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TMI Blog1987 (5) TMI 77X X X X Extracts X X X X X X X X Extracts X X X X ..... hased by the assessee from old tea-stall contractor (Rs. 25,000). The assessments have been held by the ld. CIT to be prejudicial to the interests of the Revenue. He set aside the same and directed the ITO to complete the assessments do novo in accordance with the law. The assessee repeated before the ld. Commissioner by way of written submission inter alia, contending that ITO's orders were neither erroneous nor prejudicial to the interests of the Revenue. He placed strong reliance on the ratio of the decisions reported as CIT vs. Kanodia Cold Storage (1975) 100 ITR 155 ((All)), CIT vs. Mahalaxmi Textile Mills Ltd. (1967) 66 ITR 710 (SC), CIT vs. Ram Krishna Steel Rolling Mills (1974) 95 ITR 97 (Del), Gulam Hussein Ebrahim Matchieswalla vs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecuted by the assessee as lessee on 21st July, 1980 in favour of the lessors S/Shri Ranjan Malhotra and Rahul Malhotra. Stipulations 2-B to 2-N in the above lease deed are to the following effect: "2-B. That all the Municipal Taxes such as Property Taxes, Central Tax, Water Tax, Drainage Tax, Bhumi Bhawan (Kar), Excess water charges shall be paid by the lessees besides charges and taxes that are all made payable by the tenant. The lessors shall be liable for any other charges and taxes levied on landlord in future. 2-C. The lessees shall carry out regularly every year just after rainy season the white washing, colouring of the building and the repairs of the building with his own expenses and in case the Lessees fail to carry out the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essary repairs during the currency of the lease. 2-H. That the lessees will, not sublet or assign or otherwise dispose off or in any way part with the possession of the demised premises, furniture, fixture etc. or any part thereof without the express consent of the Lessors in writing to be obtained previously from the Lessors. Provided that this prohibition shall not be applicable to any cabarte etc. dancing shows and theatrical performances held only for short period as well as conversion by the Lessees of their business in a partnership or limited concern having members of their family as defined in C.P. Act R.II of 1972 provided always that the Lessees shall always remain responsible for the due performance of this agreement. 2-I Tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ove the same at the expiry of the lease period or sooner determination thereof at there own cost. In the event of the replacement of the furniture or fans the Lessees shall return the existing furniture and fans to the Lessors. But this replacement and return of the furniture and fans or any other replacement of any fixture or fitting, sound proof ceiling etc. Shall not in any case effect the liability of the Lessees to pay the rent and hire charges herein before agreed i.e. Rs. 8,5000 (Rs. Eight Thousand Rive Hundred) per month for the first six year of the term of the lease and Rs. 11,500 (Rupees Eleven Thousand Five Hundred) per month during the last four years of the term of the lease and accordingly they will continue to pay the rent a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... repairs" is allowable. The latter provision applies to the assessee occupying the premises otherwise than as a tenant, as an owner or mortgage in possession, and in those cases the deduction is restricted in respect of the "current repairs" to the premises. So far as a tenant is concerned, it is the "repairs" to the premises and if the assessee had undertaken to bear the cost of the repairs to the premises, than these repairs may be even in the nature of capital expenditure." The above apart, the Hon'ble Supreme Court of India in the case of Empire Jute Co. Ltd. vs. CIT (1980) 17 CTR (SC) 113: (1980) 124 ITR 1 (SC) laid down the following ratio: "By the Court: (i) It is not a universally true proposition that what may be a capital rece ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n what the expenditure, is calculated to effect from a practical and business point of view rather that upon the juristic classification of the legal rights, if any, secured, employed or exhausted in the process. The question must be viewed in the larger context of business necessity or expediency. 5. Now in view of the agreed stipulations between the assessee as a lessee and the lessors of the premises-cinema building the ratio of the jurisdictional High Court as also that of the Hon'ble Supreme Court referred to above, helps the assessee qua the amount of repairs (Rs. 1,10,404) plus fee of architect (Rs.3,834) and these amounts cannot be said to be in the nature of capital expenditure. As regards amount of Rs. 25,000 this is not covered ..... X X X X Extracts X X X X X X X X Extracts X X X X
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