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TMI Blog2023 (10) TMI 567X X X X Extracts X X X X X X X X Extracts X X X X ..... aised by the assessee in its appeal preferred before the Tribunal, it would stand remanded to the AO for examination of the character and nature of the expenses incurred, having regard to the principles adverted to [ 2023 (10) TMI 467 - DELHI HIGH COURT ] the instant appeal is disposed of with the following directions, as the view taken in the said appeal will apply mutatis mutandis to the instant case as well Appellant/assessee will be entitled to claim the deduction, as, in our opinion, it is in the nature of revenue expenditure. - Hon'ble Mr Justice Rajiv Shakdher And Hon'ble Ms Justice Tara Vitasta Ganju For the Appellant : Mr Tarun Gulati, Sr. Adv. with Ms Aakanksha Kaul, Mr Aman Sahai, Mr Kumar Sambhav and Mr Adit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs.71,45,416/- Fixing of Bus Bars Rs. 32,000/- Fabrication of frame for fixing the false ceiling Rs. 36,283/- 4.1. The Commissioner of Income Tax(Appeals) [hereafter referred to as CIT(A) ] held the aforesaid items of expenditure as being in the nature of revenue expenditure. [See para 4 above]. The findings of fact returned by the CIT(A) in this behalf are set out hereafter: 5 The AO held that these expenses were capital expenses and are not covered under the scope of current repairs. He disallowed the same and allowed depreciation at 25% as per Rules. The appellant s case that the expenses are revenue expenses and represent th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Thus an addition of Rs.72,49,483/- is deleted. The AO will withdraw the depreciation allowed on this amount. The addition of Rs. 60,098/- on redoing the air conditioning system is upheld. 4.2. Although the reasoning of the CIT(A) is broadly in line with the reasoning adopted by us in ITA 1398/2023, to which reference has been made hereinabove, disallowance of expenditure incurred on redoing the airconditioning system amounting to Rs. 60,098/-, has been sustained by the CIT(A) by holding that the same was a part of the scheme for renovation. 5. Against the order of the CIT(A), both the assessee as well as the revenue preferred appeals to the Tribunal. While the assessee s appeal was confined to the disallowance amounting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... door shutters. The assessee, thus, purchased and installed 534 guest room door shutters and 540 toilet door shutters. It is not possible that all the door shutters in the hotel rooms got damaged or worn out at the same time during September-October, 1996. Apparently, the C assessee has replaced all guest room door shutters and of toilet door shutters with new items of very superior quality. No material has been brought on record as to the quality and cost of what existed prior to replacement. Prime facie the expenditure is in the nature of an attempt to bring superior look and functioning as compared to the existing one. In this context, the observations of the auditors of the company are significant. There is no doubt that the final word ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould, in our view, be adopted for determining the actual cost of the assets in the absence of any statutory definition or other indication to the contrary. In this case the fact that there is total replacement of shutters of all guest rooms and toilets therein, the rate of expenditure per piece, the auditor's report lead to inescapable conclusion that the expenditure is of capital nature. It is not an expenditure incurred to keep an existing asset to its full function but to substantially add to and enhance to the existing discarding the old asset by way of acquisition of the new asset. The argument of the assessee that no new asset or advantage was brought in is not acceptable. The assessee has hardly brought any materia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eferred to the bill issued by M/s Vaccair Engineers as at pages 12 and 13 of the paper book. He pointed out that the bill itself suggested that the expenditure was in the nature of repair and replacement. The bill referred to dismantling, repositioning, re-routing, removal and relocation and so on. Even otherwise, no new air conditioning system for the Shopping Arcade could have been brought in existence from meager expenditure of Rs.60,098/-. The learned CIT(Appeals) was under an erroneous impression that the expenditure was part of a renovation and refurbishment programme undertaken by the assessee. That programme had already come to an end in October, 1994. On consideration of the matter, we see force in these contentions of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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