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TMI Blog2015 (3) TMI 1120X X X X Extracts X X X X X X X X Extracts X X X X ..... f nine years which can be further extended by mutual consultation. It is also evident that the asset leased out by the assessee is of commercial nature and intention of the landlord is to let out the premises on long term basis. Therefore, from the facts and circumstances of the case, it is evident that the assessee would derive benefit from these structures at least for a period of nine years or even more. These structures also remains as the property of the assessee and on vacating the premises, the assessee is entitled to either remove these structures, or sell it to the new tenant. As pointed out by the Ld. CIT (A), Explanation-1 to Section 32 clearly clarifies the issue, though it has been inserted by the Taxation Laws (Amendment and M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s a company, engaged in the business of servicing of computers, computer peripherals and telecommunication products and trading of telecommunication products, filed its return of income for the assessment year 2008-09 on 25.09.2008 admitting its income as `3,35,31,354/-. Subsequently the case was selected for scrutiny under CASS and assessment was completed U/s. 143(3) of the Act on 14.02.2010 wherein the Ld. Assessing Officer made certain disallowance amongst which one of the disallowance was the excess claim of depreciation on furniture and fittings such as temporary structures like wooden partitions, false ceiling etc., in the leased premises amounting to `90,72,126/-, by relying on the decision of Hon ble Jurisdictional Madras High Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ease or other right of occupancy and any capital expenditure is incurred by the assessee for the purposes of the business or profession on the construction of any structure or doing of any work in or in relation to, any by way of renovation or extension of, or improvement to, the building then, the provisions of this clause shall apply as if the said structure or works is a building owned by the assessee. Thus, there is no distinction between a leasehold building and own building so far as the allowability of depreciation is concerned. In the instant case, the appellant has made partitions and other works in lease hold premises which is naturally by way of renovation or improvement and is, therefore, squarely covered by Explanation 1 to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of very temporary in nature eligible for 100% depreciation,. A temporary structure means it will be dismantled within the same year or the next year. Te expenditure on improvement of the building like partitioning, false ceiling etc should not be confused with the temporary structure which will be dismantled within a very short period. 4.2.2 In the instant case, the appellant has put up wooden partitions, false ceiling and other interior works by way of renovation and imkprovement in the leased premises. Since it is an improvement on the building, it is capital in nature. There is, also no hard and fast rule that all the expenditure on leasehold premises will partake the character of revenue expenditure. The expenditure incurred by the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out premises by incurring expenditure on wooden partitions, false ceiling, ESD tiled floorings, electrical network cabling and interior decoration etc. There is no doubt that the assessee would derive benefit from these structures year after year and therefore, the benefit derived is of enduring nature. From the lease deed of the assessee with its landlord, it is evident that the lease is for a period of nine years which can be further extended by mutual consultation (page 3 of the paper book). It is also evident that the asset leased out by the assessee is of commercial nature and intention of the landlord is to let out the premises on long term basis. Therefore, from the facts and circumstances of the case, it is evident that the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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