TaxTMI 
TaxTMI 
2016 (5) TMI 1504
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....expenditure instead of revenue expenditure." 4. Briefly stated, the facts of the case are that the assessee had debited an amount of Rs. 28,97,246/- to the Profit & Loss Account on account of repair and maintenance of building. While examining the ledger account of the assessee, the Assessing Officer noticed that some of the entries were like capital nature, the ledger of these entries are reproduced here-in-below : Repair& maintenance of building before Sept. Date Nature of Expenditure Voucher Amount 14.07.2009 Subir Construction Amt. credited to Subir Constructions on A/c repair work of old shed making contract (rent amount) payable to him 77 2,00,000/- 20.07.2009 Subir Con$tructi6n Amt. credited to Subir Constructions on A/c repair work of old shed making contract (rent amount) payable to him 107 4,00, 000/- 08.09.200* Subir Construction Amt. credited ....
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....l, the learned CIT (Appeals) upheld the action of the Assessing Officer, However, the learned CIT (Appeals) directed the Assessing Officer to allow depreciation on tubewell @ 15%. 7. Aggrieved by the order of the learned CIT (Appeals), the assessee has come up in appeal before the Tribunal. 8. We have heard the rival submissions and have also perused the materials available on record. The Assessing Officer has observed that under the head 'repair and maintenance of building' the total amount of Rs. 28,97,246/- spent by the assessee was capital in nature. He further pointed out that the details of the expenditure submitted by the assessee revealed that these expenditures were in capital nature. The Assessing Officer further pointed out that the expenditure spent on tubewell and new shed constructions were clearly in the nature of capital expenditure. The Assessing Officer has not given any further reason for rejecting the claim of the assessee. It is apparent from the record that the assessee had repaired old shed and spent about Rs. 17 lacs. The assessee had also spent an amount of Rs. 5,28,624/- on account of repair of tubewell. Furt....
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....ll at the loading way. Gaps at the ceiling of condensate recovery area which is adjacent to production area and birds feather were observed on the floor. Scrap material stored alongwith the wall at the loading bay. C boxes, partitions found laying alongwith the wall in production area. Flies were seen in the loading and unloading stations with open drains at the loading bay. Loading/unloading bays are not protected against the entry of pests inside the production area. Gap observed in the ceiling at the loading bay with watermarks of leakages. Barefooted employees were seen working in production area. Material is stacked/stored alongwith the wall and directly on the floor. Warehouse unloading and loading bay: external area very dirty with open drains full of water and lots of files above the drains. Naked tube light in the dispatch area. Window glasses are not filmed. Auditor was not asked to follow any plant GMP related specific instructions. Glue tank was very dirty with lots of glue spreading in the outside area and over the equipment switches. Hands wash is available at the entrance of production floor but auditor was not asked to wash his hands while going to....
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....controvert the above contention of the assessee. In our opinion, the expenses incurred towards deepening of existing tubewell are certainly in the nature of revenue. Furthermore, from the details submitted by the assessee, it is clear that the expenditure in question was incurred for maintenance of tubewell. The process of deepening is linked with its user. We may also observe here that the findings given by the learned CIT (Appeals) are also without any substance. The learned CIT (Appeals) has observed that the assessee must have certainly got done some work of capital nature. He further observed that the amount claimed to have been spent on repairs is extremely large and it is improbable to spend such a high amount on repairs. In our opinion, these observations of the learned CIT (Appeals) are not tenable and hence, we reject the same. In our opinion, whether a particular repair is really needed or not or what amount to be spent, the matter is to be decided by the assessee as it is the prerogative of the assessee to take appropriate repair at appropriate time. The repairs may be major repairs, spending considerable....
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....ules, 1962, r.w.s.14A of the Act. The Assessing Officer disallowed Rs. 76,075/-. 12. On appeal, the learned CIT (Appeals) confirmed the disallowance and, hence the assessee is in appeal before the Tribunal. 13. We have heard the rival submissions. Shri Mohit Dhiman, learned counsel for the assessee submitted that the investments were not made out of interest bearing loans but out of capital and reserves of the company. He further pointed out that the capital of the company was at Rs. 3,31,00,140/-. The interest free share application money was at Rs. 6,06,500/- and reserve and surplus were at Rs. 2,63,61,069/-. According to the learned counsel for the assessee, when these interest free funds were available and the revenue authorities have not been able to bring any nexus between two, therefore, no disallowance can be made under section 14A of the Act. In our opinion, the issue is squarely covered by the decision of the Hon'ble Punjab & Haryana High Court in the case of CIT Vs. Kapsons Associates (2016) 381 ITR 204 (P&H), wherein the Hon'ble High Court has held as under : "Re : Question Nos.5 and 6 The Commiss....
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....acts and the same position. As held by a Division Bench of this court in I. T. A. No. 320 of 2013 titled as CIT v. Abhishek Industries Ltd. decided on January 27, 2015, ( [2016] 380 ITR 652 (P&H)) section 14A requires the Assessing Officer to record satisfaction that the interest bearing funds have been used to earn tax-free income and that the satisfaction must be based upon credible and relevant evidence. It was further held that the onus to prove that interest bearing funds were used lies squarely on the Revenue. The issue, therefore, in this regard was based only on the facts. The least that must be said in favour of the respondents is that the findings of fact recorded by the Commissioner of Income-tax (Appeals) and by the Tribunal are not perverse and that the view taken by them is certainly a possible view. In view thereof, no question of law arises with respect to these questions as well." 14. In the instant case also, the assessee had invested a sum of Rs. 10,87,172/- in the shares of various companies. The contention of the assessee is that the investments in shares had been made out of the capital and outstanding reserves of the company and that no sepa....
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....sessee submitted that the assessee advanced a sum of Rs. 63,05,285/- to M/s Sodeme France for purchase of machinery. However, the seller did not deliver the machinery and the said company became bankrupt and the assessee had filed a suit in the Court of Liquidator in France and the suit was dismissed as the said company was declared as bankrupt. According to the learned counsel for the assessee, it was bad debt and till date no amount has been recovered from the said company. He further pointed out that there is no scope for recovery, it was futile to burden the assessee with interest. 19. The learned counsel for the assessee relied on the decision of the Hon'ble Jurisdictional in the case of CIT Vs. Suraj Dev Dada (2014) 367 ITR 78 (P&H), wherein the Hon'ble High Court has held as under : "8. In view of the findings recorded by the CIT(A) as well as the Tribunal, there was no justification for making an addition of Rs. 3,50,000/- under section 36(1)(iii) of the Act. The assessee has not chargd any interest on the amount advanced to M/s Nalanda Spinners as the amount advanced to Nalanda Spinners was not returned for whi....