorities below have only referred to and relied upon their respective ....
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....rom the record and the design produced by the assessee, we find that the service of providing formwork and scaffolding system involves highly technical activity as well as drawings and designs with precise skills for actual execution of construction work. 7.1 The TPO has denied the claim of the assessee on the ground that the assessee failed to establish the need and actual avail of services from the AE. It is pertinent to note that when the services provided by the assessee to its clients involves highly technical services then the nature of business activity of the assessee itself demonstrates the requirement of technical design engineer in the field. As the assessee was not having such experienced design engineers in its own organizat....
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....nstead of examining whether the price paid by the assessee is at arm's length, the TPO proceeded on the premise that the assessee was not in need of the services and the services was not actually availed by the assessee. When the assessee has produced the sufficient evidence that the said services was an inevitable part of the business activity of the assessee then the action of the TPO is not sustainable. Accordingly, we set aside the orders of authorities below qua this issue. Since the assessee has produced the invoices which is based on the per hour charges actually PERI India Pvt. Ltd. 9 | P a g e spent by the engineer for providing the services to the assessee, therefore, the test of cost sharing arrangement between the assessee and A....