IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. ITA No.201 of 2009(O&M) Date of decision: 15.10.2009 The Commissioner of Income Tax I, Chandigarh -----Appellant Vs. M/s Torque Pharmaceuticals Pvt. Limited, Chandigarh ----Respondents CORAM:- HON'BLE MR JUSTICE ADARSH KUMAR GOEL HON'BLE MR. JUSTICE GURDEV SINGH Present:- Ms. Urvashi Dhugga, Advocate for the appellant. Adarsh Kumar Goel,J. 1. This appeal has been preferred by the revenue under section 260A of the Income Tax Act, 1961 (in short, ‘the Act’) against the order of the Income Tax Appellate Tribunal, Chandigarh, Bench ‘B’, passed in ITA No.101/Chd/2008 dated 23.9.2008 for the assessment year 2004-05, proposing to raise following substantial question of law:- “Whether, on the facts and in the circumstances of the case and in law, the Appellate Tribunal was legally justified in holding that the expenditure of only ITA No.201 of 2009(O&M) Rs.17,15,031/- made on repair and maintenance of building constituted capital expenditure and thus deleting the enhancement of Rs.17,15,031/- made by the CIT(A)?” 2. The assessee is a manufacturer of pharmaceuticals and made a claim for repair and maintenance of buildings which was partly disallowed by the Assessing Officer on the ground that the same gave enduring benefit to the assessee. The disallowance by the Assessing Officer was upheld by the CIT(A) but exercising power under section 251 (1) (a) of the Act, disallowance was enhanced. The expenditure which was allowed by the Assessing Officer was disallowed by holding that the same would confer advantage and would bring into existence new asset and such expenditure was beyond the concept of ‘current repairs’ under section 31 of the Act. The Tribunal restored the order of the Assessing Officer and set aside the enhancement, holding:- “If the totality of circumstances are analysed we have found that the learned Assessing Officer has disallowed only the expenses which were of 2 ITA No.201 of 2009(O&M) enduring nature, like which were incurred on brick work, cement, steel and sanitary items etc. We are of the view that otherwise it was the duty of the assessee to construct a building by keeping in view the hygienic conditions since the assessee is a manufacturer of drugs. The learned Assessing Officer has already considered the expenses, which were incurred for the maintenance of existing building and were necessary for upkeeping the building. However, the expenses which were incurred on major repair, are certainly is of the benefit of enduring nature. The learned Assessing Officer has only disallowed the expenses which apparently does not fit into the circumference of current repairs/minor repairs by adopting a practical approach therefore, we upheld the assessment order.” 3. We have heard learned counsel for the appellant. 4. Learned counsel for the appellant submitted that the Tribunal has not applied the parameters laid down by the Hon’ble Supreme Court in CIT v. Saravana Spinning Mills P.Limited, (2007) 293 ITR 201 and also the tests applied in Silver Screen Enterprises v. CIT, Patiala, 3 ITA No.201 of 2009(O&M) (1972) 85 ITR 578 (P&H), Modi Spinning & Weaving Mills Co.Limited v. CIT, (1993) 200 ITR 544 (Del.) Senapathy Synams Insulations (P) Limited v. CIT, (2001) 248 ITR 656 (Knt.) and CIT, West Bengal v. North Dhemo Coal Company Limited, 106 ITR 592 (Cal.). 5. We are unable to accept the submission. The test laid down for determining whether particular expenditure was covered by the concept of ‘current repairs’ is well known and though it may, to some extent, over-lap with the parameters applied for determining whether expenditure was revenue or capital with reference to Section 37 of the Act, there may be difference to the extent that even capital expenditure may be covered by ‘current repairs’ in certain situations. 6. Question whether particular expenditure was covered by the ‘current repairs’ or not, is primarily a question of fact, depending upon correct test being applied. Only discussion which has been pointed out in the order of the CIT(A) with regard to the major amount involved is as under:- 4 ITA No.201 of 2009(O&M) “9…Therefore, the entire expenditure of Rs.34,30,062/- is treated as capital expenditure and the assessment is enhanced by an amount of Rs.17,15,031/-. The assessee would be entitled to depreciation @ 10%.” 7. As against above, the Assessing Officer also after discussing well known judgments, concluded as under:- “In view of above judgments, the entire expenses claimed by the assessee on account of repair and maintenance of building amounting to Rs.34,30,062/- cannot be treated as revenue expenditure. Accordingly, 50% of these expenses which comes to Rs.17,15,031/- are treated as capital expenditure. Since the expenses were incurred on building, depreciation @ 10% is allowed on this expenditure. Accordingly, a disallowance of Rs.15,43,528/- (Rs.17,15,031/- - Rs.1,71,503/-) is made and added to the returned income.” 8. Thus, inspite of application of well known tests by the Assessing officer as well as by the CIT(A), the difference is of perception and the CIT(A) has not been able to record any finding that the view taken by the Assessing Officer was perverse or correct test was not 5 ITA No.201 of 2009(O&M) applied. The Tribunal accordingly upheld the view of the Assessing Officer. 9. After perusing the impugned order and hearing learned counsel for the appellant, we are of the view that in the facts found and tests applied, the question raised is not a substantial question of law but of application of the settled law to a fact situation. 10. Since no substantial question of law arises, the appeal is dismissed. (Adarsh Kumar Goel) Judge October 15, 2009 (Gurdev Singh) ‘gs’ Judge 6 ITA No.201 of 2009(O&M) 7