TaxTMI 
TaxTMI 
2021 (9) TMI 736
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....8.2012. The substantial questions stated in the instant tax appeal relate to the Assessment Year 2003-04. The assessee challenges the order of Tribunal in rejecting the assessee's claim made towards showroom expenses; disallowed depreciation in respect of portion of Gurgaon building rented out by assessee in favour of its sister concern Apollo International Ltd; expenditure on club payment towards cost of services and finally advances written off from the amount advanced by the assessee for purchase of capital items. The substantial questions are considered in the same order they are framed in the appeal. 3. The first question relates to assessee's claim of expenditure for purchasing equipments such as wheel balancer, wheel aligner, wheel changer and tyre changer for the use by dealers of assessee at Apollo Tyre World showroom. The assessee claimed that the expenditure incurred for purchasing the equipment is an expenditure for refurbishing the showrooms of the company, hence an expenditure incurred to expand the business opportunities. The Assessing Officer, by referring to the audit report of assessee/company, found that the expenditure is in the nature of purchase of ....
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....es as noted by the Assessing Officer and expanded by the CIT (Appeals), the ownership of equipment, in fact, is transferred to the dealers. The Tribunal upon examination of the record has held as follows: "4. However, from the rival submissions made, it transpires that the ownership of these assets would continue to remain with the assessee only. Hence, the view of the Ld CIT(A) is contrary to the facts. The Ld Counsel placed reliance on the common order dated 09-09-2009 rendered by this bench in the assessee's own case in ITA Nos. 538/Coch/2005, ITA No.273/Coch/05 and ITA No.25/Coch/04 and submitted that the Tribunal has considered an identical issue in paragraphs 21-23 of the said order and has taken the view that the expenditure incurred on renovation of the show rooms is revenue expenditure. 5. We have carefully considered the Tribunal's order relied upon by the Ld A.R. In the said order, the Tribunal has actually considered the nature of expenditure incurred on interior decoration of the show rooms and took the view that they are temporary structures, which cannot be retrieved back. Accordingly, the Tribunal took the view that the expenditure incurred on interior....
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.... a showroom. So expenses incurred on account of such commercial contingencies/designs once are met by the assessee the return of asset, on which amount was expended, is not possible finally into the hands of the assessee. These expenses are more or less treated as expenses incurred as revenue expenditure. In the case on hand, the expenses incurred are towards purchase and establishment of equipment, such as wheel balancer/wheel aligner/wheel changer/tyre changer. The equipment, as rightly noted by the Tribunal, is movable equipments. The ownership is an important aspect in such expenditure. The equipment is also used by the respective dealers over a period of time but not booked against one year. Unless and until the ownership is stated to have been transferred in favour of the dealer and the assessee claims to have any interest in the movable property; according to him, the finding recorded by the Tribunal is justifiable in the circumstances of the case and any other view virtually amounts to reappreciating the findings of fact without any material on record. 7. The substantial question of law as framed refers to whether the Tribunal is correct in treating the expenditure as ca....
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....ll supported by reasons. The amount spent for acquiring membership in the clubs stands on a different pedestal from the amounts incurred for availing materials supplied or service provided in the clubs. This Court finds that the said issue is to be answered in favour of the assessee. It is declared accordingly." 8.1 The assessee is entitled to claim only the membership fee but not the amount spent by the assessee for availing the services of goods etc. in the club. In the case on hand, the finding is that it is not for membership. Having regard to the findings of fact recorded, the question is answered in favour of the Revenue, against the assessee. 9. Substantial question no.3 relates to disallowance of part depreciation claimed by the assessee of Gurgaon building aggregating to Rs. 25,27,505/- in relation to the let out portion to Appolo International Ltd. The assessee challenges the following finding recorded by the Tribunal. "13. We notice that the AO had made similar disallowance in respect of claim of bonus payment in assessment year 2002-03, i.e., provision created for the year ending 31.3.2001 was paid during the year relevant to the assessment year 2002-03 and was....
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.... in dispute that the assessee has accepted the said finding of the Tribunal and allowed the finding to become final. The Tribunal has merely followed its earlier view and rejected the claim of petitioner under this head. No other ground is argued before us to contend that the view taken, at any rate, is impermissible in law. By taking note of the circumstances stated by the assessee in respect of this particular claim, and the consideration by the Tribunal, we are of the view that the Tribunal has rightly maintained consistency in this behalf for the Assessment Years 2002-03 and 2003-04. The question raised is answered in favour of the Revenue and against the assessee. 10. Substantial question No.4 is rejection of claim of assessee in writing off bad debts. The substantial question reads as follows: "Whether on the facts and in the circumstances of the case, the Tribunal is justified in law in holding that the debts and advances relating to acquisition of capital assets written off in the books of accounts aggregating to Rs. 28,67,407/- are not allowable as revenue expenditure on the ground these are of the nature of capital loss outside the purview of Section 37(1) or 36(1) ....