M/s Win Medicare Pvt. Ltd., New Delhi v. DCIT, New Delhi

ITA 471/DEL/2011 | 2006-2007
Pronouncement Date: 28-07-2011 | Result: Partly Allowed

Appeal Details

RSA Number 47120114 RSA 2011
Bench Delhi
Appeal Number ITA 471/DEL/2011
Duration Of Justice 6 month(s)
Appellant M/s Win Medicare Pvt. Ltd., New Delhi
Respondent DCIT, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 28-07-2011
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted I
Tribunal Order Date 28-07-2011
Date Of Final Hearing 25-07-2011
Next Hearing Date 25-07-2011
Assessment Year 2006-2007
Appeal Filed On 28-01-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES: I NEW DELHI BEFORE SMT. DIVA SINGH JUDICIAL MEMBER AND SHRI B.K. HALDAR ACCOUNTANT MEMBER ITA NO: 471/DEL/2011 A.Y. : 2006-2007 M/S WIN MEDICARE PVT. LTD. VS. DCIT CIRCLE 18(1) 1400 MODI TOWER NEW DELHI 98 NEHRU PLACE NEW DELHI 19 (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SALIL KAPOOR SANAT KAPOOR ADV. RESPONDENT BY : DR.B.R.R.KUMAR SR.D.R. O R D E R PER DIVA SINGH JUDICIAL MEMBER THIS IS THE APPEAL FILED BY THE ASSESSEE AGAINS T THE ORDER DATED 9.12.10 OF CIT(A)-XXI NEW DELHI PERTAINING TO A .Y. 2006-07 WHEREIN THE ASSESSEE HAS CHALLENGED THE ADDITIONS SUSTAINED BY THE CIT(A) ON THE FOLLOWING GROUNDS. 1. THE LD.CIT(A)-XXI NEW DELHI HAS ERRED IN LA W AND ON FACTS IN UPHOLDING THE ADDITIONS MADE BY THE LD.A.O . 2. THE LD.CIT(A) HAS ERRED IN FACTS AND CIRCUMSTANC ES OF THE CASE AND IN LAW IN CONFIRMING THE DISALLOWANCE OF PRIOR PERIOD EXPENSES AMOUNTING TO RS. 1 28 039/- ALTHOUGH THE S AME WAS DETERMINED AND CRYSTALLIZED DURING THE A.Y. 2006-07 . 3. THE LD.CIT(A) HAS ERRED IN FACTS AND CIRCUMSTANC ES OF THE CASE AND IN LAW IN CONFIRMING THE ADHOC DISALLOWA NCE OF RS. 96 450/- ON ACCOUNT OF POOJA AND FESTIVAL EXPENSES ALTHOUGH THE SAME WERE INCURRED IN THE NORMAL COURSE OF BUSI NESS ACTIVITIES AND ARE ALLOWABLE U/S 37(1) OF THE ACT. ITA 471/DEL/2011 PAGE 2 OF 12 A.Y. 2006-07 WIN MEDICARE P.LTD. 4. THE LD.CIT(A) HAS ERRED IN FACTS AND CIRCUMSTANC ES OF THE CASE AND IN LAW IN CONFIRMING THE DISALLOWANCE OF REPAIRS AND MAINTENANCE EXPENDITURE (SOFT FURNISHING EXPENDITUR E) AMOUNTING TO RS. 40 708/- PAID TO EMPLOYEES AND INS TALLATION OF DIESEL GENSET AMOUNTING TO RS. 17 000/- CONSIDERING IT AS CAPITAL EXPENDITURE. 2. GROUND NO.1 IS GENERAL IN NATURE. 3. IN GROUND NO.2 THE ASSESSEE HAS CHALLENGED THE ADDITION MADE BY WAY OF DISALLOWANCE OF RS. 1 28 039/-. THE RELEVA NT FACTS OF THE CASE ARE THAT THE ASSESSEE CLAIMED AN AMOUNT OF RS.4 49 138 /- BY WAY OF HIS REVISED CLAIM OF PRIOR PERIOD EXPENSES. THE A.O. R EFUTED THE ASSESSEE TO JUSTIFY THE SAID CLAIM. PERUSING THE DETAILS GIVE N BY THE ASSESSEE THE A.O. WAS OF THE VIEW THAT IT WAS EVIDENT THAT OUT O F THE PRIOR PERIOD EXPENSES TOTALING TO RS. 4 49 138/- PROMOTIONAL EXP ENSES INCURRED ON ACCOUNT OF TESTERS AMOUNTING TO RS. 1 28 039/- HAD NOT CRYSTALLIZED IN THE SAID YEAR. THESE WERE SEEN TO HAVE BEEN CLAIM ED ON THE BASIS OF AN INTERNAL NOTE AND THE AO WAS OF THE VIEW THAT NO INDEPENDENT EVIDENCE TO JUSTIFY THE SAID CLAIM WAS PUT FORTH. ACCORDING LY CONSIDERING S.37(1) AND THE JUDGEMENTS IN THE CASE OF CIT VS. SAINT GEO RGE MOTORS 170 ITR 417 AND SAURASTRA CEMENT AND CHEMICALS INDUSTRIES V S CIT 213 ITR 523 HE HELD THAT ONLY THOSE EXPENSES/LIABILITIES W HICH HAD DETERMINED AND CRYSTALLIZED IN THE YEAR IN QUESTION WERE TO BE ALLOWED IF THE ASSESSEE IS MAINTAINING MERCANTILE SYSTEM OF ACCOUNTING. SI NCE THE SAID AMOUNT TOTALING TO RS. 1 28 309/- RELATED TO THE PERIOD EA RLIER THAN THE YEAR UNDER CONSIDERATION THE ASSESSEE WAS HELD TO HAVE N OT DISCHARGED THE ITA 471/DEL/2011 PAGE 3 OF 12 A.Y. 2006-07 WIN MEDICARE P.LTD. ONUS BY PROVING THAT THESE EXPENSES CRYSTALLIZED IN THE YEAR AND AS SUCH WERE DISALLOWED BY THE A.O. 4. IN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY I T WAS CONTENDED ON BEHALF OF THE ASSESSEE THAT THE ASSESSEE HAD SUO MO TO DISALLOWED RS. 7 45 174/- EXPENSES RELATING TO THE EARLIER YEAR CL ASSIFIED AS PRIOR PERIOD EXPENSES IN THE COMPUTATION OF INCOME FOR 2007-08 A T THE TIME OF FILING HIS RETURN. IT WAS ALSO CONTENDED THAT OUT OF THE AMOUNT DISALLOWED IN 2007-08 EXPENSES OF RS. 4 49 138/- RELATED TO PERIO D FALLING WITHIN THE F.Y. RELEVANT TO A.Y. 2006-07 ITSELF HAD BEEN DISAL LOWED. AS A RESULT OF THIS THE ASSESSEE HAD CLAIMED THESE EXPENSES AS DED UCTION BY FILING A REVISED RETURN IN THE YEAR UNDER CONSIDERATION. IT WAS FURTHER CONTENDED THAT THE LIABILITY CRYSTALLIZED IN THE YEAR UNDER C ONSIDERATION. IT WAS SUBMITTED THAT IN RESPONSE TO THE AOS REQUIREMEN T COMPLETE DETAILS OF EXPENSES ALONG WITH BILLS AND VOUCHERS HAD BEEN FI LED. DESPITE THIS FACT AO ALLOWED ONLY PART OF THE CLAIM AND THE EXPENSES CLAIMED ON ACCOUNT OF TESTERS WERE DISALLOWED HOLDING THAT THESE DID NOT CRYSTALLIZE. IT WAS EXPLAINED THAT THE ASSESSEE HAD INCURRED THE EXPEN SES FOR REIMBURSEMENT TO ITS DISTRIBUTORS FOR CONSUMPTIONS OF ITS PRODUCT USED AS TESTER TO GIVE DEMO OF ITS PRODUCT TO THE CONSU MERS. THE COST OF THE PRODUCTS WHICH WERE USED AS TESTER WAS CLASSIFIED UNDER PROMOTIONAL EXPENSES. THE EXPENSES WERE BOOKED BASED ON THE CLAIMS MADE BY THE DISTRIBUTOR AND THE CLAIMS WERE TO BE COLLECTED BY THE MARKETING EMPLOYEES OF THE COMPANY. IN THE YEAR UNDER CONSID ERATION ONE ITA 471/DEL/2011 PAGE 4 OF 12 A.Y. 2006-07 WIN MEDICARE P.LTD. EMPLOYEE WHO WAS DEALING WITH VARIOUS DISTRIBUTORS IN SOUTH INDIA COULD NOT FURNISH THE CLAIMS MADE BY VARIOUS DISTRIBUTORS TO HIM WITHIN TIME. THEREFORE IT WAS STATED THESE EXPENSES COULD NOT B E ACCOUNTED AND CLAIMED BY THE ASSESSEE. THESE WERE ACCOUNTED FOR IN THE NEXT YEAR AND DISALLOWED BY THE ASSESSEE AS PRIOR PERIOD EXPENSES . THE INTERNAL CORRESPONDENCE AND LEDGER ACCOUNTS OF THE DISTRIBUT ORS WERE RELIED UPON SHOWING THE DELAY IN SUBMITTING THE CLAIM BY THE EM PLOYEE AND REIMBURSEMENT OF EXPENSES TO THE DISTRIBUTOR BY THE ASSESSEE IN THE NEXT YEAR. 5. CONSIDERING THE ARGUMENTS THE CIT(A) UPHELD THE ACTION OF THE A.O. ON THE GROUND THAT MERELY ON THE BASIS OF INTERNAL NOTE WITHOUT SUPPORTING EVIDENCE IT COULD NOT BE SAID THAT PRIOR PERIOD EXPENSES CRYSTALLIZED IN THE YEAR. 6. STILL AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 7. LD.A.R. CONTENDED THAT THE ASSESSEE COMPANY IS E NGAGED IN THE BUSINESS OF MANUFACTURING AND SALE OF PHARMACEUTIC AL PRODUCTS AND COSMETICS. ACCORDINGLY FOR ITS MARKETING IN SALES OF COSMETICS EXPENSES FOR TESTERS ARE NECESSARILY REQUIRED TO BE INCURRED . IT WAS SUBMITTED THAT SOLELY ON ACCOUNT OF THE FACT THAT ONE EMPLOYEE DID NOT SUBMIT ITS CLAIM WITHIN TIME IN REGARD TO THE EXPENSES INCURRED BY T HE DISTRIBUTOR THE SAID SITUATION HAS ARISEN. IT WAS HIS SUBMISSION THAT T HE GENUINENESS OF THE EXPENDITURE IS NOT IN DOUBT. SPECIFIC ATTENTION W AS INVITED TO PAPER BOOK ITA 471/DEL/2011 PAGE 5 OF 12 A.Y. 2006-07 WIN MEDICARE P.LTD. PAGE NO.11 SO AS TO CONTEND THAT THIS WAS A FULL A ND FINAL SETTLEMENT OF MR.PRAMOD SAMUEL WHO ON ACCOUNT OF NOT FOLLOWING T HE GUIDE LINES LAID DOWN BY THE COMPANY FOR SUBMITTING THE DISTRIBUTOR S CLAIMS HAD BEEN MADE TO RESIGN AND THE EXPENSES RELATING TO THE DIS TRIBUTORS TESTERS CLAIMS ARE SUPPORTED BY NOTES PLACED AT PAGES 12 TO 19 OF THE PAPER BOOK AS PER THE CLAIMS FROM DIFFERENT DISTRIBUTORS . IT IS ALSO HIS CONTENTION THAT PAYMENT HAS NOT BEEN DOUBTED. IN T HE CIRCUMSTANCES IT WAS HIS PRAYER THAT SINCE THE EXPENSES RELATED TO T HE YEAR UNDER CONSIDERATION THEY HAVE TO BE ALLOWED AS A DEDUCTIO N IN THE ALTERNATIVE IT WAS HIS SUBMISSION THAT IF THE SAME IS CONFIRMED HE RE THEN NECESSARY RELIEF HAS TO BE GRANTED TO THE ASSESSEE IN THE NEX T A.Y. AS THE SAME CANNOT BE CONSIDERED FOR BOTH THE YEARS. 8. LD.D.R. ON THE OTHER HAND PLACED HEAVY RELIANCE UPON THE ORDERS OF THE AUTHORITIES BELOW AND CONTENDED THAT THE ASSESS EES GROUND HAS RIGHTLY BEEN DISMISSED AS APART FROM INTERNAL NOTES THERE IS NO OTHER EVIDENCE. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. ON A CAREFUL CONSIDERATION OF THE SAME WE ARE OF THE VIEW THAT NO DOUBT IN THE NATURE OF ASSESEES BUSIN ESS SUCH EXPENSES ARE NECESSARILY REQUIRED TO BE INCURRED. THE MODUS OPE RANDI DESCRIBED BY THE ASSESSEE BEFORE THE CIT(A) NAMELY THAT THE TEST ERS ARE USED TO GIVE DEMO OF THE PRODUCTS OF THE ASSESSEE TO ITS CONSUM ERS IS A UNIVERSALLY ITA 471/DEL/2011 PAGE 6 OF 12 A.Y. 2006-07 WIN MEDICARE P.LTD. FOLLOWED PRACTICE IN THIS LINE OF BUSINESS. THE FA CT THAT THESE EXPENSES ARE CLASSIFIED AS PROMOTIONAL EXPENSES AND ARE BOO KED ON THE BASIS OF CLAIMS MADE BY DISTRIBUTORS WHICH ARE COLLECTED BY THE MARKETING EMPLOYEES ALSO CANNOT BE FAULTED AS IT IS ALSO A P RACTICE BY AND LARGE UNIFORMLY FOLLOWED IN THIS LINE OF BUSINESS. HOWEV ER THE FACT REMAINS THAT ONLY IN REGARD TO ONE EMPLOYEE STATED TO BE PR AMOD SAMUEL THE CLAIM HAS NOT BEEN PUT FORTH WITHIN THE STIPULATED TIME. THE BELATED CLAIM STATED TO BE DULY SUPPORTED BY NOTES OF DIFFE RENT DISTRIBUTORS IS STATED TO HAVE BEEN SETTLED BY THE ASSESSEE AS IT I S AGITATED THAT THE PAYMENT HAS NOT BEEN DOUBTED. HOWEVER NONE OF THES E PROVE THE FACT THAT THE SAME CRYSTALLIZED IN THE YEAR UNDER CONSID ERATION. ACCORDINGLY FOR WANT OF EVIDENCE IN SUPPORT OF THE CLAIM THAT T HE EXPENSES CRYSTALLIZED IN THE YEAR UNDER CONSIDERATION THE ACTION OF THE C IT(A) IS CONFIRMED. HOWEVER WE FIND MERIT IN THE ALTERNATE PRAYER OF TH E ASSESSEE THE AO SHALL GIVE NECESSARY RELIEF IF DUE IN ACCORDANCE WITH LAW ON THESE EXPENSES IN THE NEXT A.Y. IF SO WARRANTED ON EXAMI NATION OF FACTS AS THE SAME AMOUNT CANNOT BE CONSIDERED AS AN ADDITION IN BOTH THE YEARS. TO THIS EXTENT THE ALTERNATIVE PLEA OF THE ASSESSEE IS ALLOWED. 10. THE FACTS PERTAINING TO GROUND NO.3 AGITATED BY THE ASSESSEE ARE THAT THE ASSESSEE CLAIMED AN AMOUNT OF RS. 6 43 000 /- STATED TO BE INCOME FOR GIFTS TO ITS EMPLOYEES AND CUSTOMERS. IN VIEW OF THE FACT THAT THE ASSESSEE HAD NOT MAINTAINED A LIST OF PERS ONS/BUSINESS ASSOCIATES TO WHOM THE GIFTS WERE GIVEN DISALLOWA NCE @ 15% WAS MADE ITA 471/DEL/2011 PAGE 7 OF 12 A.Y. 2006-07 WIN MEDICARE P.LTD. WHICH AMOUNTED TO RS. 96 450/-. THE A.O. WAS OF TH E VIEW THAT A SIMILAR DISALLOWANCE WAS MADE IN THE A.Y. 2005-06 AMOUNTING TO RS. 1 25 000/- AS SUCH AN AMOUNT OF RS. 96 450/- IN THE YEAR UNDE R CONSIDERATION WAS ADDED BACK TO THE INCOME OF THE ASSESSEE ON ACCOUN T OF PERSONAL AND NON BUSINESS USE. 11. IN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY IT WAS CONTENDED ON BEHALF OF THE ASSESSEE THAT THE EXPENSES ARE DULY S UPPORTED BY RELEVANT VOUCHERS AND INVOICES AND ARE INCURRED ON ACCOUNT O F CUSTOMARY GIFTS AT THE TIME OF DIWALI AND OTHER FESTIVE OCCASIONS FOR DISTRIBUTION TO VARIOUS BUSINESS ASSOCIATES AND CUSTOMERS. ADHOC DISALLOWA NCE @ 15% WAS ASSAILED. IT WAS ALSO CONTENDED THAT THE CLAIM OF SUCH EXPENDITURE ON THE OCCASION OF POOJA AND FESTIVAL EXPENSES COMPARE D TO THE OVER ALL EXPENDITURE INCURRED BY THE COMPANY RS. 4 66 17 982 /- WAS VERY NOMINAL. 12. HOWEVER NOT CONVINCED WITH THE ARGUMENTS ADVANC ED THE ACTION OF THE A.O. WAS CONFIRMED. CIT(A) FURTHER RELIED UPO N THE DECISION OF THE IMMEDIATELY PRECEDING A.Y. IN THE CASE OF THE ASSE SSEE. RELIANCE WAS ALSO PLACED UPON THE JUDGEMENT OF THE CHATTISGARH HIGH COURT IN THE CASE OF HIRA FERRO ALLOYS VS DCIT 326 ITR 262. 13. STILL AGGRIEVED THE ASSESSEE IS IN APPEAL BEF ORE THE TRIBUNAL. 14. LD.A.R. CONTENDED RIGHT AT THE OUTSET THAT THE ASSESSEES TURNOVER IS ABOUT 242 CRORES AND THE ASSESSEE HAS DECLARED A N INCOME OF RS. 33.89 CRORES ODD AND LOOKING AT THE TURNOVER OF TH E ASSESSEE AND THE ITA 471/DEL/2011 PAGE 8 OF 12 A.Y. 2006-07 WIN MEDICARE P.LTD. RETURNED INCOME ON WHICH THE ASSESSEE HAS PAID TAX TO THE TUNE OF 12 CRORES ADHOC DISALLOWANCE IN THE MANNER MADE CA NNOT BE SUSTAINED. IT WAS ARGUED BY HIM THAT IT CANNOT BE SAID THAT T HE ASSESSEE HAD CLAIMED EXORBITANT EXPENSES FOR CUSTOMARY GIFTS DU RING FESTIVE OCCASIONS. THE GIFTS WERE MADE IN ORDER TO FACILI TATE ITS BUSINESS RELATIONS IT IS CUSTOMARY TO GIVE GIFTS DURING THE FESTIVE SEASON TO ITS BUSINESS ASSOCIATES. MOREOVER IT WAS CONTENDED THA T THE ASSESSEE HAS FILED ITS FBT RETURN WHEREIN ON THE 50% OF THE SAI D EXPENSES TAX TO THE TUNE OF 30% HAS ALREADY BEEN PAID. IN THE CIRCUMST ANCES ADHOC DISALLOWANCE OF 15% SHOULD NOT TO BE SUSTAINED. I N THE ALTERNATIVE IT WAS SUBMITTED THAT DISALLOWANCES MAY BE SUSTAINED TO THE EXTENT OF ONLY 50% WHICH HAS NOT BEEN SUBJECTED TO FBT AND NOT TO THE ENTIRE AMOUNT. 15. LD.D.R. RELIES UPON THE DECISION OF THE IMMEDIA TELY PRECEDING A.Y. AND THE JUDGEMENT OF CHANDIGARH HIGH COURT RELIED U PON BY THE CIT(A). 16. IN REPLY THE LD.A.R. SUBMITTED THAT THE SAI D JUDGMENT DOES NOT APPLY TO THE ASSESSEE ON ACCOUNT OF THE FACT THAT T HESE ARE NOT POOJA EXPENSES AND ARE EXPENSES INCURRED IN ORDER TO MAKE CUSTOMARY GIFTS DURING THE FESTIVE SEASON. 17. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. ON A CAREFUL CONSIDERATION OF THE SAME WE ARE OF THE VIEW THAT THE GROUND RAISED BY THE ASSESSEE DESERVE S TO BE ALLOWED. IT IS SEEN THAT IN THE IMMEDIATELY PRECEDING A.Y. THE PRO VISIONS PERTAINING TO FBT WERE NOT APPLICABLE AS SUCH THE DECISION TAKEN IN THE IMMEDIATELY ITA 471/DEL/2011 PAGE 9 OF 12 A.Y. 2006-07 WIN MEDICARE P.LTD. PRECEDING A.Y. WHICH HAS BEEN RELIED UPON BY THE CI T(A) WILL HAVE NO RELEVANCE. SIMILARLY IT IS SEEN THAT THE JUDGEMENTS OF THE HONBLE CHANTTISGARH HIGH COURT PERTAINS TO A.Y. 1992-93 W HERE AGAIN THE PROVISIONS OF FBT WAS NOT APPLICABLE. MORE OVER TH E SAID JUDGEMENT PROCEEDS ON FACTS OF ITS OWN WHERE THEIR LORDSHIPS WERE CONSIDERING VISHWAKARMA AND PUJA EXPENSES WHEREAS IN THE CASE OF THE ASSESSEE THE EXPENSES PERTAIN TO CUSTOMARY GIFTS GIVEN TO BUSINE SS ASSOCIATES AND CUSTOMERS DURING FESTIVE OCCASIONS. AS FAR AS THE ASSESSEE UNDER CONSIDERATION IS CONCERNED LOOKING AT THE TURNOVER AND THE RETURNED INCOME WE DO NOT FIND ANY EXORBITANT CLAIM PUT FORT H BY THE ASSESSEE ON WHICH DISALLOWANCE HAS TO BE MADE ON AN ADHOC BASIS . EXPENDITURE IS DULY SUPPORTED BY VOUCHERS AND INVOICES NO INFIRMI TY IN THE SAME HAS BEEN POINTED OUT BY THE AUTHORITIES BELOW. ACCORD INGLY FOR THE REASONS GIVEN HEREIN ABOVE GROUND NO.3 OF ASSESSEE IS ALLOW ED. 18. THE RELEVANT FACTS REGARDING GROUND NO.4 ARE TH AT THE A.O. CONSIDERING THE REPAIRS AND MAINTENANCE EXPENSES OB SERVED THAT THE ASSESSEE CLAIMED THAT RS. 40 708/- HAD BEEN SPENT ON SOFT FURNISHING AND RS. 17 000/- HAD BEEN SPENT ON INSTALLATION OF DIESEL GENERATOR SET AT ITS CHENNAI OFFICE. THE A.O. WAS OF THE VIEW THAT INSTALLATION OF NEW MACHINERY PURCHASED BY THE ASSESSEE WAS A CAPITAL E XPENDITURE. ACCORDINGLY RELYING UPON THE CIT VS. GLEM VIEW RUBB ER CO.P.LTD. KERALA HIGH COURT (2007) 291 ITR 1 (KER) (FB) AND JASWANT TRADING CO. VS CIT ITA 471/DEL/2011 PAGE 10 OF 12 A.Y. 2006-07 WIN MEDICARE P.LTD. 212 ITR 293 (RAJ) HE MADE THE ADDITION OF RS. 57 70 8/- OBSERVING AS UNDER. IT IS TO BE NOTED THAT ASSESSEE HAS ALSO FAILED TO DISCHARGE ONUS BY NOT FURNISHING THE EVIDENCE FOR THE SO CALLED IN STALLATION IN THE FORM OF ANY INSTALLATION REPORT WORK REPORT ETC. A LTHOUGH ADEQUATE OPPORTUNITIES WERE GIVEN TO THE ASSESSEE. SIMILARL Y SOFT FURNISHING OF RS. 17 000/- IS A CAPITAL EXPENDITURE AS IT HAS BEEN DONE FOR THE FIRST TIME. IN VIEW OF ABOVE DISCUSSION REGARDING FACTS AND CASE LAWS THE EXPENSE CLAIMED AT RS. 57 708/- IS DISALL OWED AS IT IS CAPITAL EXPENDITURE. 19. AGGRIEVED BY THIS THE ASSESSEE CAME IN APPEAL B EFORE THE FIRST APPELLATE AUTHORITY BEFORE WHOM IT WAS CONTENDED TH AT THE A.O. HAS MADE AN ADDITION ON ADHOC BASIS ON MANY OCCASIONS A ND RELEVANT EVIDENCE HAS NOT BEEN CONSIDERED. IT WAS ALSO CONT ENDED THAT NO REASONS HAVE BEEN GIVEN BY THE AO SO AS TO SUGGEST THAT TH E ASSESSEE HAS UNDER STATED ITS INCOME. THE ACTION WAS ASSAILED ON THE GROUNDS THAT IT WAS UNJUSTIFIED AND CONTRARY TO THE PRINCIPLES OF NATUR AL JUSTICE. ALTERNATIVE PLEA WAS MADE REQUESTING THAT THE AO SHOULD BE DIRE CTED TO ALLOW DEPRECIATION OF THE EXPENDITURE CONSIDERING IT TO BE CAPITAL IN NATURE. 20. THE CIT(A) CONSIDERING THE SUBMISSIONS UPHELD THE ACTION OF THE AO IN NOT HOLDING THAT THE EXPENDITURE IS CAPITAL I N NATURE AND DIRECTED THE A.O. TO ALLOW DEPRECIATION ON THE ABOVE MENTION ED CAPITAL ASSET. AGGRIEVED BY THIS THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 21. LD.A.R. FAIRLY CONCEDED THAT THE EXPENSES PERTA INING TO THE GENERATOR SET WERE NECESSARILY CAPITAL IN NATURE. AS SUCH A DIRECTION TO ALLOW DEPRECIATION ON THE SAME HOWEVER MAY KINDLY B E GIVEN. ITA 471/DEL/2011 PAGE 11 OF 12 A.Y. 2006-07 WIN MEDICARE P.LTD. 22. IN REGARD TO THE EXPENDITURE INCURRED FOR SOFT CONVERSION IT WAS HIS SUBMISSION THAT THE DETAILS ARE PLACED AT PAGES 39. THE EXPENSES IT WAS STATED ARE DULY VOUCHED AND SUPPORTED BY VARIOUS D OCUMENTS. THE GENUINENESS OF THE SAID EXPENDITURE IT WAS STATED HAS NOT BEEN DOUBTED. IT WAS HIS CONTENTION THAT IN THE EVENTUALITY THESE EXPENSES WERE CONSIDERED TO BE CAPITAL IN NATURE THEN DEPRECIATIO N THERE ON SHOULD BE GRANTED. 23. LD.D.R. PLACED RELIANCE UPON THE ORDER OF CIT (A). 24. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN THE AFOREMENTIONED PECULIA R FACTS AND CIRCUMSTANCES WE DIRECT THE AO TO ALLOW THE CLAIM O F DEPRECIATION QUA THE GENERATOR SET PROVIDED THE SAME IS INSTALLED AN D USED IN THE YEAR UNDER CONSIDERATION. AS SUCH THE SAID CLAIM IS TO BE CONSIDERED AFTER GIVING THE ASSESSEE A REASONABLE OPPORTUNITY OF BEI NG HEARD IN ACCORDANCE WITH LAW. IN REGARD TO THE CLAIM PERTAIN ING TO SOFT FURNISHING THE SAME CANNOT BE TREATED TO BE CAPITAL IN NATURE. THE INCOME ON SAID EXPENDITURE DOES NOT CREATE ANY ENDURING BENEFIT IN FAVOUR OF THE ASSESSEE AND LOOKING BY ITS VERY DEFINITION WHICH I S DULY SUPPORTED BY VOUCHERS FOR EXPENDITURE ON ITEMS LIKE CURTAINS TA BLE CLOTH THESE CANNOT BE SAID TO BE CAPITAL ASSETS OF THE COMPANY. THE S AID EXPENDITURE IS REVENUE IN NATURE. THE GROUND RAISED BY THE ASSESS EE AS SUCH IS PARTLY ALLOWED. ITA 471/DEL/2011 PAGE 12 OF 12 A.Y. 2006-07 WIN MEDICARE P.LTD. 25. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON 28 TH JULY 2011. SD/- SD/- (B.K. HALDAR ) (DIVA SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 28 TH JULY 2011 *MANGA COPY OF THE ORDER FORWARDED TO: 1. APPELLANT; 2.RESPONDENT; 3.CIT; 4.CI T(A); 5.DR; 6.GUARD FILE BY ORDER DY. REGISTRAR