IN THE HIGH COURT OF DELHI AT NEW DELHI 
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   ITA 346/2012  
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 CIT            ..... Appellant 
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 Through : Mr. Sanjeev Rajpal, Advocate. 
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 versus 
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 AMWAY INDIA ENTERPRISES PVT LTD    ..... Respondent 
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 Through : Mr. Mayank Nagi, Advocate. 
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 CORAM: 
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 HON'BLE MR. JUSTICE SANJIV KHANNA 
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 HON'BLE MR. JUSTICE R.V.EASWAR 
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 O R D E R 
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     18.05.2012 
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 1. Two issues have been raised by the Revenue in this appeal which 
 pertains to the assessment year 2006-07. 
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 2. The first issue relates to the expenditure no renovation/fixtures 
 and fittings including partitions put up in the rented premises.  Learned 
 counsel for the Revenue has relied on the decision dated 25th November, 
 2011 in ITA No. 1118/2011 in CandC Constructions Private Limited v. CIT. 
 The said decision is clearly distinguishable.  The assessee had lost 
 before the Income Tax Appellate Tribunal (tribunal).  The findings of 
 fact recorded was that the assessee had constructed  sheds and had 
 claimed that after completion of the project these were to be handed over 
 to the contractee. Accordingly, they had claimed 100% depreciation. 
 Before us, the assessee had urged a new ground 
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 ITA 346/2012                 page 1 of 3 
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 for the first time that the construction cost of sheds was not capital 
 expenditure but revenue expenditure.  This plea was not allowed to be 
 raised as it was not urged and raised before the authorities/tribunal. 
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 4. Learned counsel for the respondent/assessee, who is present on 
 advance notice, has drawn our attention to the decision dated 4.11.2011 
 in ITA Nos. 1344/2009 an 1636/2009 in the assessee?s own case.  These 
 appeals were in respect of assessment years 2001-02 and 2003-03, 
 respectively.  A Division Bench of this High Court after referring to, 
 CIT v. Hi Line Pens Private Limited [2008] 306 ITR 0182 and ITA No. 
 621/2005 titled as CIT v. Escorts Finance Limited decided on 15th May, 
 2006, and some other judgments came to the conclusion that the 
 expenditure incurred on renovations in the rented premises was revenue 
 expenditure and not capital expenditure. The nature and type of 
 expenditure incurred in the present case is the same.   In view of the 
 said decision, we do not see any reason to interfere with the order of 
 the tribunal on this aspect. 
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 5. The second aspect raised by the Revenue relates to the disallowance 
 under Section 14A of the Income Tax Act, 1961 (?the Act?).   The 
 Assessing Officer had applied Rule 8D of the Income Tax Rules, 1962 
 (?Rules? for short). In Maxopp Investment Limited v. Commissioner of 
 Income Tax  [2012] 247 CTR (Delhi) 162,  it  has 
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 ITA 346/2012                 page 2 
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 been held that Rule 8D of the Rules is not retrospective but only 
 prospective and will apply only from the assessment year 2008-09. 
 However, it has also been held that both direct and indirect expenses 
 incurred for earning exempt income can be disallowed. 
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 6. Learned counsel for the respondent/assessee states that he has no 
 objection, in case, the Assessing Officer applies the ratio of Maxopp 
 Investment (supra).  It is noticed that the tribunal had already passed 
 an order of remand.  The consent of learned counsel for the respondent is 
 taken on record.  The Assessing Officer will apply the decision of this 
 Court in Maxopp Investment (supra) and accordingly examine and pass an 
 order.  The assessee will be given an opportunity of hearing before any 
 decision/order is passed. 
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 7. The appeal is disposed of with the aforesaid directions.  No costs. 
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 SANJIV KHANNA, J. 
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 R.V.EASWAR, J. 
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 MAY 18, 2012 
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 AK 
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 ITA 346/2012                 page 3 
 of 3 
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 $ 25 
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