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2017 (2) TMI 640 - ITAT MUMBAIDisallowance of expenditure incurred on the strengthening of perimeter road - treated by the AO as capital expenditure - Held that:- Respectfully following the decisions of the tribunal for A.Y. 2007-08, the impugned expenses are held to be allowable as revenue expenditure. Thus, no interference is called for in the decision of the Ld. CIT(A) and therefore, same is upheld in view of detailed and well reasoned findings of the Tribunal for A.Y. 2007-08 - Decided in favour of assessee Disallowance of refurbishment expenses in the nature of civil works - treated by the AO as capital expenditure - Held that:- It is noted that the expenses incurred are of similar nature and pattern. The other conditions i.e. no creation of new asset and no benefit of enduring nature also remain the same. This fact is not disputed that the concerned premises or building or the structures did not belong to the assessee company. Since the Tribunal has already taken a view by holding the same as revenue expenditure, respectfully following the same, the expenses under consideration should also be held as revenue expenses. Thus, we find that Ld. CIT(A) has rightly held these expenses as revenue expenditure. Thus, respectfully following the order of the Tribunal for A.Y.2007-08, no interference is required in the order of the Ld. CIT(A) and the same is upheld - Decided in favour of assessee Non deduction of TDS u/s 194J, 194C as well 195 - addition u/s 40(a)(ia) - Held that:- Nothing has been discussed about the nature of the expenses, position of crystallisation of these expenses, availability of particulars of the payees, etc. It has been observed in the order by Ld. CIT(A) that whenever payments are actually made against these provisions, TDS is deducted as was stated by the Ld. Counsel. But, what are the precise facts in this regard has not been discussed in the order. No details are available or discussed by the Ld.CIT(A) regarding various aspects, e.g. when these expenses were actually incurred, in whose name these are finally credited, who are the actual payees, when the payments were made actually and whether the TDS was deducted at the time of making of payments or not? Nothing has been brought out on record to ensure that finally there was no revenue leakage and full compliance of the TDS provisions was made ultimately. We find that order of Ld. CIT(A) is devoid of any factual narration and, therefore, we find it appropriate to send this issue back to the file of the CIT(A) for complete factual analysis and thereafter applying the correct position of law. Ld. CIT(A) shall provide adequate opportunity of hearing to the assessee. Disallowance of 25% depreciation on upfront fees - Held that:- Tribunal for A.Y. 2007-08 held that the amount paid on account of upfront fee is in the nature of an “intangible asset” eligible for depreciation and accordingly allowed the claim of depreciation upon the same. The assessee has claimed depreciation in the impugned year on the WDV of the same asset. Therefore, we find that no different decision can be taken in the year under consideration, more so, when no distinction has been made on facts or law, therefore, respectfully following the order of the Tribunal, the claim of depreciation on the upfront fee is allowed. Disallowance of interest - treated by the Assessing Officer as capital expenditure - Held that:- Submissions and details submitted by the assessee have not been analysed by the Ld. CIT(A) in the light of AO’s allegations and doubts narrated in the assessment order. With the assistance of the parties, it was also noticed by us that the assessee had submitted some details before the Assessing Officer vide letter dated 06-12-2010. But no discussion, whatsoever, had been made by the Ld. CIT(A) while allowing relief. Therefore, find it appropriate to send this issue back to the file of the Ld. CIT(A) with the direction to decide this issue in a speaking manner after analysing the details and evidences submitted by the assessee and after giving adequate opportunity of hearing to the assessee to explain its case and furnish further details / evidences as may be considered appropriate by the assessee. Thus, with these directions, this issue is sent back to the file of the Ld. CIT(A). Disallowance of legal and professional charges - Held that:- From CIT(A)’s order, it is noted that he has not given proper reasoning while allowing relief to the assessee. The details submitted by the assessee have not been discussed by the Ld. CIT(A). He has made a sweeping and general remark that the details submitted by the assessee show that legal and professional charges are clearly allowable expenses u/s 37(1) of the Act. He has not discussed the details of the legal and professional charges and whether these have been incurred on account of revenue or capital field. Disallowance u/s 14 r.w.r 8D - Held that:- Disallowance made by the AO without assuming jurisdiction as per law for invoking provisions of Rule 8D(2)(iii) is directed to be deleted. Disallowance on account of provision for leave encashment made by the assessee on the basis of actuarial valuation - Held that:- None of the authorities have narrated proper facts as to whether the total amount debited under this head was on account of provision or some part of it was paid also. Further, it is also not coming out whether provision for leave encashment has been made on the basis of actuarial basis or not. In our view, this issue needs to go back for proper verification of facts, and therefore, we send this issue back to the file of the AO for proper adjudication Amount of Passenger Service Fee – Security Component (PSF – SC) received - whether forms part of taxable income of the assessee company - Held that:- As per the terms of SOP issued by MOCA, if ultimately there was some deficit, then it was required to be funded by Government of India, and if there was ever any surplus (i.e. unspent amount), it was to be transferred to the account of Airport Authority of India (AAI). Thus, viewed from this angle too there was no question of there being any income in this exercise, much less, any income, which could be characterised as taxable income in the hands of the assessee company. Thus, we have no hesitation in holding that the aforesaid amount is not taxable as income in the hands of the assessee company. The AO is directed to recompute the income of the assessee accordingly. The AO has also the liberty to examine that no portion of amount collected by the assessee on account of PSF-SC is utilised by the assessee for its own purposes or for any purposes which are not permitted by MOCA/other competent authorities. In case any violation is done by the assessee in this regard, then the AO will be at his liberty to treat the amount so misappropriated as income of the assessee but to that extent only. Further, if any refund is received by the assessee on account of TDS deducted on this component, i.e. on PSF-SC, then the same shall also be deposited by the assessee in the Escrow Account, as was fairly agreed by the Ld. Counsel during the course of hearing before us, failing which it would be treated as income of the assessee, to that extent only. Depreciation on taxiways, taxiing track and parking ways - @10% as applicable to buildings OR 15% made by the assessee as applicable to plant and machinery - Held that:- Tribunal has allowed the claim of depreciation @15% as applicable to plant & machinery. No distinction has been made by the Ld. DR on facts or on legal position. Therefore, respectfully following the order of the Tribunal for A.Y. 2007- 08, this issue is decided in favour of the assessee, and therefore, the claim of depreciation @15% is directed to be allowed.
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