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TMI Blog2021 (2) TMI 543X X X X Extracts X X X X X X X X Extracts X X X X ..... een accepted in the previous and subsequent year also, therefore, in the said circumstances, the finding of the CIT(A) is not justifiable, hence is liable to be set aside. We ordered accordingly and the claim of the assessee is hereby allowed. - I.T.A. No.1233/Mum/2017 - - - Dated:- 9-2-2021 - Shri M. Balaganesh, AM And Shri Amarjit Singh, JM For the Assessee : Shri K. Gopal, Ms. Neha Paranjpe For the Revenue : Shri Rajendra Joshi (DR) ORDER PER AMARJIT SINGH, JM: The assessee has filed the present appeal against the order dated 28.11.2016 passed by the Commissioner of Income Tax (Appeals) -8, Mumbai [hereinafter referred to as the CIT(A) ] relevant to the A.Y.2013-14. 2. The assessee has raised the following grounds: - 1.1 On the facts and circumstances of the case and in law the assessing officer has erred in considering the following expenses as Capital expenditure instead of revenue expenditure out of the total expenses of Repairs Maintenance of ₹ 70,04,835 debited to Profit Loss Account and CIT(A) in confirming the same. Name of Party Rupees M/s. Bagwe Engineering Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peal, if so advised. 3. The brief facts of the case are that the assessee filed its return of income on 30.9.2013 declaring total income of ₹ 55,58,990/-. The case was selected for scrutiny. Notices u/a 143(2) 142(1) of the I. T. Act, 1961 were issued and served upon the assessee. The assessee was the owner of premises Nirmal Building and acts like a mutual association for managing the property for the benefit of the unit holders cum share holders of the company who contribute by the way of compensation charges and out of the same various expenses of the building were made. The assessee has shown the interest income in sum of ₹ 1,58,25,633/- which was treated as income from other sources. The assessee has shown the repair maintenance charges of ₹ 50,03,041/- which was treated as capital expenditure and disallowed. The total income of the assessee was assessed to the tune of ₹ 1,04,58,500/-. Feeling aggrieved, the assessee filed an appeal before the CIT(A) who partly allowed the claim of the assessee but the assessee was not satisfied, therefore, the assessee has filed the present appeal before us. ISSUE Nos. 1 to 4 4. We have heard the argu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arrived at by the assessee in the present case was devised for raising finance as the assessee-company was faced with the stupendous task of raising funds of about ₹ 80 lakhs which was the estimated cost of construction of a commercial building and that the arrangement between the assessee-company and its shareholder was a genuine and bon fide arrangement for payment of a sum of money designated as interest in return for the company obtaining finance for construction of the building. Shri Dastur also pointed out that the Income-tax Department and the Tribunal did not allow the assessee's claim for deduction of the sum of ₹ 4.77 lakhs and ₹ 4.79 lakhs for the two years on the ground that the deposits were trading receipts and accordingly the interest would not be payable on what constituted the assessee's trading receipt or income. Shri Dastur contended that the fact that the said receipts were considered as trading receipts did not alter the situation at all. They were part of the arrangement for obtaining funds for carrying its activities under which the assessee-company received the deposits and also collected monthly sums from the occupants. The sums we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... act was payable, cannot be disallowed as claimed by the Department. Reliance was also placed on the decision reported in CIT v. Tata Sons Ltd. [1939] 7 ITR 195 (Bom), wherein n annual amount payable to a lender of money which was needed by the assessee was held to be deductible even if it was payable after the entire loan had been repaid. Shri Dastur relied upon the observation made in Tata Sons Ltd. v. CIT [1950] 18 ITR 460, 467 (Bom), wherein it has been observed that one has to consider the deductibility of the amount claimed by the assessee-company by taking into account commercial expediency and the principles of ordinary commercial trading and whether the expenditure was a part of the process of profit making . He also relied upon the observations made in Eastern Investments Ltd. v. CIT , wherein it is observed that in order to claim a deduction it is enough if it is shown that the money was expended not of necessity but voluntarily and on the ground of commercial expediency and in order to facilitate the carrying on of the business. Reliance was also placed on the observations made in Tata Sons Ltd. v. CIT [1950] 18 ITR 460, 468 (Bom), wherein it was observed Even a volunt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the basis of the above discussion, it must be held that the Income-tax Officer was not entitled to enhance the compensation to the extent of the compensation received by the share-holders in their own right. 14. The next question arises for consideration as to whether the claim of the assessee that losses of the past years should be carried forward and adjusted against the income of the assessee for the assessment years 1971-72 and 1972-73 has been rightly rejected by the Tribunal. The said claim of the assessee was rejected merely because the matter was finally not decided. In the view which we have taken, the losses would be required to be carried forward and adjusted against the income of the assessee for the assessment years 1971-72 and 1972-73. 5. The said judgment speaks that the income of the assessee should be treated as business income. No doubt in the said circumstances, the expenses are liable to be allowed as revenue expenses. Further, we find that in the previous and subsequent year, the claim of the assessee has been accepted by the revenue as revenue expenses. The claim of the assessee is liable to be accepted on the basis of consistency also. Moreover, the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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