Processing fees paid to bank for increase in working capital overdraft facilities is revenue expense

DCIT Vs M/s. QRG Central Hospital & Research Centre Limited (ITAT Delhi)

Assessee claimed expenditure of Rs.1,05,000/- incurred on account of processing fees paid to IDBI Bank Ltd. for increase in working capital overdraft facilities as revenue expenditure. When admittedly there is no capital creation with the loan facilities availed of by the assessee, the working capital overdraft facility cannot be kept under the category of capital expenses, rather working capital overdraft facility “is oftenly used to run day-to-day business”. Hence, the ld. CIT (A) has rightly deleted the addition of Rs. 1,05,000/- by treating the same as revenue expenditure.

FULL TEXT OF THE ITAT ORDER IS AS FOLLOWS:-

The appellant, Deputy Commissioner of Income-tax, Circle 14 (1), New Delhi (hereinafter referred to as ‘the Revenue’), by filing the present appeal, sought to set aside the impugned order dated 06.08.2014 passed by the Commissioner of Income-tax (Appeals)-XVII, New Delhi qua the assessment year 2010-11 on the grounds inter alia that :-

“(1) On the facts and under the circumstances of the case, the ld. CIT(A) has erred in deleting the addition of Rs.65,516/- made by the AO holding as capital in nature ignoring the facts that the assessee itself admitted the expenditure incurred on replacement of old furniture.

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