2016 (9) TMI 854

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..... out of the order passed by the CIT(A) on 27.01.2014 in relation to the assessment year 2005-06. 2. The first issue involved in this appeal is against the confirmation of addition of Rs. 1,95,320/-, being legal and professional expenses incurred in relation to shares buy back. 3. Briefly stated, the facts of this ground are that the assessee claimed deduction for Legal and professional charges. .....

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..... disallowance of expenditure of Rs. 1,95,320/- sustained in the first appeal relates to buy back of shares. The Hon'ble Supreme Court in Punjab State Industrial Development Corporation (supra) has held that the expenses incurred in that connection still retain the character of a capital expenditure since the expenditure is directly related to the expansion of the capital base of the company. Simila .....

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..... treated this amount as capital expenditure and disallowed the same. The ld. CIT(A) upheld the disallowance. 8. After hearing the ld. DR and perusing the relevant material, it is observed that the assessee incurred expenses of Rs. 8,28,304/- on a rented premises. Such expenses are in the nature of renovation of building. The Hon'ble Supreme Court in Ballimal Naval Kishore vs. CIT (1997) 224 ITR 41 .....

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..... t repairs but a capital expenditure not deductible in full. We thus reject the viewpoint of the assessee of such an expense being of revenue nature. 9. Explanation 1 to section 32 provides that where the business is carried on in a building not owned by the assessee, but in respect of which the assessee holds a lease or other right of occupancy and any capital expenditure is incurred 'on the cons .....

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..... ee in respect of the building is a capital and not a revenue expenditure, we hold that the assessee is entitled to depreciation at the stipulated rate. The AO is directed to allow such depreciation as per law after allowing a reasonable opportunity of hearing to the assessee. 10. In the result, the appeal is partly allowed. Order Pronounced in the open Court on 16.08.2016.
Case laws, Decisio .....

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