2017 (9) TMI 1594 - HC - Income Tax

Treatment to expenses claimed on crockery, cutlery, utensils, etc. - capital v/s revenue expenses - AO treating the expenses to be capital in nature on the premise that they were incurred in respect of a resort launched for the first time - Held that - By the impugned order of the ITAT, the Assessee s appeal was allowed and the Revenue s appeal was dismissed. The Court is not persuaded by the learned counsel for the Revenue that the above concurrent factual finding of the CIT (A) and the ITAT is perverse. No substantial question of law arises as regards the said issue. The entire expenditure incurred on crockery, cutlery, utensils, etc. should be treated as revenue expenditure. Addition on the basis of certain documents retrieved from the hard disc of the computer impounded during survey proceedings - Held that - CIT (A) has in the order discussed in detail the reconciliation statement, which was prepared twice once during the proceedings before the CIT (A). No discrepancy was found in the balance sheet and profit and loss account. This finding again has been concurred with by the ITAT in the impugned order. Revenue has been unable to persuade the Court that the concurrent factual finding is perverse. Revenue appeal dismissed.

Summary

Issues:
1. Addition of expenses claimed on crockery, cutlery, utensils as capital in nature.
2. Deletion of addition based on documents retrieved from computer hard disc.

Analysis:
1. The first issue in this case revolves around the addition of expenses claimed on crockery, cutlery, utensils as capital in nature. The Assessing Officer treated these expenses as capital in nature, amounting to &8377; 3,35,33,933, on the basis that they were incurred for a 'resort launched for the first time'. The Commissioner of Income Tax (Appeals) sustained a disallowance of &8377; 31,92,313 and deleted the addition of &8377; 3,03,47,020, as it was found that the resort was restarted after repairs. Both the Revenue and the Assessee filed appeals before the ITAT. The ITAT concurred with the CIT (A) on facts, holding that the entire expenditure should be treated as revenue expenditure. The High Court found no substantial question of law arising from this issue, dismissing the Revenue's appeal.

2. The second issue pertains to the deletion of an addition of &8377; 10,00,51,049 made by the AO based on documents retrieved from a computer hard disc during survey proceedings. The CIT (A) discussed in detail a reconciliation statement prepared twice, finding no discrepancies in the balance sheet and profit and loss account. This finding was also upheld by the ITAT. The Court, after considering the arguments presented by the Revenue, declined to frame a question on this issue, as it found no perversity in the concurrent factual finding. Consequently, the appeal was dismissed by the High Court.