Income Tax Appellate Tribunal - Delhi
Rupin Investment And Trading (P.) Ltd. vs Income-Tax Officer on 14 September, 1990
Equivalent citations: [1991]38ITD428(DELHI)
ORDER
M.C. Agarwal, Judicial Member
1. This is an assessee's appeal arising out of its assessment for assessment year 1985 86.1 have heard the learned counsel for the assessee. No one appeared on behalf of the revenue.
2. The first ground raised in this appeal is about a disallowance of Rs. 2,200 made by the assessing officer on account of payments for taxation matters. The reason given by the assessing officer was that it was a case of loss. The learned CIT(A) has upheld the disallowance for the same reason and he has tried to justify the ITO's action by taking support from some comments in the commentary of Chaturvedi and Pithisaria at page 2043. He has not reproduced the comments nor mentioned the substance thereof. The learned counsel for the assessee submitted that there are no such observations and I have also looked into the book and have not been able to trace any such observation. However, let me examine the reasoning given by she authorities below. They have not specifically referred to Section 80VV. But their line of reasoning appears to have been that since expenditure relating to income-lax proceedings can be allowed under Section 80VV which finds place in Chapter VI-A of the Act, the deduction cannot be allowed in cases where there is a loss. This argument will be applicable to several deductions mentioned in Chapter VI-A but it cannot be applied to all the deductions. Section 80V provided for deduction of interest on moneys borrowed to pay taxes; while Section 80VV provides for deduction in respect of expenses incurred in connection with certain proceedings under the Act. Thus, these two sections provide for deduction of expenditure. in computing the total income of an assessee. It is settled law that the income computed under the Act may be a loss as well. The expenditure claimed by the assessee was within the limits of Section 80VV and, therefore, it had to be allowed in computing the total income of an assessee and when so allowed it will certainly increase the amount of loss so determined. Various other deductions provided in Chapter VI A would show that they arc not deductions of expenditure in computing the income hut are deductions by way of relief from income already computed and, therefore, those deductions cannot certainly be allowed when the income computed results in a loss. Prior to insertion of Section 80VV such expenditure was allowable under Section 37(1). This section now stands deleted from 1-4-1986 and again such expenditure is allowable under Section 37. In respect of expenditure the concept of there being a positive income before the expenditure can be allowed is not applicable and at. expenditure is a necessary deduction in computing the income/loss. Section 80VV merely places a restriction and the assessee has not exceeded that restriction, in rny view, therefore, the expenditure to the extent of Rs. 2,200 was allowable. Therefore the disallowance is deleted.
The next ground raised in this appeal is about a disallowance of Rs. 15,000 out of Expenses for repairs of a bu tiding. The assessee spent a total amount of Rs. 28,333 on ihe repairs of a building owned by it, a portion of which was self-occupied and she rest was rented out. Out of this expenditure the assessing officer disallowed Rs 15,000 being 60% of the expenditure as, in his view, this related to the portion occupied by the tenants. According to the assessee the repairs will be carried out only in the portion that was occupied by the assessee itself and the expenditure was necessitated because the assessce renovated the premises for carrying on its own business of wholesale activity in textiles, i.e., men's shirting and suiting. On appeal the learned CIT(A) upheld the disallowance as, in his view, two items of expenditure amounting to Rs. 5,200 and Rs. 11,636 were of a capital nature and there was nothing to show that the amount was spent only for repairs of the self-occupied portion. The learned counsel for the assessce pointed out that it had been repeatedly asserted before the authorities below that the amount was spent exclusively for repairs of the self-occupied portion and ihcrc was no necessity for the assessee to make such heavy expenditure on the repairs of tenanted accommodation. He also contended that the entire expenditure was of a revenue nature as was clear from the details furnished at page 1 of the paper book. The sum of Rs. 5,200 was spent not for purchase of sanitary materials but for the repairs of some almirah. It is the other sum of Rs. 11,636 that was spent on the purchase of sanitary materials. When a building is renovated for the purposes of carrying on business such expenditure are necessary and they arc all of the nature of revenue expenditure. Regarding the point raised by the assessing officer that the repairs arc also related to tenanted portion there being no material to support such a view, the disallowance of 60% of the expenditure was improper. In my view, therefore, the entire expenditure was allowable and should have been allowed. The disallowance of Rs. 15,000 is, therefore, deleted.
Appeal allowed.