Shree Nirmal Commercial Ltd. Vs ITO (ITAT Mumbai)
At the outset, the Ld. Representative of the assessee has argued that the assessee was not the owner of the property, therefore, the expenses are not liable to be capitalized in any manner. It is also argued that the assessee is the lease-holder and only 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 said judgment speaks that the income of the assessee should be treated as business income. No doubt in the said circumstances, the expenses are liable to be allowed as revenue expenses. Further, we find that in the previous and subsequent year, the claim of the assessee has been accepted by the revenue as revenue expenses. The claim of the assessee is liable to be accepted on the basis of consistency also. Moreover, there is no plausible reason given by the AO as well as CIT(A) in which it can be assumed that the nature of the expenses has been changed. Anyhow, in view of the above said facts and circumstances, it is quite clear that the assessee is not the owner of the building he is only lease-holder, hence, expenses are not liable to be capitalized. Moreover, the claim of the assessee has been accepted in the previous and subsequent year also, therefore, in the said circumstances, the finding of the CIT(A) is not justifiable, hence is liable to be set aside. We ordered accordingly and the claim of the assessee is hereby allowed.
FULL TEXT OF THE ITAT JUDGEMENT
The assessee has filed the present appeal against the order dated 28.11.2016 passed by the Commissioner of Income Tax (Appeals) -8,
Mumbai [hereinafter referred to as the “CIT(A)”] relevant to the A.Y.2013-14.
2. The assessee has raised the following grounds: –
“1.1 On the facts and circumstances of the case and in law the assessing officer has erred in considering the following expenses as Capital expenditure instead of revenue expenditure out of the total expenses of Repairs & Maintenance of Rs. 70,04,835 debited to Profit & Loss Account and CIT(A) in confirming the same.
