The order of the Bench was delivered by
Kuldip Singh, JM-The appellant Eco RRB Infra Pvt. Ltd. by filing the present appeal, sought to set aside the impugned order dated 02.09.2013 passed by Ld. CIT(A) XVIII, New Delhi for the Assessment Year 2010-2011 on the grounds inter alia that:
"1) Ld. CIT(A) erred in confirming the revenue expenses of building repair in a sum of Rs. 7,96,187/- as capital expenditure;
2) Disallowing depreciation in a sum of Rs. 9,216/-."
2. Briefly stated, the facts of this case are: the income tax return filed by the assessee for the Assessment Year 2010-2011 showing loss of Rs. 5,78,03,649/-, was put under scrutiny assessment under CASS and consequently, statutory notices u/s 143(2) dated 19.09.2011 and 28.09.2011 and notice u/s 142(1) dated 21.08.2012 were issued. Shri F.A. Samsi, C.A. being AR of the assessee attended the proceedings, filed documents / evidences in support of his claim.
3. The assessee company is engaged in the field of power generation, consultancy services in power sector. From the perusal of Profit & Loss account for the period under scrutiny it is noticed that the company has debited an amount of Rs. 55,65,812/- under the head "repair & maintenance towards building", and the assessee provided details. During scrutiny of details provided by the assessee, it has been noticed that the company has incurred the expenses of Rs. 6,51,641/- and Rs. 2,37,010/- on account of water proofing expenses. Vide order sheet entry dated 22.01.2013 the assessee was called upon to show cause as to why the same should not be capitalized being an expenditure of capital nature. Finding the reply dated 07.02.2013 not tenable, an amount of Rs. 7,96,187/- is added back to the returned income of the assessee and Rs. 88,465/- is allowed as depreciation @ 10% on building.
4. It has also been observed that during assessment proceedings for the year 2006-2007 to 2009-2010 depreciation claimed by assessee on WEGs land was disallowed. Assessee company has filed chart showing depreciation on WEG for the year 2010-2011 as Rs. 9,216/- and the same was disallowed as in case of earlier Assessment Years.
5. The assessee's appeal has been partly allowed by Ld. CIT(A). Feeling aggrieved, the assessee has challenged the impugned order before the Tribunal by filing the present appeal.
6. The assessee challenging the impugned order, contended that the expenditure to the tune of Rs. 7,96,187/- claimed by the assessee was purely of revenue in nature having been incurred on utter necessity and depreciation of Rs. 9,216/- on WEG land is also allowable. On the other hand, Ld. D.R. reiterated the contentions made before Ld. CIT(A) and relied upon the impugned order and prayed for dismissal of appeal.
7. We have heard the Ld. Authorized Representatives of the parties, have gone through the documents brought on record in the light of the facts and circumstances of the case.
8. A bare perusal of the impugned order passed by Ld. CIT(A) shows that the same has been passed on the basis of conjectures and surmises and by wrongly placing reliance on the judgment cited as Humayun Properties Ltd. Vs CIT 44 ITR 73 (Cal.) wherein luxury repairs and current repairs have been distinctly categorized and only luxury repairs have been held to be capital expenditure, which is not the position in the present case.
9. Hon'ble High Court in the judgement cited as CIT Vs Kaira Distt. Co-operative Milk Producers Union Ltd., 192 ITR 608 (Guj.) held that expenditure incurred at guests house for water proofing work on terrace is allowable as deduction u/s 30A(ii) of the Act. Similarly, Hon'ble Jurisdictional High Court in the judgement cited at CIT Vs Delhi Press Samachar Patra (P.) Ltd., 322 ITR 590 (Del.) affirmed the view taken by the Hon'ble Tribunal that in case assessee had incurred expenditures, only to preserve and maintain existing asset and that expenditure was not of a nature which brought into being a new asset or created a new advantage of an enduring nature, deletion has to be allowed.
10. By applying the ratio of judgement in the case of Kaira Distt. Cooperative Milk Producers Union Ltd. and Delhi Press Samachar Patra (P.) Ltd. (supra), the expenditure of Rs. 7,96,187/- incurred by the assessee for water proofing work, fall in the category of current repairs and not the luxury repairs, hence, allowable as deduction u/s 30A(ii) of the Act.
11. So far as the question of disallowance of depreciation by CIT(A) of Rs. 9,216/- on account of deprecation on land which was used for installation of WEG at 80% as claimed by the assessee is concerned, no material whatsoever has been brought on record by the assessee to make out as to how the land on which WEG functions, got depreciated. Even no deterioration is proved to be caused to land because of installation of plant and machinery on the same. Rather, it is a matter of common knowledge that the land, on which some industry is running, gets appreciated in terms of its value. So, no ground is made out to interfere into the order of Ld. CIT(A) in disallowance of depreciation on WEG land to the tune of Rs. 9,216/-.
11. In view of what has been discussed above, the present appeal filed by the assessee is hereby partly allowed to the extent of addition of Rs. 7,96,187/- made on account of water proofing expenses.
The order pronounced in the open court on 13.10.2015.