TaxTMI 
TaxTMI 
2021 (2) TMI 543
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.... expenditures have not been incurred in relation to annual maintenance cost for normal wear and tear and the said expenditures are expected to give long lasting benefit to the appellant and hence, erred in considering the same as capital expenditure. 2.3 It is submitted that the nature of activities carried on by the appellant is just like co-operative society i.e maintaining the affairs of the building "Nirmal". Thus the way a cooperative society collects repair fund and incurs out of it the expenditure for the repairs of the building, in a similar way the appellant also has incurred expenses on repairs. It had not collected any separate repair fund as the appellant has surplus funds available out of compensation charges etc. recovered from the unit holders. The CIT(A) has erred in not appreciating the said fact and considering the expenditure as capital expenditure. 2.4 It is further submitted that the object of every repair is to improve the condition or the efficiency which has been lost on account of the use and so there is necessarily an improvement or betterment. Merely because the benefit of repairs extends beyond the year of expenditure it would not make the expenditur....
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....claiming the repair and maintenance charges, hence, the expenses are not liable to be capitalized in the interest of justice. In support of these contentions, the Ld. Representative of the assessee has placed reliance upon the decision in the case of CIT Vs. Shree Nirmal Commercial Ltd. (1995) 213 ITR 361. It is also argued that in the A.Y. 2008-09 and 2010-11, the claim of the assessee in connection with the expenses has been admitted as revenue expenses which is inconsistent to this year, hence, the claim of the assessee is liable to be allowed. However, on the other hand, the Ld. Representative of the Department has refuted the said contention. It is to be seen whether the expenses incurred/claim is capital in nature or revenue in nature. The issue is duly covered by the assessee's own case titled as CIT Vs. Shree Nirmal Commercial Ltd. (1995) 213 ITR 361. The relevant finding has been given as under.:- "13. Shri Dastur, therefore, is right in inviting us to hold that the payment of interest being accepted as genuine, the same would be required to be allowed as deductible at least under section 37 if not under section 28 of the Income-tax Act. Shri Jetley in the last tried to ....
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....he amounts were deposits they partook of the character of trading receipts and have been taken into account in determining the business profit or loss of the assessee-company and what has been held is that the nature of the amount paid by way of deposit was a trading receipt and the High Court had set out how the amount was to be dealt with in the books of the assessee-company, i.e., it was to remain to the credit of the unitholder. This court in the assessee's case has observed that the Tribunal was right in holding that the said deposits were in essence the consideration paid by the shareholders for allotment of the floor space and that the Tribunal was right in its view that this was in the nature of sale proceeds. Shri Dastur, however, contended that this does not mean that the said deposits completely lose their character as deposits. Relying upon the decisions reported in Punjab Distilling Industries Ltd. v. CIT and CIT v. Punjab Distilling Industries Ltd. , wherein the Supreme Court while determining the character of empty bottles return security deposit account held that the receipts reflected under that account partook of the character of trading receipts. But that, ho....
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....he result could have been achieved in another way. What one is concerned with is whether the transaction was done in the ordinary course of business, however mistaken the directors and shareholders may have been", and also the further observations "It is irrelevant that a transaction was forced on the company by its principal shareholders." Shri Dastur also relied upon the observations made in F. E. Dinshaw Ltd. v. CIT [1959] 36 ITR 114, 121 (Bom), wherein it has been held that in the absence of fraud, the questions whether the transaction has the effect of diminishing an assessee's taxable income and whether it was necessary for the assessee to enter into the transaction are irrelevant. Shri Dastur also relied upon the decision in CIT v. Nainital. Bank Ltd. Ltd. , wherein it is held that "the sole question for determination is whether in incurring the expenditure the assessee-company acted in the interests of and for the purpose of its business. Even if it is held-which is not at all admitted-that the assessee-company was under no legal liability to make the payment, still if it made the payment for the purpose of its business the same would have been deductible". In Sasoon J.....