2018 (6) TMI 690

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....ged as an investment company dealing in securities and other financial instruments and also engaged in finance related activities. The assessee has been registered as a Non-Banking Financial Company (NBFC) with the Reserve Bank of India. 4. During the course of scrutiny assessment, AO disallowed Rs. 25,94,088/- u/s. 94(7). AO also disallowed interest expenditure by invoking provisions of Section 14A r.w. Rule 8D. Expenditure incurred on civil work was also partly disallowed by the AO treating the same as capital in nature. 5. By the impugned order, CIT(A) partly allowed the expenditure incurred on civil work by treating the same as revenue in nature. However, CIT(A) confirmed the disallowance made u/s.14A and also disallowance made u/s.94....

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....tified in holding that the disllowance made under Section 14A read with Rule 8D on the basis of the netting of interest relying upon the decision of its Coordinate benches in Paresh K.Shah(ITA No.8214/M/2011) and M/s. Trade Apartments Ltd.? 3. Regarding question (i): The impugned order of the Tribunal dismissed the Revenue's appeal holding that the disallowance of interest under Section 14A of the Act should be made with reference to net interest loan. This was by following the decision of its Coordinate bench at Mumbai in case of Paresh K. Shah (ITA no.8214/M/2011) and the decision of its Calcutta Bench in Trade Apartments Ltd. (ITA no.1277/Kol/2011). Mr. Kotangale, the learned counsel appearing for the Revenue is unable to po....

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....ncurred for running the business effectively and efficiently. The repair, renovation and interior work was necessary so that the building can be efficiently used for the business. It has not brought into existence any new advantage or any new asset nor it has given any benefit of enduring nature. There are settled case laws which show that these kinds of expenditure are nothing but revenue in nature and so are allowable. These expenditures incurred by the company were an integral part of profit earning process. Therefore, it is not correct to say that company has obtained any enduring benefit because of this expenditure. Furthermore, no capital asset of enduring nature came into existence. It is merely expenses incurred to renovate the buil....

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....980 122 ITR49 (SC) & Empire Jute Co. Ltd v CIT (1980) 124 ITR 1 (SC). Reliance is also placed on the following Hon'ble judicial decisions :- 1. The Hon'ble Delhi High Court in Airport Authority of India vs. CIT "If the expenditure is made for acquiring or bringing into existence an asset or advantage for the enduring benefit of the business it is properly attributable to capital and is of the nature of capital expenditure. If, on the other hand, it is made not for the purpose of bringing into existence any such asset or advantage but for running the business or working It with a view to produce the profits it is a revenue expenditure." 2. Similar view was also taken in the case of Dy. GIT v. Sandoz (P.) Ltd. by Hon'ble Mumb....