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TMI Blog2016 (7) TMI 71X X X X Extracts X X X X X X X X Extracts X X X X ..... n the facts and in the circumstances of the case and in law, Income Tax Appellate Tribunal was correct in holding that the expenditure to the extent of 75% of Rs. 31,32,841/was capital in nature?" 3. Brief facts leading to this appeal are as under : (a) Since the year 1995, the appellant was in occupation as a tenant of 7th floor of Ceat Mahal, Worli, Mumbai(said premises ). The appellant was paying a monthly rent of Rs. 73,530/. In the A.Y. 1996-97, the appellant filed its return of income declaring an income of Rs. 17.46 lakhs. The appellant had debited a sum of Rs. 47.63 lakhs to the Profit and Loss account under the head "Repairs and Maintenance" while determining its income. Out of the aforesaid amount of Rs. 47.63 lakhs as expendit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... carried the issue of nature of expenditure in appeal to the Tribunal. The impugned order of the Tribunal on facts found that substantially, the expenditure on renovation gives a benefit or advantage of enduring nature. Therefore substantially on capital account qualifying for depreciation in terms of Explanation-I to Section 32 of the Act. In the circumstances , it upheld the order of the CIT(A), holding that the expenditure to the extent of Rs. 23.49 lakhs out of Rs. 31.32 lakhs is on capital account and cannot be allowed as revenue expenditure. 4. Being aggrieved, the appellant is in appeal and the appeal has been admitted on the above question of law. Mr. Jhaveri, learned Counsel appearing for the appellant in support submits as under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . This expense resulted in an advantage / benefit of a enduring nature in as much as it inter alia resulted in the appellant being able to accommodate more number of employees and facilitate improving its trading operations. Thus the benefit obtained by the appellant, according to the Authorities was substantially in the capital field and could not be entirely allowed as revenue expenditure. The submission on behalf of the appellant, before us, that as the appellant does not own the premises the expenditure incurred on renovation goes to the benefit of the owner of the said premises, therefore in the hands of the tenant it can only be revenue expenditure is more then met by the impugned order of the Tribunal. This in view of the fact that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere a lumpsum payment of Rs. 1.50 crores gets rid of annual business expenses chargeable against revenue then the lumpsum is to be regarded as a revenue/business expenditure. The benefit obtained by the assessee in the above case was premises at a lower rent in view of the contribution made to the developer for repairing / reconstructing the premises. Thus, the expenditure was in the revenue field and allowable under Section 37 of the Act. In the present facts, nothing is on record to indicate that there was any advantage secured by the appellant in the revenue field. There was no decrease in the rent nor was there any embargo on future increase in the rent in consideration of the expenditure for renovation. Therefore, the above decision wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of facts found was in any way arbitrary or perverse. Thus we find no merit in the above submission. 9. In the view taken by us that the expenditure of 75% of Rs. 31.32 lacs i.e. Rs. 23.49 lakhs is on capital account, the submission to claim deduction on account of Section 30 of the Act made by the Appellant need not be examined. Nor the decision of the Delhi High Court in Commissioner of Income Tax Vs. Hi Line Pens Pvt. Ltd. 306, ITR 182 relied upon for interpretation of Section 30 of the Act need be examined. This for the reason that the Explanation to Section 30 of the Act itself provides that the amount paid on the cost of repairs would not include any expenditure which is in the nature of capital expenditure. Although this Explanatio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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