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TMI Blog2022 (11) TMI 460X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment year [for short "AY"] 2013-14. 2. Two short issues arising for our consideration, one as to what constitutes sufficiency of interest free funds entitling diversion thereof to sister concern as such? And second as to when repairs & maintenance expenditure to tantamount capital expenditure [for short "Capex"]? 3. Before we proceed to adjudicate on aforesaid issues, it's necessary to reproduce the grounds raised such as; "1. The learned CIT(A) erred in law and on facts in confirming disallowance of interest expenditure of Rs.4,77,338/- on account of diversion of funds for nonbusiness purpose. The disallowance being unjustified on facts and in law may kindly be deleted. 2. The learned AO erred in law and on facts in disallowing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore this Tribunal on effectively two grounds set in para 3 hereinbefore. 5. During the course of physical hearing, the learned representative of the assessee [for short "AR"] at the outset referring to affidavit and application filed for condonation of delay in instituting the appeal, reiterated its contents and prayed for condonation. In so far as the first meritare ground is concerned, the Ld. AR adverting to page 11-12 of the paper book submitted that, the sum of the equity capital and balance of reserves & surplus are far more than the total amount of interest free funds lent to sister concern, hence the disallowance u/s 36(1)(iii) was unwarranted. And in so far as disallowance of repairs & maintenance is concerned, the Ld. AR contende ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accordingly. 7. We have heard the rival contentions of both the parties; and subject to the provisions of rule 18 of Income Tax Appellate Tribunal Rules, 1963 [for short "ITAT, Rules"] perused the material placed on record, case laws relied upon by the appellant as well the respondent and duly considered the facts of the case in the light of settled legal position forewarned to either parties. 8. First thing first, in so far as the delay of 82 days in instituting the present appeal is concerned, we having regards to facts & circumstance, find force in the submission of the appellant establishing the sufficiency of reason in belated filing, consequently in the light of decision of Hon'ble Apex Court in "Collector Land Acquisition Vs MST K ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Ld. AR prima-facie did not inspire any confidence in the claim put forth. We are mindful to the fact that, the funds borrowed on interest under "OD" facility is meant for working capital needs of the borrower & is governed by terms of loan agreement and bench is also aware of the fact that, every banker while making such a sanction invariably restricts the borrower from diverting the such loan funds or utilization thereof for any purpose outside the sanctioned tenacity by stipulating appropriate condition in the loan agreement itself. Since the appellant neither brought on the record any authorisation from the banker entitling such diversion of funds to sister concern nor placed any evidential material to substantiate such interest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion sufficiently clenches that, when a premises in a disfigured or dilapidated condition is occupied by the assessee, all extensive repairs meant to include current or otherwise undertaken by the assessee for making such premises tenable vis-a-vis habitable for business, unless such extensive repairs brings into existence any capital field or rights therein, shall pass the litmus test laid in sub-clause (i) of section 30(a) of the Act and accordingly the allowance. 12. In the present case before us, it is an admitted fact that, the appellant has occupied the premises on short term lease in a disfigured condition and carried out the extensive repairs to convert the same into workshop and showroom so has to suit its business operation to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ture under the Act, what is material is the classification between the capital and revenue and the same-does not recognise of any concept of deferred revenue expenditure cataloguing with enduring benefit, hence for the reason we disapprove the contention of Ld. DR's for treating the revenue expenditure as deferred expenditure, and are we are of the considered view that, the expenses incurred by the appellant squarely intra-legem to the provision of section 30(a)(i) of the Act, and the same finds fortified by the decision of the Hon'ble Calcutta High Court in "Cultural Enterprises Corp. Vs CIT" reported in 196 ITR 488, ergo we remove the infirmity in the order of both the tax authorities below by deleting the disallowance carried out u/s 30( ..... X X X X Extracts X X X X X X X X Extracts X X X X
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