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TMI Blog2000 (7) TMI 58X X X X Extracts X X X X X X X X Extracts X X X X ..... and in the circumstances of the case and also for the reasons stated in enclosure to the reference application, the Tribunal is right in law and fact, (i) in holding that the expenditure is a capital expenditure as it was incurred in connection with or incidental to the acquisition of the capital asset ? (ii) in upholding the claim of the assessee for deduction of depreciation in respect of the amount of Rs. 6,31,267?" With regard to question No. 1, it is covered by the decision of the Supreme Court in CIT v. Anand Theatres [2000] 244 ITR 192. The Supreme Court has held that the building used for running a hotel or cinema business is not plant for the purpose of depreciation. On the basis of the above decision, the question is answe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the fresh assessment, the assessee claimed it as a revenue expenditure. This was disallowed on the ground that it was not a liability of the transferee. According to the assessee, it had to incur the liability in order to run the business and, therefore, the same should be allowed as revenue expenditure. Alternatively, it was contended that it should be allowed as capital expenditure and depreciation on the same should be allowed. The Assessing Officer treated it as capital, but did hot grant depreciation. The Commissioner of Income-tax (Appeals) held that it is capital expenditure and disallowed the depreciation on the ground that the expenditure was not part of the purchase consideration and that the amount was not paid as per the terms ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... existence to enable the assessee to claim depreciation. This expenditure can only be considered as any other expenditure incurred by the assessee before the commencement of the business. The assessee has discharged the liability on behalf of the seller. Therefore, no asset has emerged on which depreciation can be allowed. It is also not going to increase the value of various assets purchased by the assessee. This does not form part of the purchase consideration. The advocate Shri Roy Chacko, for the assessee, contended that as a matter of fact, the expenditure was a revenue expenditure, But the Tribunal accepted only the alternate contention of the assessee that it is a capital expenditure without considering the question whether it was r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assets. According to us, there has been no improvement in the capital assets. At the most, it could be said that the expenses incurred for acquiring an advantage for the trade. The appellant cannot claim depreciation on the amount spent for acquiring an advantage. Learned counsel for the assessee then submitted that as a matter of fact, the assessee has an alternate case that it was revenue expenditure, but it was not considered by the Tribunal. In this reference application, we are only concerned with the questions referred to us. The question now raised by the respondent does not form any facet of the questions of law referred. Hence, we cannot consider the contention raised by the respondent. In the above view of the facts, we hold tha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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