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TMI Blog2014 (7) TMI 755X X X X Extracts X X X X X X X X Extracts X X X X ..... nature - the expenditure has been incurred in the compelling circumstances to remove the inconvenience and hardship faced by the assessee in its professional work as well as non-professional life and the advantage of the said expenditure is to facilitate the assessee's professional activity to be carried out more efficiently and profitably - 50% of the total expenditure which is considered to be for the professional purpose is allowed as revenue expenditure – Decided partly in favour of Assessee. - ITA NO.39/Mum/2011, ITA NO.171/Mum/2011 - - - Dated:- 7-5-2014 - SHRI VIJAY PAL RAO AND SHRI RAJENDRA, JJ. For the Appellant : Shri Aditya R. Ajgaonkar For the Respondent : Shri Pitambar Das ORDER Per: Vijay Pal Rao: These cross appeals are directed against the order dated 20.10.2010 of CIT(A) for the Assessment Year 2006-07. 2. The assessee is a lyricist and a well-known film personality. The assessee stated that he operates his profession from the premises 6th and 7th floor, Juhu Sagar Samrat, Co.op Housing Society Limited. The building was an old seven storied building having one lift. Since the lift was old, it used to get out of order very frequently, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In fact, the installation and use of the lift was for assessee's and his family's personal purpose as well. Accordingly, the CIT(A) was of the view that the lift installed is definitely not a revenue expenditure but is a capital asset. However, there are instances when expenses have been capitalised by various assessee's due to different reasons. CIT(A) has held that the installation of new lift was both for the purpose of assessee and his family's personal use and use by his professional visitors. Accordingly 50% of the Society Development Charges are held not allowable to the assessee either as revenue expense or capitalized cost being on personal and non professional account. Hence CIT(A) allowed 50% of expenditure claimed by the assessee to be capitalized and depreciation at prescribed rate. Both assessee and revenue have challenged the order of CIT(A). 4. The assessee has raised the following grounds in this appeal:- (i) Ld. CIT(A) has erred confirming the disallowance of the expenditure amounting to ₹ 17,32,436/- claimed by your appellant as society development charges in his Income and Expenditure Account. (ii) The Ld. CIT(A) has erred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct of the assessee's business to be carried on more effectively or more profitably while leaving the fixed capital untouched, the expenditure would be on revenue account, even though the advantage may endure for an indefinite future. He has further contended that as a result of expenditure the assessee has not acquired any capital asset because the lift does not form part of the capital structure or asset of the assessee. 7. The Ld. AR has then relied upon the decision of Hon'ble Supreme Court in the case of L.H. Sugar Factory Oil Mills (P.) Ltd. Vs. CIT (4 Taxman 5) (SC) and submitted that in the said case the assessee was a sugar manufacturing company and has contributed to the construction of road around the factory and claimed the same as revenue expenditure. The AO disallowed the claim of the assessee on the ground that the expenditure is in the nature of capital asset. The matter was taken to the Supreme Court and it was held that the road which was constructed around the factory belonged to the U.P. Government and not to the assessee. However, undoubtedly the roads were advantageous to the business of the assessee as they facilitated the transport of sugarcane t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ofessional activity of the assessee and enabling the assessee to manage and conduct his profession more profitably without any change in the fixed capital of the assessee and hence, is allowable as revenue expenditure. 8. On the other hand the Ld. DR has submitted that the expenditure in question is not at all a business expenditure. For the purpose of allowing the expenditure the mandatory condition is that the same should be incurred wholly and exclusively for the purpose of business of the assessee. The assessee has installed the lift in the building belonging to the society and, therefore, the question of exclusive purpose of business of the assessee does not arise. Further, when the assessee is residing in the same building along with number of other residents then the expenditure in question is not incurred wholly and exclusively for the purpose of business or profession of the assessee. The Ld. DR has submitted that the decision relied upon by the assessee are not applicable in the facts of the present case. In the case of CIT Vs. Associated Cement Companies Ltd. (supra) the assessee incurred the expenditure for laying of water supply pipeline within its premises and on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... professional activity of the assessee but it also enjoyed by assessee as well as family members of the assessee other than the professional purpose. Though the lift is also being used by other residents of the buildings, however for the purpose of considering the allowability of expenditure the use of lift by other residents in the building is not so material or relevant. The assessee has incurred the expenditure keeping in view its professional and family requirements. For allowing the expenditure u/s 37 of the Income Tax Act, the mandatory condition is that the expenditure has to be laid out wholly and exclusively for the purpose of business or profession of the assessee however it should not be on the capital field. So far as the nature of the capital in question is concerned since the assessee does not acquire any advantage in the capital account or any new asset for its professional purpose and the lift in question is not an apparatus of generating the professional income, therefore, we are of the view that it cannot be considered as an expenditure of capital nature as it does not create any new asset belonging to the assessee. The CIT(A) having considered this fact that the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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