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TMI Blog2014 (8) TMI 641X X X X Extracts X X X X X X X X Extracts X X X X ..... INCOME TAX, DELHI-IV. Versus M/s HI LINE PENS PVT. LTD. [2008 (9) TMI 25 - HIGH COURT DELHI] - expenses that were incurred were towards repairing the premises taken on lease so as to make it more conducive to its business activity - Such expenses would clearly fall within the expression of repairs to the premises as appearing in Section 30(a)(i) - The legislature has made a distinction between expenses incurred by a tenant for “repairs” of the premises and expenses incurred by a person who is not a tenant towards “current repairs” to the premises – Decided in favour of Assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... of having attractive showrooms as a marketing strategy persuaded its dealers to make some changes in their showrooms.The assessee also received advice from M/s LML Limited for making modification in the showroom by changing the flooring and having marble flooring, plaster of paris, painting etc. These were got done by the assessee as it was compulsory for continuation of the dealership agreement and thus was a business necessity. At the time of finalization of accounts and before filing the return in mid of September 1997, the assessee left those premises alongwith all the modifications and shifted to a new showroom constructed by him. The expenditure was thus for modernization and better conduct of business and improving the sales. The re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... S, TAXES, REPAIRS & INSURANCE FOR BUILDINGS. In respect of rent, rates, taxes, repairs and insurance for premises, used for the purposes of the business or profession, the following deductions shall be allowed - (a)Where the premises are occupied by the assessee - (i) as a tenant, the rent paid for such premises; and further if he has undertaken to bear the cost of repairs to the premises, the amount paid on account of such repairs; (ii) Otherwise than as a tenant, the amount paid by him on account of current repairs to the premises; (b) Any sums paid on account of land revenue, local rates or municipal taxes; (c) The amount of any premium paid in respect of insurance against risk of damage or destruction of the premises." 6. The case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... legislature has made a distinction between expenses incurred by a tenant for "repairs" of the premises and expenses incurred by a person who is not a tenant towards "current repairs" to the premises. This distinction has to be given meaning. Perhaps the logic behind the distinction was that a tenant would, by the very nature of his status as a tenant, not undertake expenditures as would endure beyond his likely period of tenancy or create a new asset. Whereas, an owner may undertake expenditures so as to even bring about new assets of capital nature." 8. Further, the Tribunal had relied upon judgment of Apex Court in Ballimal Naval Kishore and another v. CIT, (1997) 224 ITR 414 which was distinguished by the Delhi High Court in Hi Line Pen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich is similar to the expression appearing in Section 30(a)(ii) and Section 31(i) of the Income Tax Act, 1961. Whereas it is Section 10(2)(ii) of the 1922 Act which is similar to the provisions of Section 30(a)(i), which is applicable in the present case. Both, Section 10(2)(ii) of the 1922 Act and Section 30(a)(i) of the 1961 Act, speak only of "repairs" and not "current repairs". Thus, the decision in Ballimal Naval Kishore (supra) would also be of no help to the revenue in as much as the facts are entirely different." 9. In CIT, Patiala v. Bharat Cinema, (1980) 121 ITR 165 (P&H), this Court had held that amount spent on the cost of replacement of false ceiling was an expenditure of revenue nature. Following the aforesaid decision, anoth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Factory's case [1980] 125 ITR 293 (SC), and the decisions of this court in Bharat Cinema [1980] 121 ITR 165 (P&H) and Bhagat Industries Corporation [1980] 126 ITR 645 (P & H), the benefit even if it is taken to be of an enduring nature, though it was not, does not fall within the realm of capital expenditure for taxation. It was revenue expenditure wholly and exclusively spent for the business of the assessee and is thus an expenditure of revenue nature. The assessee was entitled to claim its exemption and the decision of the Tribunal was not correct."
10. In view of the above, the substantial question of law is answered in favour of the assessee and against the revenue. Consequently, the appeal stands allowed. X X X X Extracts X X X X X X X X Extracts X X X X
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