M/s. Windamere Hotel (P) Ltd., Kolkata v. ACIT, Circle - 3, Siliguri, Siliguri

ITA 1291/KOL/2010 | 2007-2008
Pronouncement Date: 02-12-2011

Appeal Details

RSA Number 129123514 RSA 2010
Assessee PAN AAACW2667C
Bench Kolkata
Appeal Number ITA 1291/KOL/2010
Duration Of Justice 1 year(s) 5 month(s) 10 day(s)
Appellant M/s. Windamere Hotel (P) Ltd., Kolkata
Respondent ACIT, Circle - 3, Siliguri, Siliguri
Appeal Type Income Tax Appeal
Pronouncement Date 02-12-2011
Appeal Filed By Assessee
Bench Allotted B
Tribunal Order Date 02-12-2011
Date Of Final Hearing 20-04-2011
Next Hearing Date 20-04-2011
Assessment Year 2007-2008
Appeal Filed On 22-06-2010
Judgment Text
1 B IN THE INCOME TAX APPELLATE TRIBUNAL BENCH- B KOL KATA [ . .. . ! ! ! !. .. . '# ] BEFORE SRI N.VIJAYAKUMARAN JUDICIAL MEMBER & SRI C.D. RAO AC COUNTANT MEMBER $ $ $ $ / ITA NO. 1291 (KOL) OF 2010 %& '( / ASSESSMENT YEAR 2007-08 M/S. WINDAMERE HOTEL (P) LTD. KOLKATA. (PAN-AAACW2667C) ASSTT.COMMISSIONER OF INCOME-TAX HAKIMPARA SILIGURI. (+ / APPELLANT ) - VERSUS (/0+ / RESPONDENT ) + 1 2 '/ FOR THE APPELLANT: / SRI M.BHATTACHARJEE /0+ 1 2 ' / FOR THE RESPONDENT: / SRI A.K.PRAMANICK 3 1 !# / DATE OF HEARING : 21/11/2011 4' 1 !# / DATE OF PRONOUNCEMENT : 02/12/2011 '5 / ORDER ( ) (N. VIJAYAKUMARAN) JUDICIAL MEMBER : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. C.I.T.(A) SILIGURI DATED 05/3/2010. THE ASSESSMENT YEAR INVO LVED IS 2007-08. 2. FIRST GROUND OF THIS ASSESSEES APPEAL VIDE GRO UND NO. 1(A) IS ON THE DISALLOWANCE OF EXPENDITURE INCURRED ON CONFERENCE HALL REPAIRS AND MAINTENANCE. THE ASSESSEE HAD INCURRED RS.17 42 749/- ON THE RENOVATION OF THE CO NFERENCE HALL. THE LD. A.O. WAS OF THE VIEW THAT NEW ASSET CAME INTO EXISTENCE AND HEN CE THE EXPENSES ARE IN THE CAPITAL FIELD. HE HOWEVER OBSERVED THAT THE ASSESSEE MIG HT HAVE INCURRED SOME OTHER MINOR REPAIR WORKS ON THE CONFERENCE HALL. ON SUCH ASSUM PTION OF FACTS THE LD. A.O. ALLOWED 10% OF THE EXPENDITURE AS BEING IN THE NATURE OF CU RRENT REPAIRS AND REMAINING 90% I.E. RS.15 68 474/- WAS DISALLOWED AS IN THE CAPITAL FIE LD. ON THE OTHER HAND THE LEARNED COUNSEL FOR THE ASSESSEE BEFORE THE LD. C.I.T.(A) S UBMITTED THAT SUCH REPAIRING WORK WAS CONDUCTED SO AS TO KEEP THE CONFERENCE HALL IN MARKETABLE CONDITION. THE LD. C.I.T.(A) FINALLY CONCLUDED THAT PART OF THE EXPENS ES INCURRED ON CONFERENCE HALL MAY BE 2 CURRENT REPAIRS BUT THERE WAS MASSIVE RENOVATION WO RK UNDERTAKEN THEREON TO MAKE IT MORE COMFORTABLE AND ATTRACTIVE TO THE CUSTOMERS. H E THEREFORE UPHELD THE DISALLOWANCE OF RS.15 68 474/- MADE BY THE LD. A.O. AS CAPITAL IN NATURE. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE MATERIAL AVAILABLE ON RECORD INCLUDING THE PRECEDENTS. THE ASSESSEE-COMP ANY RUNS A HOTEL BUILDING AT DARJEELING WEST BENGAL. THE HOTEL BUILDING IS VER Y OLD ONE WHICH IS LOCATED AT THE TOP OF THE HILL IN DARJEELING. EVERY YEAR DUE TO ROUGH WEATHER E.G. HEAVY RAIN AND SNOW FALL OCCASIONAL CRACKS OCCURS ON THE HILL TOP FLOOR WAL LS AND ROOF OF THE BUILDING WHICH REQUIRED MAINTENANCE. FURTHER THE BUILDING WAS BU ILT ON THE RENTED LAND. IT IS NOT DISPUTED THAT THE ASSESSEE IS NOT THE OWNER OF THE BUILDING. HENCE EXPLANATION-1 TO SEC. 32 OF THE ACT WILL APPLY. EXPLANATIO-1 READS AS UNDER :- EXPLANATION 1. WHERE THE BUSINESS OR PROFESSION OF THE ASSESSEE I S CARRIED ON IN A BUILDING NOT OWNED BY HIM BUT IN RESPECT OF WH ICH THE ASSESSEE HOLDS A LEASE OR OTHER RIGHT OF OCCUPANCY AND ANY CAPITAL EXPENDI TURE IS INCURRED BY THE ASSESSEE FOR THE PURPOSES OF THE BUSINESS OR PROFES SION ON THE CONSTRUCTION OF ANY STRUCTURE OR DOING OF ANY WORK IN OR IN RELATIO N TO AND BY WAY OF RENOVATION OR EXTENSION OF OR IMPROVEMENT TO THE BUILDING T HEN THE PROVISIONS OF THIS CLAUSE SHALL APPLY AS IF THE SAID STRUCTURE OR WORK IS A BUILDING OWNED BY THE ASSESSEE. HENCE FOR THIS LIMITED PURPOSE THE EXPENSES ONCE CAPITALIZED THE ASSESSEE IS ENTITLED FOR DEPRECIATION IN VIEW OF THE EXPLANATION ABOVE W .E.F. 01/4/1988. WE THEREFORE CONFIRM THE ORDER OF LD. C.I.T.(A) AND CONSEQUENTIA L TO THAT WE DIRECT THE LD. A.O. TO ALLOW DEPRECIATION IN VIEW OF EXPLANATION-1 TO SEC. 32 OF THE ACT WHICH ARE THE EXPENSES CAPITALIZED. 4. COMING TO THE SECOND ISSUE IN GROUND NO. 1(B) IT IS ON THE COMPUTER REPAIRING AND MAINTENANCE TO THE TUNE OF RS.84 386/- OUT OF THE T OTAL AMOUNT OF RS.1 26 340/- CLAIMED UNDER THIS HEAD WHICH WAS HELD TO BE IN TH E NATURE OF PURCHASE OF COMPUTERS AND ACCESSORIES. THE ASSESSEE EXPLAINED THAT THIS EXPENDITURE WAS ACTUALLY INCURRED FOR SERVICING OF THE EXISTING COMPUTERS. WHEN THE EXPENSES WERE INCURRED FOR SERVICING OF THE EXISTING COMPUTERS NO NEW ASSET H AS COME INTO EXISTENCE. HENCE WE ARE OF THE VIEW THAT THE ENTIRE EXPENDITURE IS TO B E ALLOWED AS IT IS ESTABLISHED THAT THE 3 EXPENSES WERE INCURRED ONLY FOR THE REPAIR OF THE C OMPUTERS AND THERE WAS NO FRESH PURCHASE OF COMPUTERS. FURTHER COMPUTER REQUIRES TO BE UPDATED THEN AND THERE IN VIEW OF THE NEW INVENTION OF THE ACCESSORIES. THER EFORE WHEN NO NEW ASSET CAME INTO EXISTENCE BY UPDATING THE COMPUTERS REPAIR EXPENDI TURE HAS TO BE ALLOWED AS REVENUE IN NATURE. HENCE WE SET ASIDE THE ORDERS OF THE LO WER AUTHORITIES AND ALLOW THE CLAIM OF THE ASSESSEE IN FULL TOWARDS EXPENSES OF THE COMPUT ERS. 5. COMING TO THE DISALLOWANCE UNDER THE HEAD REPA IRING & MAINTENANCE OF ELECTRIC LINE VIDE GROUND NO.2 THE TOTAL EXPENSES CLAIMED UNDER THIS HEAD IS RS.5 68 629/-. THE LD. A.O. WAS OF THE VIEW THAT THE ENTIRE EXPENS ES TOWARDS ELECTRIC WIRING AND CHANGING THE ELECTRIC GADGETS GIVE ENDURING BENEFIT TO THE ASSESSEE AND ENHANCE ITS EARNING CAPACITY. HE THEREFORE KEPT THE SUM OF R S.2 99 363/- BEING DISALLOWED UNDER THE CAPITAL FIELD. ON APPEAL THE LD. C.I.T.(A) C ONSIDERING THE SUBMISSION OF THE ASSESSEE THAT THERE WAS NO ADDITION TO THE BUILDING ACCOUNT WHICH REQUIRED WIRING AND INSTALLATION OF NEW ELECTRIC GADGETS AND THE EXPEND ITURE IS SUPPORTED BY THE BILLS RESTRICTED THE DISALLOWANCE ON ESTIMATE TO RS.1 50 000/- BY HOLDING THAT THE REMAINING AMOUNT WAS SPENT ON ACCOUNT OF NORMAL REPAIR & MAIN TENANCE. THAT BEING THE POSITION WE SEE NO JUSTIFICATION TO INTERFERE WITH THE ORDER OF THE LD. C.I.T.(A). HENCE THIS GROUND IS DECIDED AGAINST THE ASSESSEE AND IN FAVOU R OF THE REVENUE BY CONFIRMING THE ORDER OF THE LD. C.I.T.(A). 6. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. 6 '5 #' 7 8 69 THIS ORDER IS PRONOUNCED IN THE OPEN COURT ON 2/12/ 2011 SD/- SD/- ( . .. . ! ! ! !. .. . ) '# ( ) (C.D. RAO) ACCOUNTANT MEMBER (N.VIJAYAKUMARAN) JUDICIAL MEMBER ( (( (!# !# !# !#) )) ) DATE: 2 -12-2011 4 $ $ $ $ / ITA NO. 1291 (KOL) OF 2010 '5 1 /%% :'';- COPY OF THE ORDER FORWARDED TO: 1. + / THE APPELLANT : M/S.WINDAMERE HOTEL (P) LTD. C/O. GUPTA & MITRA CHARTERED ACCOUNTANT 29 R.N.MUKHER JEE ROAD KOLKATA- 700 001 2 /0+ / THE RESPONDENT : A.C.I.T. CIRCLE-3 SILIGURI 3. %5 () : THE CIT(A) SILIGURI 4. %5/ THE C.I.T. SILIGURI 5 ?%8 /% / DR ITAT KOLKATA BENCHES KOLKATA 6 GUARD FILE . 0 /%/ TRUE COPY '5/ BY ORDER (DKP) @ / DY/ASSTT. REGISTRAR .