2023 (10) TMI 518 - HC - Income Tax

Nature of expenses - renovation and repair expenses incurred on account of improvisation and better conduct of the existing business - whether not the revenue expenditure admissible u/s 37? - treatment of expenses incurred on renovation and refurbishment of Hotel - HELD THAT - Having regard to the judgment rendered in 2023 (10) TMI 467 - DELHI HIGH COURT the instant appeal is disposed of with the following directions, as the view taken in the said appeal will apply mutatis mutandis to the instant case as well Appellant/assessee will be entitled to claim the deduction, as, in our opinion, it is in the nature of revenue expenditure as incurred on renovation, refurbishment and repairs.

Summary

Issues involved: Assessment of renovation and repair expenses as capital expenditure for the Assessment Year 1996-97.

Summary:
The appeal before the Delhi High Court concerned the order passed by the Income Tax Appellate Tribunal regarding the Assessment Year 1996-97. The Tribunal had followed a previous order related to AY 1991-92 to AY 1994-95. A substantial question of law was framed regarding the treatment of renovation and repair expenses as capital expenditure for better conduct of the existing business. The Court noted a previous judgment on a similar issue for AY 1992-93. The Assessing Officer had disallowed a specific amount incurred on renovation and refurbishment. The Commissioner of Income Tax (Appeals) granted partial relief by treating a portion of the expenses as revenue expenditure. The Tribunal upheld the CIT(A)'s order. In line with a previous judgment, the Court allowed the deduction of the expenses as revenue expenditure, ruling in favor of the appellant/assessee and against the revenue. The appeal was disposed of accordingly.