TaxTMI 
TaxTMI 
2018 (7) TMI 1552
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....d brevity. Assessment Year: 2011-12 (Assessee's appeal ITA No.2220/Kol/2016) 3. The assessee's first substantive ground pleads that both the lower authorities have erred in law as well as on facts in rejecting its Value Added Tax (VAT for short) amounting to Rs.2,12,100/- written off as no longer recoverable claimed as a deduction. Both the Learned representatives take us to CIT(A)'s corresponding findings in para 3.1 of the order reading as under:- "3.1 I have considered the submission of the AR of the appellant in the matter in the backdrop of the assessment order. I find that the AO has disallowed the sum of Rs.2,12,100/- u/s.36(2)(i) of the Act. The AR in his submissions has not disputed the finding of fact by the AO that the sum of VAT was not forming part of income in the profit and loss account in any of the previous assessment ears. In fact, the appellant has submitted that it is maintaining a separate account for VAT, wherein the input and output is entered and the yearend balance is reflected in the Balance Sheet of the appellant every year. I find that nothing is routed through profit & loss account. It was also submitted that this item is a....
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....recoverable. The CIT(A)'s findings under challenge qua this issue read as under:- "4.1 I have considered the submission of the A of the appellant in the matte. I find that the appellant has claimed a deduction of Rs.7,55,500/- in respect of advance (earnest money) written off. Impugned order find from the assessment order that the disallowance is made u/s 36(2) of the Act. The AR before me has claimed the said write off as allowable u/s.28 of the Act, relying upon the case as cited supra. The AR has submitted before me that in the course of normal business activity, the appellant had to participate in various tender processes with different Government organizations for which they had to pay Earnest Money. Some of the sided earnest monies could not be recovered for different reasons and after lapse of reasonable time, the same were written off since chances of recovery of the same became remote. Since those Earnest monies were paid for regular business purpose and for securing business income, writing off of the sale were to be treated as normal business expenses. Although, the appellant's AR has submitted that the earnest money was paid for regular business purpose, I find....
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....vidip Enterprise Rs. 8,36,091/- Orders were placed before them for supply as well as for execution of works. In some cases of execution of contract, any requirements of materials are being procured by them from outside independent parties and not supplied by your assessee and they raised invoices separately for supply of materials and for labour when such labour charges are required. As a result in case of supply of materials, stated herein above, taxes have not been deducted at source since these are not cases coming under expression "carrying out any work". In other cases taxes were duly deducted. In the Memorandum explaining the provision of Finance Bill, 2009, definition of work in sec 194C has been clarified to the effect that "work shall not include manufacturing or supplying of materials according to requirement or specification of costumer by using raw materials purchased from a person other than customer." Moreover Marble Kind & Tiles Co is a regular dealer of tiles and other building materials who are used to sale those materials in their day to day business and as a result purchase of materials from them in the normal course of business do not call f....
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.... to its payees for manufacture or supply purposes. We therefore conclude that the CIT(A) has erred in law as well as on facts in confirming the impugned disallowance of outright material purchase. The assessee succeeds in third and final substantive ground as well as the main appeal ITA No.2220/Kol/2016. 9. We now come to latter assessment year 2012-13. The Revenue's appeal ITA No. 1793/Kol/2016 raises its former substantive ground challenging correctness of the CIT(A)'s action treating assessee's repair expenditure claim on building amounting to Rs.1,07,03,835/- as revenue expenditure as follows:- "3. Ground No.1 This ground is directed against the action of the AO in disallowing an amount of Rs.1,07,03,835/- on account of repairing expenses of building treating it as capital in nature. The matter is discussed at para 3 to 3.3 of the assessment order. In course of assessments proceedings, the assessee provided the breakup of the expenses incurred as follows: Expenses incurred for repair at the site office of the company at 32 & 32/1,APC Road, Kolkata-700009 Rs.15,56,093/- Expenses incurred for repair at the registered office as well as unit-I&II of the company....
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....isallowed the entire expenses with a simple comment that entire expenses are of capital nature. Copy of the above letter as well as details of such expenses are attached. Al the expenses incurred are of day to day normal repairing and maintenance nature and some of them were made to ensure safety, security and benefit of the workers and staff since the properties are very old specially the city office which was built up near independence. No new structures are built up and expenses are all for maintenance of the existing structures to keep them in working condition. No new asset was created and the company did not receive any benefit of enduring nature. Hon'ble Supreme Court in the case of Ballimal Naval Kishore vs. CIT have clearly described the term "repairs" as follows: 'The simple test that must be constantly borne in mind is that as a result of the expenditure which is claimed as an expenditure or repairs what is really being done is to preserve and maintain an already existing asset. The object of the expenditure is not to bring a new asset into existence, nor is its objet the obtaining of a new or fresh advantage. This can be the only definition repairs....
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....with payment of rent of the property. In view of the foregoing discussion, I do not find any merit in the action of the AO in resorting to make the impugned disallowance of Rs.1,07,03,835/- on both facts and law for which the same is directed to be deleted. This ground is allowed." Learned Departmental Representative vehemently contends during the course of hearing that the Assessing Officer had rightly disallowed the assessee's impugned claim to be not incurred in routine manner and in view of the fact that the repaired premises was not in its ownership. We find no substance in either of these two arguments. We afford sufficient opportunities to the Revenue to refer to the case record for the purpose of pin-pointing any capital expenditure element in assessee's claim i.e. creation of altogether a new asset or any enduring advantage etc. There is no such rebuttal coming from the case file. The Revenue's latter argument raising ownership issue of the repaired premises also has no force as there is no such pre-condition in the Act that only self-owned asset or premises of the concerned assessee can be repaired for the purpose raising the consequential claim as revenue expenditure.....