AI Drafter 
TaxTMI 
TaxTMI 
2016 (6) TMI 1043
X X X X Extracts X X X X
X X X X Extracts X X X X
....e A.III passed by the Income Tax Appellate Tribunal, Chandigarh Bench 'B' Chandigarh (in short, "the Tribunal") in ITA No.1057/CHANDI/2008, for the assessment year 2005-06, claiming following substantial questions of law:- "I. Whether, on the facts and in the circumstances of the case and in law, the Hon'ble Income Tax Appellate Tribunal was legally justified in deleting the entire disallowances under section 30(1) without adjudicating on Explanation I to Section 30? II. Whether, on the facts and in the circumstances of the case and in law, the Hon'ble Income Tax Appellate Tribunal was legally justified in deleting 50% of the disallowance sustained by the CIT(A) without giving a finding as to what was legally/factually wrong in the order of the CIT(A). The Hon'ble ITAT is the last fact finding authority and is bound to give an order which goes into all the aspects of the case? III. Whether, on the facts and in the circumstances of the case and in law, the Hon'ble Income Tax Appellate Tribunal was legally justified in deleting/giving relief of Rs. 7,26,477/- of the quantum amount disallowed by the Assessing Officer under section 36(....
X X X X Extracts X X X X
X X X X Extracts X X X X
....venue, the assessee had taken huge unsecured loans of Rs. 21.78 crores by paying interest on the same at the rate of 10.75%. However, at the same time, it had not charged the interest on the loans and advances given to various persons. Hence the instant appeals by the revenue and the assessee. 5. We have heard learned counsel for the parties. 6. The first two questions are inter-related and are regarding claim of expenditure of Rs. 67,28,214/- incurred on repair and renovation of the Lajpat Nagar Hospital. In respect of claim of expenditure of Rs. 67,28,214/- incurred on repair and renovation of Lajpat Nagar Hospital, it has been categorically recorded by the Tribunal that the expenditure had been incurred by the assessee on the hospital building which had been taken on lease under an agreement dated 25.2.2004 between the assessee and Malhotra Heart Institute and Medical Research Centre Private Limited. This expenditure had not been incurred either by way of demolition of old structure or construction of a new hospital, as recorded by the CIT(A). After examining the entire material on record and the case law on the point, it was concluded by the Tribunal that where the expens....
X X X X Extracts X X X X
X X X X Extracts X X X X
....essee has, therefore, been successful in establishing that the impugned expenditure was revenue in nature. The case laws referred to by the learned DR are primarily in the context of the expression 'current repairs' as appearing in section 30(a)(ii) of the Act whereas the instant case is to be considered in the light of section 30(a)(iv) of the Act. Infact, the distinction between the presence of expression 'repairs' in section 30(a)(ii) which covers the case of rented premises and the expression "current repairs" in section 30(a)(ii) has been elaborately brought out by the Hon'ble Delhi High Court in the case of High Line Pens (P) Limited (supra)." 7. Nothing was shown that the said findings of the Tribunal are perverse. Accordingly, the first and second questions are answered against the revenue. 8. With regard to the third question qua disallowance of interest of Rs. 24,21,587/- claimed by the assessee under section 36(1)(iii) of the Act, which is common in all the three appeals, in the light of the judgment of the Apex Court in Hero Cycles (P) Limited vs. CIT, Ludhiana, (2015) 281 CTR 481 and judgment of this Court in Commissioner of Income Tax vs. Kap....
X X X X Extracts X X X X
X X X X Extracts X X X X
....166 (SC)], etc." In the process, the Court also agreed that the view taken by the Delhi High Court in 'CIT v. Dalmia Cement (B.) Ltd.' [2002 (254) ITR 377] wherein the High Court had held that once it is established that there is nexus between the expenditure and the purpose of business (which need not necessarily be the business of the assessee itself), the Revenue cannot justifiably claim to put itself in the arm-chair of the businessman or in the position of the Board of Directors and assume the role to decide how much is reasonable expenditure having regard to the circumstances of the case. It further held that no businessman can be compelled to maximize his profit and that the income tax authorities must put themselves in the shoes of the assessee and see how a prudent businessman would act. The authorities must not look at the matter from their own view point but that of a prudent businessman." 9. Further, in Kapson Associates's case (supra), while considering disallowance of interest under section 36(1)(iii) of the Act, it was recorded as under:- "The Commissioner of Income Tax (Appeals) and the Tribunal found as a matter of....