2014 (2) TMI 465 - AT - Income Tax

Disallowance of repair and maintenance expenses - excess depreciation on furniture and fixture and plant & machinery Held that - The decision in IP Support Services (India) Pvt. Ltd. Versus DCIT (OSD) CIT-IV, New Delhi 2012 (9) TMI 364 - ITAT DELHI followed - There is no error whatsoever in the order of the Ld. CIT (A) - there was no separate claim of repair and maintenance and depreciation by the assessee - The reimbursement and 25% mark up had already been offered by the assessee to tax - The reimbursements have been found on deductions claimed in the profit and loss account on account of repair and maintenance of building, furniture and depreciation claimed on computers, furniture and fixtures, vehicles and office equipment provided - The order pertaining to the deletion of disallowances on account of repair and maintenance on let out buildings and disallowance on account of depreciation claimed on furniture, fixtures and plant and machinery upheld Decided against Revenue. Disallowance u/s 14A of the Act r.w. Rule 8D of the Rules - Held that - The Tribunal has upheld the findings of the Commissioner of Income Tax(A) which deleted the addition made by the Assessing Officer by invoking Rule 8D of the Income Tax Rules r/w section 14A of the Act - the assessee had itself added portfolio management expenditure incurred for maintaining portfolio of the assessee and the assessee has added expenditure of portfolio management services voluntarily, then if it is found that no interest expenditure stood debited in the P&L account, Rule 8D r/w section 14A of the Act cannot be invoked - the Commissioner of Income Tax(A) rightly upheld part addition in this regard and another part of the addition has been deleted on justified grounds there is no reason to interfere with the findings of the Commissioner of Income Tax(A) Decided against Revenue.

Summary

Issues:
1. Deletion of addition of repair and maintenance expenses.
2. Deletion of addition of excess depreciation on furniture, fixture, and plant & machinery.
3. Deletion of addition made on account of disallowance by invoking Rule 8D read with Section 14A of Income Tax Act, 1961.

Issue 1 - Repair and Maintenance Expenses:
The appeal by the revenue challenged the deletion of an addition of Rs.46,63,676 on account of repair and maintenance expenses. The Assessing Officer observed disallowances related to repair and maintenance of a let-out building. The Commissioner of Income Tax(A) partly allowed the appeal. The ITAT Delhi 'C' Bench had previously decided in favor of the assessee for AY 2006-07, 2007-08, and 2008-09. The Tribunal upheld the Commissioner's decision, stating that there was no error in the order, as the expenses had already been offered for taxation. The revenue's appeal was dismissed.

Issue 2 - Excess Depreciation:
The revenue contested the deletion of an addition of Rs.50,17,397 on account of excess depreciation on furniture, fixture, and plant & machinery. The ITAT Delhi 'C' Bench had previously dismissed similar appeals for AY 2006-07, 2007-08, and 2008-09. The Tribunal upheld the Commissioner's decision, stating that the Assessing Officer was in error to hold it as a case of double deduction. The revenue's appeal was dismissed.

Issue 3 - Disallowance under Rule 8D and Section 14A:
The revenue challenged the deletion of an addition of Rs.33,35,986 made by invoking Rule 8D read with Section 14A of the Act. The ITAT Delhi 'C' Bench had previously upheld the Commissioner's order for AY 2007-08. The Tribunal found that Rule 8D could not be invoked if no interest expenditure was debited in the Profit and Loss account. The Commissioner's decision to accept the suo moto estimated amount offered by the assessee for taxation was upheld. The revenue's appeal was dismissed.

In conclusion, the ITAT Delhi upheld the Commissioner's decisions in all three issues, citing previous judgments and finding no valid reasons to interfere with the impugned orders. The revenue's appeal was dismissed in its entirety.