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TMI Blog2016 (1) TMI 647X X X X Extracts X X X X X X X X Extracts X X X X ..... d to confirmation of addition of Rs. 2,33,324/- made under section 14A of the Income Tax Act, 1961 ["Act" in short] r.w. Rule 8D for earning dividend of Rs. 2,715/-. In the Revenue's appeal, the first effective ground raised is with regard to deletion of disallowance under section 36(1)(va) of the Act towards payment to PF and second issue pertains to allowability of current repairs. 2. Brief facts of the case are that the assessee is engaged in the business of pharmaceuticals and filed its return of income on 26.09.2008 declaring loss of Rs. 25,80,056/-. Subsequently, the assessee has filed a revised return on 30.09.2008 declaring the loss at Rs. 16,01,096/-. The case of the assessee was processed under section 143(1) of the Act and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g Officer was many fold and it should not be more than the dividend income earned by the assessee and at the best the disallowance should be restricted to the amount of exempt income. 6. On the other hand, the ld. DR supported the orders of authorities below. 7. We have heard both sides, perused the materials on record and gone through the orders of authorities below. It is a fact that the assessee has earned dividend of Rs. 2715/-. Before the Assessing Officer, the assessee has submitted that the entire investment made is out of its surplus generated from business and that it was not out of any borrowals. It was also submitted that no expenditure attributed to earn the exempt income. Since it cannot be ruled out that the assessee has not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntire exempt income is to be disallowed. The window for disallowance was indicated in section 14A and was only to the extent of disallowing expenditure "incurred by the assessee in relation to the tax exempt income". This proportion or portion of the exempt income surely cannot swallow the entire amount. The order of the Assessing Officer was set aside. The initiation of penalty proceedings also was set aside. The matter was remitted to the Assessing Officer for fresh consideration." 8. In the present case, the assessee has earned exempt dividend income of Rs. 2,715/-. The assessee has not admitted any expenses to earn the above dividend income. The Assessing Officer disallowed the expenses to the tune of Rs. 2,33,324/- by invoking section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and also it is inconsistent with Godaveri (Mannar) Sahakari 298 ITR 149 (Bom). On the other hand, the ld. Counsel for the assessee strongly supported the order passed by the ld. CIT(A). 12. We have heard both sides, perused the material on record and have gone through the orders of authorities below. It is not disputed by the Revenue that the assessee has not paid the employees contribution received by it before the due date of filing of the return. The Hon'ble Jurisdictional High Court in the case of CIT v. Nexus Computer (P) Ltd. [2009] 313 ITR 144 has held that the PF and ESI contribution paid belatedly, but prior to due date of filing of return could not be disallowed under section 43B of the Act. Therefore, respectfully following ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure. Accordingly, the Assessing Officer has held that some of the expenditure relates to some minor repair items, out of the total expenditure of Rs. 43,29,728/- spent for renovation of hotel property and the balance expenditure of Rs. 33,31,189/- was treated it as capital in nature. 14. On appeal, after considering the detailed submission of the assessee and by following the decision of the Hon'ble Jurisdictional High Court in the case of CIT v. Ooty Dasaprakash 237 ITR 902, the ld. CIT(A) and treated the expenditure as revenue in nature and accordingly, allowed the ground raised by the assessee. 15. Aggrieved, the Revenue is in appeal and the ld. DR has strongly contended that the assessee has constructed an annexe to the building t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iring works carried out by the assessee. The Assessing Officer has not found that the assessee has enhanced the existing rooms/restaurant. The only objection of the Assessing Officer is that the assessee has procured bulk quantity of building materials like cement, bricks, iron & steel, flooring materials, etc. and to carry out such bulk quantity of building materials are not required to carry out minor repairs. It has to be seen the building condition in which the materials so purchased were used for repairing work. Before the ld. CIT(A), the assessee has submitted that the repair works were carried out in a heritage building, which is more than 250 years old and also submitted that the assessee has incurred the expenditure towards repair ..... X X X X Extracts X X X X X X X X Extracts X X X X
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