9911796707
TMI Blog1999 (12) TMI 136X X X X Extracts X X X X X X X X Extracts X X X X ..... ". The assessee was asked to explain the nature of such expenses. On the basis of details furnished by the assessee it was found by the Assessing Officer that such expenditure was incurred on demolition of some of the original walls and rebuilding part thereof to suit the office requirements, preparation of number of temporary wooden partitions for the office purpose, painting and decorative wood panelling and extensive electric wiring and fittings. In addition to all such expenses the assessee also incurred another expenditure of Rs. 71,114 towards furniture and fixtures consisting of chairs, telephone counter, office counter, cabinet, tables, teapots, sofa etc. which was capitalised by the assessee itself as a capital expenditure. Keeping ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 281. Aggrieved by the said order, the assessee is in appeal before the Tribunal. 4. The learned counsel for the assessee Mr. K.A. Sathe, has vehemently assailed the order of CIT(A) by contending that the assessee does not acquire an asset or an advantage of enduring nature by incurring expenditure in the rented premises. It was submitted by him that the expenditure in the nature of capital i.e. on acquisition of furniture of various types was already capitalised by the assessee and it was only expenditure in the nature of repairs and replacement to have optimum use of the rented premises which has been claimed as revenue expenditure. In support of his contentions he relied on the decision of Karnataka High Court in CIT v. B. V. Ramachandra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. It may also be on revenue account on the facts of the case, if in the commercial sense facilitates the trading operations or enabling the management to conduct all business of the assessee to be carried on more efficiently or more profitably, However, if the advantage is in the capital field, it will be disallowable Empire Jute Co. Ltd.'s case. (2) Where the expenditure incurred by the assessee is by way of renovation it could not be considered either as repair or revenue expenditure. Such expenditure should be treated as capital expenditure. Recent decision of Supreme Court in Ballimal Naval Kishore v. CIT [1997] 224 ITR 414/90 Taxman 402. (3) Where the expenditure incurred is in the capital field but the assessee does not become the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The perusal of the second agreement between the assessee and the above lessees dated 1-9-1988 shows that these lessees have transferred their leasehold rights in the flat to the assessee against same consideration of Rs. 3,37,800 which was paid by them to the landlord. Thus in our opinion, the assessee firm has become the perpetual lessee. It is in this background, the nature of the expenditure incurred by assessee is to be seen. 8. The perusal of assessment order shows that assessee had incurred a substantial amount of Rs. 2,27,735 under the head "repairs and maintenance". This expenditure was incurred on rebuilding of interior walls, wooden partitions, paintings of all rooms with plastic emulsion paint and extensive electrical fittings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng in the capital field, in our opinion has been rightly disallowed by the CIT(A). 9. The case law relied upon by the learned counsel of the assessee are distinguishable on facts of the case. Firstly, none of the case law related to perpetual lease. Secondly, the expenditure incurred in these cases was by way of repair and renovation of the existing old and dilapidated asset to make it useful for carrying on the business. Thirdly, the expenditure was not substantial one as in the present case. Fourthly, no asset had been created belonging to the assessee while in the present case the expenditure incurred by assessee created asset belonging to the assessee and not to the lessor. 10. In view of the above discussions, it is held that, expend ..... X X X X Extracts X X X X X X X X Extracts X X X X
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