1990 (9) TMI 132 - AT - Income Tax

Summary

Issues:
1. Disallowance of payments for taxation matters
2. Disallowance of expenses for repairs of a building

Disallowance of payments for taxation matters:
The assessee's appeal was based on the disallowance of Rs. 2,200 by the assessing officer for payments related to taxation matters due to a case of loss. The CIT(A) upheld the disallowance, citing support from commentary without specifying the substance. The authorities did not refer to section 80VV, but the reasoning implied that deductions cannot be allowed in cases of loss. However, it was argued that section 80VV allows for deductions related to certain proceedings under the Act, which should be allowed in computing total income, even if it results in a loss. The expenditure claimed by the assessee was within the limits of section 80VV and, therefore, should have been allowed. The Tribunal held that the disallowance was unjustified, and the expenditure of Rs. 2,200 was allowable under section 80VV.

Disallowance of expenses for repairs of a building:
The appeal also addressed the disallowance of Rs. 15,000 out of total repair expenses of Rs. 28,333 for a building owned by the assessee. The assessing officer disallowed 60% of the expenditure, claiming it related to the portion occupied by tenants. The CIT(A) upheld the disallowance, stating that certain expenditures were of a capital nature and not exclusively for repairs of the self-occupied portion. The assessee argued that the entire expenditure was for repairs of the self-occupied portion, necessary for its wholesale textile business. The Tribunal agreed with the assessee, noting that the repairs were essential for the business and were revenue expenditures. The disallowance of Rs. 15,000 was deemed improper, and the entire expenditure was allowed. Therefore, the Tribunal deleted the disallowance of Rs. 15,000.

In conclusion, the ITAT Delhi allowed the assessee's appeal, ruling in favor of the assessee for both issues of disallowance of payments for taxation matters and disallowance of expenses for repairs of a building.