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TMI Blog1983 (11) TMI 136X X X X Extracts X X X X X X X X Extracts X X X X ..... distemper 1,52,956 3,28,356 and on renovation of old furniture 5. Cost of mirrors 30,000 6. Cost of artefacts 60,000 7. False ceiling 22,000 8. Paintings 80,000 9. Electrical fittings 1,10,000 10. Show window and facade 75,000 11. Cost of contingencies, material and design fees 1,50,000 12. Cost of linoleum 1,01,800 7,37,730 13. Cost of miscellaneous work like fixing of racks, display of alcoves and expenditure on false ceilings (described as expenditure 1,08,930 on extension as Annexure 'A' of the assessment order) 14. Cost of renovation of building at 124, Janpath, New Delhi. 3,38,052 Less expenditure met by the Government of India 97,000 ------------------------- 2,41,052 ------------------------- 15. Renovation of the above (structural 76,286 extension of the main hall of the emporium and mezzanine floor). 16. Renovation of the above (replacement of 24,827 beams). 17. Addition/alteration in the above (cost of 4,256 3,48,162 providing expanded metal and extension of A.C. sheets) 18. Addition/alteration in above (cost of 1,741 closing of the opening at the first floor by dismantling platform at ground floor) -------------------------- Total ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 251 of the Act calling upon the assessee-corporation to explain why the amount of Rs. 3.42 lakhs debited to the repairs and maintenance account being expenditure reimbursed to the CPWD, be not treated as capital expenditure within the meaning of section 32(1A) of the Act, and depreciation allowed thereon. After hearing the appellant and after taking into account contents of the letter dated 15-6-1976 sent by the CPWD to the officer concerned of the NDMC, the Commissioner (Appeals) held that the expenditure was incurred on extensive renovation of the barrack type structure at 124, Janpath, New Delhi, which had outlived its life long time back. He, accordingly, held that the expenditure of Rs. 3.42 lakhs was capital in nature entitled to depreciation under section 32(1A) and directed the ITO to treat it as such and amend the assessment which had been made on the footing that the expenditure was revenue in character. 5. It is in the background of the above facts, that we heard the learned counsel for the appellant, Shri B.L. Chawla, vehemently contending that the aforesaid finding of the Commissioner (Appeals) regarding the expenditure of Rs. 3.42 lakhs was erroneous and without ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l administration), Central Cottage Industries Emporium, which describes the expenditure of Rs. 3.42 lakhs incurred by the assessee-corporation : " Please refer to your letter No. CCIE/2981, dated 9-9-1977 on the subject cited above. The expenditure incurred, deposits received and the share of expenditure to be met by the Government of India is as under workwise : Sl. No. Name of work Expenditure Departmental Total incurred charges Rs. Rs. Rs. 1. Renovation to A barracks 2,91,009.84 47,041.95 3,38,051.79 plot No. 124, Janpath, Less New Delhi (portion occu- expenditure pied by CCIE). to be met by GOI 97,000.00 -------------------------- 2,41,051.79 Less : Deposit received 2,07,215.00 -------------------------- 33,836.79 2. Renovation to A barracks 63,889.00 12,397.15 76,286.13 plot No. 124, Janpath (structural extension of the main Hall of Emporium) mezzanine floor. 3. Renovation to A barracks 21,825.78 3,801.06 24,826.84 plot No. 124, Janpath, (Replacement of beams in portion occupied by CCIE) 4. A/A in A barracks plot 3,469.00 687.03 4,256.03 No. 124, Janpath (providing expanded metal window and extension of AC sheets). 5. A/A in A barracks plot 1,46 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ructure that he built which were to become the property of the lessor on determination of lease, he nonetheless continued to be the owner of superstructure during the sustenance of lease. The judicial opinion, therefore, veered round the view that full ownership for a limited period did not militate against the concept of ownership in jurisprudence. As a consequence, depreciation allowance was held admissible in cases where the property was not owned by an assessee but where capital expenditure had been incurred by him for the purposes of his business. The correctness of such views was accepted by the Parliament and statutory recognition was granted to them by incorporation of provisions of section 32(1A) into the Act by the Taxation Laws (Amendment) Act, 1970, with effect from 1-4-1971. 7. Judging the nature of spending of Rs. 3.42 lakhs in the background of the letter dated 19-9-1977 reproduced above and by applying the touchstone of the ethos behind the provisions of section 32(1A), it appears to us that the expenditure in question was incurred by the assessee on the substantial renovation and extension of its business premises. Such an expenditure clearly partook the characte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and extension of the building and, therefore, the second authority relied upon by the learned counsel does not help the assessee's case. As in the above-mentioned two cases, in the third case of Dyer's Stone Lime Co. (P.) Ltd., on which reliance has been placed by the learned counsel, some expenditure on current repairs had been incurred on the brick-kiln plant and that had been allowed as a revenue expenditure. On the very face of the facts found in the present case, the aforesaid decision would have no application whatsoever. Lastly, the decision in the case of India United Mills Ltd. also does not help the appellant's, case. In that case certain old worn out doors had been substituted by fire proof doors as per factory rules and the renewal of roof had been done in order to get more light into the factory. The expenditure thus incurred was held to be a revenue expenditure on current repairs. As against the facts of the above mentioned case, in the present case large scale renovations and extensions were made as per details given in paragraph 1 above and as per the particulars mentioned in the letter of Public Works Department dated 19-9-1977 which has been reproduced in paragrap ..... X X X X Extracts X X X X X X X X Extracts X X X X
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