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Commissioner of Income-tax Vs. Bhagat Industries Corporation Ltd. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtPunjab and Haryana High Court
Decided On
Case NumberIncome-tax Reference No. 24 of 1976
Judge
Reported in(1980)18CTR(P& H)247; [1980]126ITR645(P& H)
AppellantCommissioner of Income-tax
RespondentBhagat Industries Corporation Ltd.
Appellant Advocate D.N. Awasthy and; B.K. Jhingan, Advs.
Respondent Advocate Bhagirath Dass and; R.N. Narula, Advs.
Excerpt:
- sections 80 (2) & 89 & punjab motor vehicles rules, 1989, rules 85 & 80: [t.s. thakur, cj, jasbir singh & surya kant, jj] appeal against orders of state or regional transport authority imitation held, a stipulation regarding the period of limitation available for invoking the remedy shall have to be strictly construed. that is because any provision by way of limitation is in the nature of a restraint on the remedy provided under the act. so viewed two inferences are clear viz., (1) sections 80 and 89 of the act read with rule 85 of the rules make it obligatory for the authorities making the order to communicate it to the applicant concerned and (2) the period of limitation for any appeal against the order is reckonable from the date of such communication of the reasons would imply..........of the case, the tribunal was right in law in holding that the sum of rs. 40,176 was allowable as revenue expenditure ?'5. after hearing the learned counsel for the parties we are of the opinion that the question of law referred to us has to be answered in the affirmative, i.e., in favour of the assessee and against the revenue. the finding of fact recorded by the tribunal that the premises in question were being used as branch office of the assessee is not being assailed. the only question to be seen is whether the expenditure in question was incurred for the repairs of the premises or not. we have no reason to differ from the findings of the tribunal that the premises in question being branch office of the assessee, necessarily required frequent or periodic repairs and retouches and.....
Judgment:

B.S. Dhillon, J.

1. The assessee is a limited company carrying on business as distillers, rectifiers, brewers, maltsters and in the manufacture ofcarbon-dioxide gas. The return of income for the assessment year 1968-69,relevant to the accounting period ending 30th November, 1967, was filedby the assessee declaring an income of Rs. 2,75,634. The assessment wascompleted by the ITO on a total income of Rs. 4,68,320. During the coursef the examination of accounts, the ITO found that the assessee-companyaimed a sum of Rs. 75,702 on account of 'general repairs' in connection(sic) the tenanted house in Daiya Ganj at Delhi, totally used by the assessee(sic) branch office. The ITO disallowed the assessee's claim to the extentRs. 48,367 after scrutinising the details of expenditure.

2. On appeal filed by the assessee, the AAC allowed partial relief in respect of the expenditure on tractor repairs but upheld the disallowance of Rs. 40,176 by observing that a sum of Rs. 40,176 had been incurred on 'renovation of the living room, bath-room, back verandah, study, kitchen-cum-pantry, stairway, dining-room, etc.' The AAC thus upheld the disallowance of Rs. 44,054 out of the total addition of Rs. 48,367 made by the ITO holding these expenses to be in the nature of capital expenditure.

3. The assessee filed an appeal before the Appellate Tribunal. The Tribunal held that out of the total disallowance of Rs. 44,054 upheld by the AAC out of the 'general repairs' account an expenditure to the extent of Rs. 40,176 could not be characterised as capital expenditure but it was only an expenditure incurred at the branch office necessarily requiring frequent or periodic repairs and hence this was allowable as business expenditure.

4. At the instance of the revenue, the following question of law has been referred to this court for its opinion:

'Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the sum of Rs. 40,176 was allowable as revenue expenditure ?'

5. After hearing the learned counsel for the parties we are of the opinion that the question of law referred to us has to be answered in the affirmative, i.e., in favour of the assessee and against the revenue. The finding of fact recorded by the Tribunal that the premises in question were being used as branch office of the assessee is not being assailed. The only question to be seen is whether the expenditure in question was incurred for the repairs of the premises or not. We have no reason to differ from the findings of the Tribunal that the premises in question being branch office of the assessee, necessarily required frequent or periodic repairs and retouches and thus had to be allowed as business expenditure. The mere fact that the repairs made are of a durable nature, would not make the expenditure under consideration a capital expenditure. Sri Awasthy, the learned counsel for the revenue, could not point out any item to show that the expenditure incurred in that regard was of capital nature. That being so, we have no reason to take, a view different from the one taken by the Tribunal. We order accordingly. There will be no order as to costs.


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