TaxTMI 
TaxTMI 
2018 (3) TMI 1570
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....ssioner of Income Tax (Appeals) XVIII ["CIT (A)"], to the extent upholding the action of the Ld. AO in full or in part, is contrary to the factual and legal position and thus is bad in law. 2. That on the facts and in the circumstances of the case and in law, Ld. CIT (A) has erred in holding that the repair and maintenance expenses amounting to Rs. 2,23,45,165 & Rs. 2,55,93,985 for AYs 2003-04 & 2005-06 respectively is capital in nature and therefore not allowable as revenue expenditure . 3. That on the facts and in the circumstances of the case and in law, the Ld. CIT(A) grossly erred in sustaining the adhoc disallowance of repair & maintenance expenses amounting to Rs. 13,80,005 & Rs. 19,17,585 for AYs 2003-04 & 2005-06 respectively (being 5% of Rs. 2,76,00,116 & Rs. 3,83,51,700 respectively) purely under misconceived facts and on surmises or suspicion, as to the existence of the party(s) without appreciating that the adhoc disallowance has no nexus with any specific party, and therefore, this part of the order deserves to be set aside." 3. The appellant, Deputy Commissioner of Income-tax, Circle 15 (1), New Delhi (hereinafter referred to as 'the Revenue') by fil....
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....38,793/- & Rs. 32,41,106/- for AYs 2003-04 & 2005-06 respectively on account of Director's foreign travel expenses on the ground that the same are not related to business of the assessee company. 5. Assessee company carried the matter by way of filing appeals before the ld. CIT (A) who has reduced the ad hoc disallowance of repair and maintenance expenses from 50% to 5%; confirmed the disallowance made by the AO qua repair and maintenance expenditure paid to Chandra Singh Contractor and National Sanitation and deleted the disallowance of Director's travel expenditure disallowed by the AO by partly allowing the appeals. Feeling aggrieved, the assessee company as well as Revenue has come up before the Tribunal by way of filing the cross appeals. 6. We have heard the ld. Authorized Representatives of the parties to the appeal, gone through the documents relied upon and orders passed by the revenue authorities below in the light of the facts and circumstances of the case. GROUND NO.1 OF ASSESSEE'S APPEALS IN ITA NOS.6024/DEL/2014 & 6025/DEL/2014 7. Ground No.1 of assessee's appeals in ITA Nos.6024/Del/2014 & 6025/Del/2014 is general in nature, hence does not....
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.... persons through account-payee cheques and that there was a gate pass and challan system, which. Was being strictly adhered to in that regard - Assessee requested Assessing .Officer to depute a person to trace out parties - Assessing Officer did not take any steps to trace out parties, but added amount paid to fabricators as income- Whether since explanation that parties concerned - might have moved out or closed down their business; appeared plausible, Assessing Officer was unjustified in making addition- Held; yes" 12. In the instant case, assessee has brought on record the complete detail of the vendors including their PAN available at pages 196 & 197 of the paper book, invoices raised by them available at pages 507 to 509 & 542of the paper book and ledger account at pages 198 to 464 of the paper book, which were also produced before AO during assessment proceedings and have not been disputed nor the AO and ld. CIT (A) has disputed the incurrence of expenditure. Moreover ld. CIT (A) reduced the ad hoc disallowance from 50% to 5% merely on the basis of surmises that, "still some doubt about the existence of vendors is there". 13. The coordinate Bench of the Tribunal in as....
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.... "9. Further, Hon'ble madras High Court in case of CIT Vs Dasprakash (supra) has held that many items, which are fixed in the wall that would present an inviting appearance for the customers assembled, are allowable as revenue expenditure. Furthermore, the Hon'ble Madras High Court in 237 ITR 902 also held that expenditure incurred for repairs and modernizing hotel and replacing the existing components of old building furniture and fittings with the object to create a conducive and beautiful atmosphere for running business of hotel is not an expenditure of enduring in nature but is only current repairs. Further Hon'ble Karnataka High Court in 233 Taxman 177 has held that expenditure incurred on replacing flooring, falls roofing, furniture, carpets and refurnishing of hotel rooms in tune with international standard without addition of extra floor space or extra room capacity is revenue in nature. Assessee was incurring expenditure from AY 2002-03 to the present assessment year on repairs and maintenance as under:- Assessment Year Amount of repair/ exp. claimed (In Rs.) 2002-03 74120326 2003-04 52409060 2004-05 67692199 2005-06 78384501 2....
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....maintenance expenditure paid to Chandra Singh Contractor and National Sanitation for AYs 2003-04 and 2005-06 as the expenditure are liable to be treated as revenue in nature as keeping the hotel rooms, floors, ceilings and its ambience in good condition would certainly lead to the increase of the revenue of hotel and it will also enhance its sale-ability and cannot be treated as capital expenditure of enduring nature. So, Ground No.2 of assessee's appeals in ITA Nos.6024/DEL/2014 & 6025/DEL/2014 is determined in favour of the assessee. GROUND NO.2, 3 & 4 OF REVENUE'S APPEALS IN ITA NOS.6097/DEL/2014 & 6098/DEL/2014 20. The AO made disallowance of Rs. 12,38,793/- and Rs. 32,41,106/- for AYs 2003-04 & 2005-06 respectively towards foreign travel expenses of Directors being not related to business of the assessee company which have been allowed by the ld. CIT (A) by following the assessment order for AY 2011-12 treating the foreign travel expenditure incurred wholly and exclusively for business purposes. 21. The ld. DR for the Revenue relied upon the order of the AO. 22. Appeal effect order passed by AO is available at pages 32 to 34 of the paper book. Assessee has brought on recor....