Ita/14/2019 Of Mfar Hotels And Resorts Private Ltd v. The Commissioner Of Income Tax

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE S.V.BHATTI & THE HONOURABLE MR.JUSTICE BASANT BALAJI MONDAY, THE 10 DAY OF OCTOBER 2022 / 18TH ASWINA, 1944 ITA NO. 17 OF 2019 AGAINST THE ORDER CO 13/2015 OF I.T.A.TRIBUNAL, COCHIN BENCH APPELLANT/S: MFAR HOTELS AND RESORTS PRIVATE LTD. XVI/263, NH BYEPASS, KUNDANNUR, MARADU, KOCHI-682 304, REPRESENTED BY ITS DIRECTOR-MR. M.M.ABDUL BASHEER. BY ADVS. SRI RAJA KANNAN; SRI M.GOPIKRISHNAN NAMBIAR SRI.K.JOHN MATHAI; SRI.JOSON MANAVALAN SRI.KURYAN THOMAS; SRI.PAULOSE C. ABRAHAM RESPONDENT/S: THE COMMISSIONER OF INCOME TAX C.R.BUILDINGS, I.S.PRESS ROAD, COCHIN-682 018. BY SR ADV SRI P K R MENON; SRI.JOSE JOSEPH, SC, FOR INCOME TAX THIS INCOME TAX APPEAL HAVING COME UP FOR ADMISSION ON 10.10.2022, ALONG WITH ITA.14/2019, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ITA Nos.17 & 14/2019 -2- IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE S.V.BHATTI & THE HONOURABLE MR.JUSTICE BASANT BALAJI MONDAY, THE 10 DAY OF OCTOBER 2022 / 18TH ASWINA, 1944 ITA NO. 14 OF 2019 AGAINST THE ORDER ITA 335/2015 OF I.T.A.TRIBUNAL,COCHIN BENCH APPELLANT/S: MFAR HOTELS AND RESORTS PRIVATE LTD., XVI/263, NH BYEPASS, KUNDANNUR, MARADU, KOCHI-682304, REPRESENTED BY ITS DIRECTOR MR.M.M.ABDULBASHEER. BY ADVS.SRI RAJA KANNAN; M.GOPIKRISHNAN NAMBIAR; SRI.K.JOHN MATHAI; SRI.JOSON MANAVALAN SRI.KURYAN THOMAS; SRI.PAULOSE C. ABRAHAM RESPONDENT/S: THE COMMISSIONER OF INCOME TAX, C.R.BUILDING, I.S PRESS ROAD, COCHIN-682018. BY SR ADV SRI P K R MENON; SRI.JOSE JOSEPH, SC, FOR INCOME TAX THIS INCOME TAX APPEAL HAVING COME UP FOR ADMISSION ON 10.10.2022, ALONG WITH ITA.17/2019, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ITA Nos.17 & 14/2019 J U D G M E N T [ITA Nos.17/2019, 14/2019] S.V. Bhatti, J. MFAR Hotels and Resorts Pvt. Ltd/Assessee is the appellant. The Commissioner of Income Tax/Revenue is the respondent. The appeals relate to the returns filed by the assessee for the Assessment Year 2011-12, and particularly raise questions on the claim of the assessee as revenue expenditure viz., the amounts spent by the assessee towards the renovation, refurbishment etc, of the existing assets of the assessee. 2. I.T.A. No.14/2019 is directed against the order dated 26.10.2018 in I.T.A. No.335/Coch/2015. I.T.A. No.17/2019 is directed against the order dated 26.10.2018 in Cross Objection No.13/Coch/2015 (Assessment Year 2011-12) of the Income Tax ITA Nos.17 & 14/2019 -4- Appellate Tribunal, (for short ‘the Tribunal’), Cochin Bench. The appeals are disposed of by this common judgment as the circumstances and the substantial questions raised are similar in both appeals. The appeals, though, have been admitted on the substantial questions of law raised in the respective memorandums of appeal, Mr Raja Kannan, appearing for the assessee, has reformulated the substantial questions of law in the course of the argument, and we have heard both the Counsel on the following substantial questions: “(i) Whether, in the facts and circumstances of the case, and in the light of the guiding principles set out in various binding precedents, the Appellate Tribunal was right in treating the expenditure incurred towards the renovation and refurbishment of International Convention Centre (ICC), as capital in nature? (ii) Whether the Appellate Tribunal was right in its approach, as regards the inadmissibility of the expenditure incurred towards the renovation and refurbishment of International ITA Nos.17 & 14/2019 Convention Centre (ICC), under Section 37 of the Income Tax Act, 1961? 4. The assessee is engaged in the business of running a “(i) Whether, in the facts and circumstances of the case, and in the light of the guiding principles set out in various binding precedents, the Appellate Tribunal was right in treating the expenditure incurred towards the renovation and refurbishment of International Convention Centre (ICC), as capital in nature? (ii) Whether the Appellate Tribunal was right in its approach, as regards the inadmissibility of the expenditure incurred towards the renovation and refurbishment of International ITA Nos.17 & 14/2019 Convention Centre (ICC), under Section 37 of the Income Tax Act, 1961? 4. The assessee is engaged in the business of running a five-star hotel in the name and style of ‘Le Meridien’. On 30.09.2011, the assessee filed the income tax return for the Assessment Year 2011-12. The return was processed under Section 143(1) of the Income Tax Act, (for short, ‘the Act’). In the appeals, the issue relates to the assessee’s claim as revenue expenditure of the amount spent by the assessee for renovation, refurbishment, etc, of an existing asset. The case of the assessee is that ‘Le Meridien’ has an International Convention Centre constructed in the year 1998-99. The said convention centre was normally used for holding conventions, seminars, functions etc. The facilities at the convention centre, with the passage of time, are subjected to wear and tear, or the facilities have become obsolete to the standards expected by the customers in ITA Nos.17 & 14/2019 -6- the year 2011-12. The assessee, therefore, claims to have spent Rs.7,13,89,107/- during the subject assessment year for the renovation of the existing asset i.e., the Convention Centre. The said expenditure has been claimed as revenue expenditure made in the Financial Year 2010-11. The Assessing Officer rejected the assessee’s claim as revenue expenditure. The Assessing Officer recorded the following conclusions: “3.10 Coming back to the facts and circumstances of this case, it is apparent that what the assessee did was not mere repairs to preserve and maintain the existing facility. In fact as per the assessee's submission it is because of these modifications, the convention centre could be brought back to its original standard. The Hon'ble Bombay High Court in New Shorrock (supra) had ruled that renewal or restoration is not covered under current repairs. What the assessee has done is substantial refurbishment, renovation and replacement. Unlike a machine, there is no question of bringing the Convention Centre back to the original state because of different materials used. What has happened is a total renovation and revamp of the Convention Centre. New machinery, new furniture, new flooring, new şanitary fittings were installed. It is a thorough revamp of the existing structure to derive an extra advantage. Therefore, it cannot be said that the said expenditure qualifies as revenue expenditure. Since the assessee has done extensive repairs and renovation which is not in the nature of repairs, it requires to be treated as an addition to fixed assets. Therefore, the same requires to be treated as capital asset and be disallowed as revenue expenditure. Since there is no proof that the capitalisation was complete by the end of the F.Y., no depreciation is warranted. (Disallowance: Rs. 7,13,89,107) 5. The Commissioner of Income Tax (Appeals) vide order dated 19.03.2015 accepted the claim of the assessee as revenue expenditure and the finding of the Commissioner of Income Tax (Appeals) reads thus: “In this case, it is amply clear that the assessee does not create any extra floor space. Existing asset is the total building and its rooms including the convention hall etc. and, when no extra flooring space or extra room capacity is added on account of such repairs, it cannot be held that a new asset has come into (Disallowance: Rs. 7,13,89,107) 5. The Commissioner of Income Tax (Appeals) vide order dated 19.03.2015 accepted the claim of the assessee as revenue expenditure and the finding of the Commissioner of Income Tax (Appeals) reads thus: “In this case, it is amply clear that the assessee does not create any extra floor space. Existing asset is the total building and its rooms including the convention hall etc. and, when no extra flooring space or extra room capacity is added on account of such repairs, it cannot be held that a new asset has come into existence. The analysis made by the A.O. that the expenses incurred would not fall under the category of "current repairs" by placing reliance on the aforesaid two ratios pronounced by the Apex Court since has been discussed on the sets of facts by the Hon'ble Karnataka High Court and has found the ratio of the Apex Court as not applicable. Since the instant fact of this case is identical, the ratio pronounced by the Hon'ble Karnataka High Court, referred as above, is squarely applicable to this case. Thus, in view of the discussions made in the foregoing paras, it is held that the expenses incurred by the appellant on repairs etc. falls under the head of "current repairs", and as such, allowable as revenue expenditure. Thus, the addition made by the assessing officer is deleted and appeal on this ground is allowed.” Hence, the Revenue filed ITA No.335/Coch/2015 before the Tribunal. 6. We have excerpted the substantial questions of law raised in the appeal. To fully appreciate the tenor of the argument of Mr Raja Kannan, we find it necessary to excerpt ITA Nos.17 & 14/2019 the paragraphs from the order of the Tribunal on which the arguments are advanced by him: 31. We have heard the rival submissions and perused the record. Regarding the issue of 'current repairs' under section 31 of the Act, the judgment of the Supreme Court in the case of CIT vs. Saravana Spinning Mills (P) Ltd. (2007) 293 ITR 201had laid down that in order to determine whether a particular expenditure amounts to 'current repairs' the test is "whether the expenditure is incurred to 'preserve and maintain' an already existing asset and not to bring a new asset into existence or to obtain a new advantage. For 'current repairs' determination, whether expenditure is revenue or capital is not the proper test". It was held that the entire textile mill machinery cannot be regarded as a single asset, replacement of parts of which can be considered to be for mere purpose of 'preserving or maintaining' of asset. It was held that all machines put together constitute the production process and each separate machine is an independent entity and replacement of such an old machine with a new one would constitute bringing into existence of a new asset in place of the old one and not repair of the old and existing machine. Also, a new asset in a textile mill is not only for temporary use. Rather it gives the purchaser an enduring benefit of better and more efficient production over a period of time. Thus, replacement of assets in the instant case cannot amount to 'current repairs'. The decision in Saravana Mills (supra) case clearly mentioned that replacement of a derelict ring frame by a new one does not amount to 'current repairs'. Further in the case of Ballimal Naval Kishore vs. CIT (224 ITR 414), the Supreme Court held that a new asset or new/different advantage cannot amount to 'current repairs', which was subsequently approved in the case of Saravana Mills (supra) case. For these reasons, the expenditure made by the assessee cannot be allowed as a deduction under section 31 of the Act. The judgment in the case of Saravana Mills (supra) case mentioned two exceptions in which replacement could amount to current repairs, namely: "Where old parts are not available in the market as in the case of CIT v. Mahalakshmi Textile Mills AIR 1968 SC 101), or Where old parts have worked for 50-60 years." "Where old parts are not available in the market as in the case of CIT v. Mahalakshmi Textile Mills AIR 1968 SC 101), or Where old parts have worked for 50-60 years." 31.1 In the instant case, the assessee has not claimed any of the above stated exceptions. The Saravana Mills case also restricts the scope of 'current repairs' to repairs made to machinery, plant and/or furniture. In the present case, the assessee fully renovated International Convention Centre. if such renovation work is held to be treated as 'current repairs', section 31(1) will be completedly redundant and absurdity will creep in because repair implies existence of a part of the machine or building which has malfunctioned or damaged which is impossible in the case of such replacement. Hence, this replacement expenditure cannot be said to be 'current repairs'. 31.2 Given that section 31 of the Act is not applicable to the said expenditure of the assessee, the next issue is whether it can be considered 'revenue expenditure' of the nature envisaged under section 37 of the Act. The Saravana Mills (supra) case holds that expenditure is deductible under section 37 only if it (a) is not deductible under sections 30-36, (b) is of a revenue nature, (c) is incurred during the current accounting year and (d) is incurred wholly and exclusively for the purpose of the business. We are satisfied that the assessees' expenditure satisfies requirements (a), (c) and (d) as stated above. The dispute is with respect to the nature of expenditure, that is, whether it is revenue or capital in nature. 31.3 We are of the opinion that the expenditure of the assessee in this case is capital in nature and there is sufficient judicial precedent to support this view. In the case of Travancore Cochin Chemicals Ltd. vs. CIT (2 SCC 20), the Court held that expenditure is of a capital nature when it amounts to an enduring advantage for the business and repair is different from bringing a new asset for the business. Further, in Lakshmiji Sugar Mills (P) Co. vs. CIT (AIR 1972 SC 159) it has been held by the Court that bringing into existence a new asset or an enduring benefit for the assessee amounts to capital expenditure. We have already explained why replacement, in this case, amounts to bringing into existence a new asset and also an enduring benefit for the assessee. It is clearly seen that expenditure of the assessee is not of a revenue nature and thus, cannot be claimed as a deduction under section 37 of the Act. Accordingly, this ground of appeal of the assessee is rejected. 32. The Cross Objection raised by the assessee in C.O. No.13/Coch/2015 is only supportive of the order of the CIT(A). Since we have allowed the appeal of the Revenue, the Cross Objection filed by the assessee has become infructuous and is dismissed as infructuous.” 7. Mr Raja Kannan contends that the Tribunal committed an error in law and also fact by holding that renovation and refurbishment expenditure cannot be said to be current repairs. The Commissioner of Income Tax (Appeals) ITA Nos.17 & 14/2019 examined in sufficient detail the nature of heads under which the amount now claimed as revenue expenditure was spent. The assessee, by spending Rs.7,13,89,107/- is neither bringing into existence a new asset nor extending the existing asset to disallow the revenue expenditure claimed. The principles on which the allowance or disallowance of expenditure claimed as revenue expenditure are no more res integra, and in support thereof, both as binding precedents and illustrative cases on the same point, he relies on the following judgments: Principal Commissioner of Income Tax, Panaji v. Goa Tourism Development[1]; Comfort Living Hotels P. Ltd v. Commissioner of Income Tax-III[2]; Commissioner of Income Tax v. Cama Hotels Limited[3]; Indus Motors Co.P. Ltd. V. Deputy Commissioner of Income Tax[4]; Empire Jute 1 (2019) 261 TAXMAN 500 (Bom.) 2 (2014) 363 ITR 182 (Delhi) 3 (2015) 235 TAXMAN 206 (Guj.) 4 (2016) 382 ITR 503 (Ker) 4 (2016) 382 ITR 503 (Ker) ITA Nos.17 & 14/2019 Principal Commissioner of Income Tax, Panaji v. Goa Tourism Development[1]; Comfort Living Hotels P. Ltd v. Commissioner of Income Tax-III[2]; Commissioner of Income Tax v. Cama Hotels Limited[3]; Indus Motors Co.P. Ltd. V. Deputy Commissioner of Income Tax[4]; Empire Jute 1 (2019) 261 TAXMAN 500 (Bom.) 2 (2014) 363 ITR 182 (Delhi) 3 (2015) 235 TAXMAN 206 (Guj.) 4 (2016) 382 ITR 503 (Ker) 4 (2016) 382 ITR 503 (Ker) ITA Nos.17 & 14/2019 Co. Ltd v. Commissioner of Income Tax[5]; Alembic Chemical Works Co. Ltd v. Commissioner of Income Tax, Gujarat[6]; Commissioner of Income Tax v. High Land Produce Co. Ltd.[7]; Joy Alukkas India (P) Ltd v. Assistant Commissioner of Income Tax[8]; Commissioner of Income Tax v. Ooty Dasaprakash[9]; Commissioner of Income Tax v. MAC Charles (India) Ltd[10]; Commissioner of Income Tax v. Saravana Spinning Mills P. Ltd[11]; Ballimal Naval Kishore v. Commissioner of Income Tax[12]; Travancore Cochin Chemicals Ltd v. Commissioner of Income Tax, Kerala[13]; and M/s. Lakshmiji Sugar Mills Co. v. Commissioner of Income Tax, New Delhi[14]. A few cited judgments are referred hereunder: 7.1 Empire Jute Co. Ltd v. Commissioner of Income Tax 5 (1980) 124 ITR 1 6 (1989) 3 SCC 329 7 (1976) 102 ITR 803 8 (2016) 282 CTR 551 9 (1999) 237 ITR 902 10 (2015) 273 CTR (Kar) 596 11 (2007) 293 ITR 201 (SC) 12 (1997 224 ITR 414 13 (1977) 2 SCC 20 14 (1971) 3 SCC 526 “The decided cases have, from time to time, evolved various tests for distinguishing between capital and revenue expenditure but no test is para mount or conclusive. There is no all embracing formula which can pro vide a ready solution to the problem; no touchstone has been devised. Every case has to be decided on its own facts, keeping in mind the broad picture of the whole operation in respect of which . But a few tests the expenditure has been incurredformulated by the courts may be referred to as they might help to arrive at a correct decision of the controversy between the parties. One celebrated test is that laid down by Lord Cave LC in, Atherton v. British Insulated and Helsby Cables Ltd. [1925] 10 TC 155, 192 (HL), where the learned Law Lord stated: (emphasis supplied) "...... when an expenditure is made, not only once and for all, but with a view to bringing into existence an asset or an advantage for the enduring benefit of a trade, I think that there is very good reason (in the absence of special circumstances leading to an opposite conclusion) for treating such an expenditure as properly attributable not to revenue but to capital." This test, as the parenthetical clause shows, must yield where there are special circumstances leading to a contrary conclusion and, as pointed out by Lord Radcliffe in Commissioner of Taxes v. Nchanga Consolidated Copper Mines Ltd. [1965] 58 ITR 241 (PC), it would be misleading to suppose that in all cases, securing a benefit for the business would be, prima facie, capital expenditure so long as the benefit is ".not so transitory as to have no endurance at allThere may be cases where expenditure, even if incurred for obtaining advantage of enduring benefit, may, none the less, be on revenue account and the test of enduring benefit may break down. It is not every advantage of enduring nature acquired by an assessee that brings the case within the principle laid down in this test. What is mate rial to consider is the nature of the advantage in a commercial sense and it is only where the advantage is in the capital field that the expenditure would be disallowable on an application of this test. If the advantage consists merely in facilitating the assessee's trading operations or enabling the management and conduct of the assessee's business to be carried on more efficiently or more profitably while leaving the fixed capital untouched, the expenditure would be on revenue account, even though the advantage may endure for an indefinite future. The test of enduring benefit is, there fore, not a certain or conclusive test and it cannot be applied blindly and mechanically without regard to the . But even particular facts and circumstances of a given caseif this test were applied in the present case, it does not yield a conclusion in favour of the revenue. Here, by purchase of loom hours no new asset has been created. There is no addition to or expansion of the profit-making apparatus of the assessee. The income-earning machine remains what it was prior to the purchase of loom hours. The assessee is merely enabled to operate the profit making structure for a longer number of hours. And this advantage is clearly not of an enduring nature. It is limited in its duration to six months and, moreover, the additional working hours per week transferred to the assessee have to be utilised during the week and cannot be carried forward to the next week. It is, therefore, not possible to say that any advantage of enduring benefit in the capital field was acquired by the assessee in purchasing loom hours and the test of enduring benefit cannot help the revenue. (emphasis supplied) 7.2 Joy Alukkas India (P) Ltd v. Assistant Commissioner of Income Tax “29. Advantage to facilitate trade operations providing the management to conduct business more effectively to make profits without the need of expanding or extending capital asset (permanent structure). what, assessee acquires by spending money is to achieve good ambience which may result in profits without changing the building itself in which the business is conducted. The outgoing expenditure though forms part of profit earning exercise, in the absence of acquiring any asset or a right of permanent nature, it cannot be considered as capital expenditure. There is no replacement of complete structure with the new process. The nature of business prior to expenditure in question and afterwards being the same without any change, except some improvements to augment more profits in order to compete with the other competitors in the business regarding new interior designs etc. it cannot be termed as capital expenditure. There was no fresh venture by the assessee so far as the business is concerned. Intended object and the effect must be with reference to business realities. Whether advantage or benefit is for at shorter or longer period. it is immaterial. Therefore, character of expenditure is alone the deciding factor. (emphasis supplied) ITA Nos.17 & 14/2019 7.3 Commissioner of Income Tax v. Ooty Dasaprakash The assessee, who was running a hotel, claimed deduction of expenditure incurred towards the repair of the hotel buildings and their maintenance and replacing the existing components of the building, furniture and fittings as -revenue expenditure under section 31(1) of the Incometax Act, 1961. The Income-tax Officer held that, since the modernisation programme involved a large amount spread over three years, it resulted in an enduring benefit to the business and hence it was capital expenditure. The Tribunal held that the ex penditure incurred by the assessee in substantially replacing the old building during the previous years relevant to the assessment years 1985-86, 1986-87 and 1987-88 was allowable as current repairs under section 31(1) or under section 37 of the Act. On a reference application under section 256(2) of the Act: Held, affirming the decision of the Tribunal, that the expenditure was incurred solely for repairs and modernising the hotel and replacing the existing components of the building, furniture and fittings, with a view to create a conducive and beautiful atmosphere for the purpose of running the business of a hotel. The expenditure incurred was not of an enduring nature and was allowable as revenue expenditure under section 37 of the Act. (emphasis supplied) ITA Nos.17 & 14/2019 7.4 Commissioner of Income Tax v. MAC Charles (India) Ltd ITA Nos.17 & 14/2019 7.4 Commissioner of Income Tax v. MAC Charles (India) Ltd 3. Learned counsel for the Revenue assailing the impugned order contended that the expenditure incurred on replacement of several items as mentioned in the impugned order would not constitute the nature of repair or current repair. It is incurred not for preserving or maintaining an already existing asset. The improvement so carried out has resulted in a new asset coming to existence and benefit therefrom is enduring in nature and therefore, the said expenditure has to be treated as capital expenditure. In support of his contention, he relied upon a judgment of apex Court in the case of Ballimal Naval Kishore & Anr. v. CIT MANU/SC/2058/1997: (1997) 138 CTR (SC) 284: (1997) 224 ITR 414 (SC) and another judgment in the case of the CIT v. Saravana Spinning Mills (P) Ltd. MANU/SC/3308/2007: (2007) 211 CTR (SC) 281: (2007) 293 ITR 201 (SC). 8. It is, hence, argued that the Tribunal disallowed the expenditure not by applying any of the tests laid down by the Supreme court in the judgments cited above. Therefore, the conclusion recorded on ‘current repairs’ under Section 31(1) of the Act is illegal and thereby decided the disallowance under ITA Nos.17 & 14/2019 Section 37 of the Act. In other words, the argument is that not by applying the tests laid down by the Supreme Court and this Court, but, on elimination, the conclusion is recorded. He prays for setting aside the finding in this behalf and remit the matter to Tribunal for consideration and disposal afresh by applying the binding precedents on the point. 9. Learned Senior Counsel Mr P K R Menon argues that the finding of fact recorded by the Tribunal on ‘current repairs’, by any standard, is a simple finding of fact. The said finding has bearing and nexus to the conclusion recorded for disallowing the expenditure claimed by the assessee. The reasoning is that the expenditure is deducted under Section 37 only if the expenditure (a) is not deductable under Sections 30-36, (b) is of a revenue nature, (c) is incurred during the current accounting year, and (d) is incurred wholly and exclusively for the purposes ITA Nos.17 & 14/2019 of the business, is based on the ratio laid down in Saravana Spinning Mills P. Ltd case and is in all fours applicable to the case on hand. The Senior Counsel does not debate on principles laid down in the judgment cited by the assessee, but invites our attention to Assam Bengal Cement Co. Ltd. v. Commissioner of Income Tax, West Bengal[15] and argues that a conclusion on whether revenue or capital expenditure is always case specific and no exception to the findings recorded by the Tribunal could be taken. On the effort of the counsel for the assessee to independently examine whether the expenditure claimed under the subject head could be allowed or not, he contends that such an exercise would undertake an examination of circumstances and may lead to disturbing pure and simple findings of fact. For any reason, the Court is not convinced with the reasoning and ITA Nos.17 & 14/2019 conclusion recorded by the Tribunal; the Tribunal ought to be directed to re-consider the issue. 10. For answering the substantial questions stated for our consideration, we have the option of either recording an independent finding on the expenditure claim of the assessee or, alternatively, whether the finding recorded by the Tribunal warrants our interference because of not conforming to the ratio laid down in the judgment relied on by both the parties. We prefer to be precise by relying on the very judgment in Assam Bengal Cement Co. Ltd. case, on which reliance is placed by the learned Senior Counsel, which reads thus: “…. The question has all along been considered to be a question of fact to be determined by the Income Tax authorities on an application of the broad principles laid down above and the Courts of law would not ordinarily interfere with such findings of fact if they have been arrived at on a proper application of those principles.” our consideration, we have the option of either recording an independent finding on the expenditure claim of the assessee or, alternatively, whether the finding recorded by the Tribunal warrants our interference because of not conforming to the ratio laid down in the judgment relied on by both the parties. We prefer to be precise by relying on the very judgment in Assam Bengal Cement Co. Ltd. case, on which reliance is placed by the learned Senior Counsel, which reads thus: “…. The question has all along been considered to be a question of fact to be determined by the Income Tax authorities on an application of the broad principles laid down above and the Courts of law would not ordinarily interfere with such findings of fact if they have been arrived at on a proper application of those principles.” 10.1 As rightly pointed out by Mr Raja Kannan, the consideration is not by applying the principles and tests laid down by the binding precedents in deciding whether the claim merits acceptance as revenue expenditure or not. On the contrary, on the applicability of Sections 30-36 a finding is recorded. By following Assam Bengal Cement Co. Ltd. case, we are constrained to observe that the findings recorded by the Tribunal do not conform to the principles laid down by the binding precedents. The matter requires reconsideration. Hence, the questions are answered, for statistical purposes, in favour of the assessee and against the Revenue. The order under appeal on this point is set aside. The matter is remanded to the Tribunal for consideration and decision afresh, in accordance with law. ITA Nos.17 & 14/2019 Income Tax Appeals allowed as indicated above. Sd/- S.V.BHATTI JUDGE Sd/- BASANT BALAJI JUDGE jjj ITA Nos.17 & 14/2019 APPENDIX OF ITA 14/2019 PETITIONER ANNEXURES ANNEXURE A THE TRUE COPY OF THE ORDER OF ASSESSMENT DATED 28.3.2014 ISSUED UNDER SECTION 143(3)OF THE ACT, BY THE ASSESSING AUTHORITY FOR THE A.Y.2011-12.28.3.2014 ISSUED UNDER SECTION 143(3)OF THE ACT, BY THE ASSESSING AUTHORITY FOR THE A.Y.2011-12. ANNEXURE B THE TRUE COPY OF THE ORDER DATED 19.3.2015 ISSUED BY THE COMMISSIONER OF INCOME-TAX (APPEALS)-I, KOCHI FOR THE A.Y 2011-12.BY THE COMMISSIONER OF INCOME-TAX (APPEALS)-I, KOCHI FOR THE A.Y 2011-12. ANNEXURE C THE TRUE COPY OF THE APPEAL MEMORANDUM DATED 4.6.2015 FILED BY THE ASSISTANT COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE-1(2), KOCHI, FOR THE A.Y.2011-12.4.6.2015 FILED BY THE ASSISTANT COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE-1(2), KOCHI, FOR THE A.Y.2011-12. ANNEXURE D THE TRUE COPY OF THE CROSS OBJECTION MEMORANDUM DATED 20.7.2015 FILED BY THE APPELLANT AGAINST ANNEXURE C APPEAL, BEFORE THE APPELLATE TRIBUNAL.MEMORANDUM DATED 20.7.2015 FILED BY THE APPELLANT AGAINST ANNEXURE C APPEAL, BEFORE THE APPELLATE TRIBUNAL. ANNEXURE E THE TRUE COPY OF THE ORDER DATED 26.10.2018 ISSUED BY THE INCOME TAX APPELLATE TRIBUNAL, COCHIN BENCH IN ITA 335/COCH/2015.ISSUED BY THE INCOME TAX APPELLATE TRIBUNAL, COCHIN BENCH IN ITA 335/COCH/2015. ANNEXURE F THE TRUE COPY OF THE ORDER DATED 2.1.2019 ISSUED BY THE ASSISTANT COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE-1(2), KOCHI.BY THE ASSISTANT COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE-1(2), KOCHI. ANNEXURE G THE TRUE COPY OF THE COMMUNICATION DATED 11.1.2019 ISSUED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRALIZED PROCESSING CENTER, BANGALORE.11.1.2019 ISSUED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRALIZED PROCESSING CENTER, BANGALORE. ITA Nos.17 & 14/2019 ANNEXURE H THE TRUE COPY OF THE RECTIFICATION PETITION DATED 28.1.2019 FILED BY THE APPELLANT BEFORE THE ASSISTANT COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE-1(2), KOCHI. ITA Nos.17 & 14/2019 APPENDIX OF ITA 17/2019 PETITIONER ANNEXURES ANNEXURE A THE TRUE COPY OF THE ORDER OF ASSESSMENT DATED 28.3.2014 ISSUED UNDER SECTION 143(3) OF THE ACT, BY THE ASSESSING AUTHORITY FOR THE A.Y 2011-12.28.3.2014 ISSUED UNDER SECTION 143(3) OF THE ACT, BY THE ASSESSING AUTHORITY FOR THE A.Y 2011-12. ANNEXURE G THE TRUE COPY OF THE COMMUNICATION DATED 11.1.2019 ISSUED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRALIZED PROCESSING CENTER, BANGALORE.11.1.2019 ISSUED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRALIZED PROCESSING CENTER, BANGALORE. ITA Nos.17 & 14/2019 ANNEXURE H THE TRUE COPY OF THE RECTIFICATION PETITION DATED 28.1.2019 FILED BY THE APPELLANT BEFORE THE ASSISTANT COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE-1(2), KOCHI. ITA Nos.17 & 14/2019 APPENDIX OF ITA 17/2019 PETITIONER ANNEXURES ANNEXURE A THE TRUE COPY OF THE ORDER OF ASSESSMENT DATED 28.3.2014 ISSUED UNDER SECTION 143(3) OF THE ACT, BY THE ASSESSING AUTHORITY FOR THE A.Y 2011-12.28.3.2014 ISSUED UNDER SECTION 143(3) OF THE ACT, BY THE ASSESSING AUTHORITY FOR THE A.Y 2011-12. ANNEXURE B THE TRUE COPY OF THE ORDER DATED 19.3.2015 ISSUED BY THE COMMISSIONER OF INCOME-TAX (APPEAL)-I, KOCHI FOR THE A.Y. 2011-12.BY THE COMMISSIONER OF INCOME-TAX (APPEAL)-I, KOCHI FOR THE A.Y. 2011-12. ANNEXURE C THE TRUE COPY OF THE APPEAL MEMORANDUM DATED 4.6.2015 FILED BY THE ASSISTANT COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE-1(2), KOCHI, FOR THE A.Y 2011-12.4.6.2015 FILED BY THE ASSISTANT COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE-1(2), KOCHI, FOR THE A.Y 2011-12. ANNEXURE D THE TRUE COPY OF THE CROS OBJECTION MEMORANDUM DATED 20.7.2015 FILED BY THE APPELLANT AGAINST ANNEXURE C APPEAL, BEFORE THE APPELLATE TRIBUNAL.MEMORANDUM DATED 20.7.2015 FILED BY THE APPELLANT AGAINST ANNEXURE C APPEAL, BEFORE THE APPELLATE TRIBUNAL. ANNEXURE E THE TRUE COPY OF THE ORDER DATED 26.10.2018 ISSUED BY THE INCOME TAX APPELLATE TRIBUNAL, COCHIN BENCH IN ITA 335//COCH/2015.ISSUED BY THE INCOME TAX APPELLATE TRIBUNAL, COCHIN BENCH IN ITA 335//COCH/2015. ANNEXURE F THE TRUE COPY OF THE ORDER DATED 2.1.2019 ISSUED BY THE ASSISTANT COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE-1)2), KOCHI.BY THE ASSISTANT COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE-1)2), KOCHI. ANNEXURE G THE TRUE COPY OF THE COMMUNICATION DATED 11.1.2019 ISSUED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRALIZED PROCESSING CENTER, BANGALORE.11.1.2019 ISSUED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRALIZED PROCESSING CENTER, BANGALORE. ITA Nos.17 & 14/2019 ANNEXURE H THE TRUE COPY OF THE RECTIFICATION PETITION DATED 28.1.2019 FILED BY THE APPELLANT BEFORE THE ASSISTANT COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE-1(2), KOCHI.