9911796707
|
Home
Issues Involved:
1. Whether the expenditure of Rs. 22,301 incurred by the assessee on repairs to the building constitutes an expenditure admissible u/s 30(a)(i) or u/s 37 of the Income-tax Act, 1961. Judgment Summary: Issue 1: Admissibility of Expenditure u/s 30(a)(i) The Tribunal disallowed the deduction under s. 30(a)(i) on the grounds that there was no written agreement obligating the lessee to bear the cost of repairs. However, the High Court interpreted clause (iv) of the lease deed in conjunction with s. 108(m) of the Transfer of Property Act, which mandates the lessee to keep the property in good condition. The court held that the lessee's obligation to maintain the building in a "good condition" inherently included necessary repairs, even without a specific agreement. Thus, the expenditure on repairs was admissible under s. 30(a)(i). Issue 2: Admissibility of Expenditure u/s 37 The Tribunal also held that the expenditure was of a capital nature and not admissible under s. 37. The High Court disagreed, emphasizing that the nature of the expenditure should be viewed in the context of the business environment and specific circumstances. The court referenced precedents, including Empire Jute Co. Ltd. v. CIT and L. H. Sugar Factory and Oil Mills (P.) Ltd. v. CIT, which established that even enduring benefits could be considered revenue expenditure if they facilitated business operations without altering fixed capital. The court concluded that the repairs were necessary for the business and did not result in a capital asset, thus qualifying as revenue expenditure under s. 37. Conclusion: The High Court ruled in favor of the assessee, holding that the expenditure of Rs. 22,301 on repairs was admissible as a deduction both u/s 30(a)(i) and u/s 37 of the Income-tax Act, 1961. The Tribunal's decision was overturned, and the reference was answered in favor of the assessee.
|
