TaxTMI 
TaxTMI 
TaxTMI 
2016 (6) TMI 285
X X X X Extracts X X X X
X X X X Extracts X X X X
....ove at the time of hearing." 2. The brief facts of the case is that assessee is a company engaged in the business of trading of different products such as carpets, textile, metal, plastic items etc. The company purchases these products locally and exports them. For the assessment year 2005-06 it filed its return of income on 28th October, 2005 declaring an income of Rs. 15,88,70,103/-. During the course of assessment proceedings, it was found that the company has debited expenses of Rs. 20,988,343/- on account of repair and maintenance of building expenditure. Assessee was asked to explain nature of such huge expenditure and in response to that assessee submitted that these expenses relate to EDP maintenance charges, maintenance charges for electrical items accommodation provided to expatriate employees, cleaning charges, pool and garden expenses etc. These are the necessary expenditure on repairs of various fittings installed in its office premises. Ld. AO held that out of the above expenditure EDP maintenance cost of Rs. 22,32,507/-, upkeep maintenance of office building of Rs. 1,97,358/-, repair and maintenance of office premises of Rs. 15,76,638/-, lease rentals of Rs. 44,11,....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e relied up on the decision of honourable supreme court in CIT V Savarana Spinning mills Limited [293 ITR 201(SC)] to state that accumulated repairs is a not allowable. He further referred to the decision of Honourable Supreme court in case of Deepak Agro Foods V State Of Rajasthan ( 2008-TIOL-134-SC-CT] and Hon Delhi high court in case of CIT V Jan samparak Advertising Limited [ 56 taxmann.com 286 (Del)] 6. Against this, Ld. AR submitted that these are the expenses incurred by the assessee on premises that are not owned by the assessee but on rented premises. He submitted the complete details in the form of vouchers, bills etc, of expenditure submitted before AO and before ld CIT (A). He submitted that genuineness of the expenditure has not been doubted by the Ld. AO but only issue is whether this expenditure are capital or revenue in nature. He further submitted that the undisputedly these are repair and maintenance expenditure and assessee has not derived any benefit of enduring nature, no capital assets is acquired and they are in the nature of routine ordinary day to day expenses on maintenance of equipments, cleaning charges, etc. and in case of rented premises even accumula....
X X X X Extracts X X X X
X X X X Extracts X X X X
....arketing (P) Ltd. (supra) requested that matter may be set aside back to the file of the AO. He further submitted that according to sub rule 3 of Rule 46A no evidence can be taken into account unless the AO has been given reasonable opportunity to examine and rebut the same. For these propositions, he relied on the decision of Hon'ble Delhi High Court in the case of CIT vs. Manish Build Well Pvt. Ltd. [ITA no 9258/2011 dated 15.11.2011]. Against this Ld. AR submitted that matter should not be remitted back to the file of the AO and for this he submitted a note relying on the decision of M/s.Zuari Leasing & finance Company limited V ITO. 112 ITD 205 (Delhi) and several other decisions. 8. We have carefully considered the rival contentions. The brief facts of the case is that assessee has incurred following expenditure and same were held to the capital expenditure :- Particulars Amount (In Rs.) EDP Maintenance cost 22,32,507 Upkeep maintenance at office building 1,97,358 Repair and maintenance -office premises 15,76,638 Lease rentals 44,11,920 Security costs 53,87,700 Cleaning costs 6,19,116 Total 1,44,25,239 9. It is evident from the assessment order itself that th....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... on account of expenditure towards payment of annual maintenance contract for various EDP peripherals, purchase of printer toner cartridge, ink printer fuser and repairs of various EDP peripherals. Likewise the lease rental amounting to Rs. 44,11,9201- has been paid to M/s AB Hotels Ltd. with which tile appellant has entered in maintenance agreement for its registered office at Radisson Commercial Plaza New Delhi. As per the said agreement a maintenance charge totalling to Rs. 44.11.920/- (Rs. 3,67,660/- per month @ 12 Months) has been paid to M/s AB Hotels Ltd. for the latter having provided the appellant the use of facilities like air conditioning plant. generators, compressors, electric installation, lifts, fire-fitting equipment etc. which has been operated and maintained. by M/s A.B. Hotels Ltd. An amount of Rs. 53,87.700/- has been incurred as expenditure to security charges to professional been made to professional security agencies like Group-4 Expat; Black Fox Security Expat etc. These security agencies were deployed by the appellant at the office premises and accommodation of various expatriate employees working for the appellant. An amount of Rs. 15,76,638 has been paid ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... repair expenditure but accumulated repairs so even though the expenditure is revenue in nature, same is not allowable. We find that the reliance on this decision by the revenue is misplaced as in that case, Hon'ble Supreme Court was concerned about the modernisation and replacement expenses on the textile mill and it was held that it was not allowable. In the present case, the issue is not of repairs on plant and machinery but related to expenditure on building, further the building is also not owned by the assessee but is a rented premises. The expenditure would be dealt with by the provision of section 30, which is as under:- "In respect of rent, rates, taxes, repairs and insurance for premises, used for the purposes of the business or profession, the following deductions shall be allowed-- (a) where the premises are occupied by the assessee-- (i) as a tenant, the rent paid for such premises; and further if he has undertaken to bear the cost of repairs to the premises, the amount paid on account of such repairs; (ii) otherwise than as a tenant, the amount paid by him on account of current repairs to the premises; (b) any sums paid on account of land revenue, local ....