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TMI Blog2014 (10) TMI 102X X X X Extracts X X X X X X X X Extracts X X X X ..... loyees for the purpose of business; (b) expenditure incurred for wooden partition, electric wiring, power connection, interior layout and carpeting etc., in the business premises; and (c) the perquisites for each employee. Not satisfied with the order passed by the Assessing Authority, the respondent preferred an appeal before the Appellate Commissioner. On all the three aspects, referred to above, the Appellate Authority held in favour of the respondent. In the further appeal filed by the Department before the Tribunal, the view taken by the Appellate Authority was confirmed. The Department submitted as many as 7 questions for being referred to this Court under Section 256(1) of the Income Tax Act. After hearing both the parties, the Trib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... partitions, electric wiring, power connection, interior layout, carpeting etc. has the effect of addition to enduring assets, and in that view of the matter, it ought to have been treated as a capital expenditure. It is pleaded that the respondent himself was clear on this aspect and claimed depreciation from the capital expenditure and that there was no justification for the Appellate Authority or the Tribunal in treating it as the revenue expenditure. On the third question, learned Standing Counsel submits that the Tribunal did not address the question independently and stating that there is no authoritative precedent from the High Court or the Supreme Court, it just took into account, an order passed by it in the previous assessment yea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se in which the question arises. Instances are not lacking where the same item of expenditure would answer one description, if it is incurred by a particular category of persons and the other description, if the expenditure was in the hands of other persons. For instance, if the owner of an immovable property incurs expenditure even for otherwise temporary structures or fixtures like partition, in his building, it is capable of being treated as capital expenditure, since the structure, though temporary would become part of the permanent asset, and thereby, becoming an enduring addition. In contrast, if the premises are taken on lease, and for better use thereof, the lessee makes certain arrangements such as making partitions or arranging e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aragraph reads: In order to decide whether this expenditure is revenue expenditure or capital expenditure, one has to look at the expenditure from a commercial point of view. What advantage did the assessee get by constructing a building which belonged to somebody else and spending money for such construction? The assessee got a long lease of a newly constructed building suitable to its own business at a very concessional rent. The expenditure therefore, was made in order to secure a long lease of new and more suitable business premises at a lower rent. In other words, the assessee made substantial savings in monthly rent for a period of 39 years by expending these amounts. The saving in expenditure was a saving in revenue expenditure in t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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