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TMI Blog2012 (9) TMI 1175X X X X Extracts X X X X X X X X Extracts X X X X ..... r building capacity by the appellant by virtue of incurring of the aforesaid expenditure. The appellant craves leave to add to, amend or vary the above grounds of appeal on or before the date of hearing. 3. In this case Assessing Officer noted that during the current assessment year assessee has incurred of ₹ 58,42,496/- on account of repair and maintenance of building. Further it was noticed that assessee has claimed in the head 'Office General' (Renovation) amounting to ₹ 30,07,465/-. Assessee was asked to submit the details in this regard. Assessee has submitted as under:- "Office General (Renovation) in the amount of ₹ 30,07,454/-, we would inform that similar kind of renovation is a continuing process in a hotel industry. The has to be done for various reasons. The main being more foot falls and usage as compared to fabrics, upholstery, curtains etc. used in a domestic house. The other main reason being that the public areas have to be redecorated every so often to maintain the charm and to ensure that customers keep coming and to do not get bored with the same scenario. It is exactly for this reason that a mockup room was prepared based on which o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e laws are absolutely not applicable to the facts and circumstances of the assessee and the case. In the case of Ballimal Nawal Kishore, the repairs and renewal were done on self owned premises and not on leased premises. On the other hand the assessee company has infact followed the principle enunciated in the second case law i.e. all capital expenditure incurred in lease hold premises which can be removed when leaving the premises has been capitalized. The expenditure charged to revenue account as shown in page no. 444 consists of upholstery, fabric, cutlery, rubber mats, napkins, civil work, shower mirror, room chair cloth etc. No additional asset was created, it is only the existing assets which were renewed. As mentioned in the note filed with the assessing officer part of the expenditure was on mockup room based on which the other rooms in the Hotel were to be refurbished. The other part of the expenditure was on redoing the bar in the Hotel called Insomnia Bar." 4.1 Furthermore, the case law relied by the Assessing Officer was distinguished and several other case in support of the case of the assessee were submitted. Assessee further submitted that ITAT decided the similar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the ratio of the judgment of Hon'ble Supreme Court in the case of BaIlimal Naval Kishore vs. CIT 224 ITR (SC) and also putting reliance on various other judgments, AO has held that expenses are providing enduring benefit and thus enhancing efficiency and effectiveness of the Hotel. So, finding of the Assessing Officer is based on facts that expenses should have been capitalized to fixed assets in the books of accounts of the assessee. By doing so Assessing Officer has worked out disallowance of ₹ 30,07,454/-. The Ld. Ld. Authorised Representative's reliance on this vaorus case laws has been considered and found to be not attracted on the facts of the case. In view of the above discussion ground no. 2 of the appellant deserves to be dismissed. 5. We have heard the rival contentions in light of the material produced and precedent relied upon. We find that in this case the assessee has a hotel premises on lease. Assessee had to incur various expenditure as on-going operations. Assessee's submission is that assessee has a hotel and it has to keep on making changes to its rooms restaurants, lobbies in their decor as well as in the edibles on offer (i.e. the menu) in attra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that assessee has relied upon the following cases laws:- - 293 ITR 432 C.I.T. vs. Lean Logistics Ltd. - 169 Taxman 41 - Roger Enterprise (P) Ltd. vs. C.I.T. - 322 ITR 590 C.I.T. vs. Delhi Press Samachar P Ltd. - 302 ITR 26 C.I.T. vs. Dr. A.M. Singhvi - 237 ITR 902 C.I.T. vs. Ooty Dasaparkash. The above case laws are germane and support the case of the assessee. In 293 ITR 432 CI.T. vs. TVS Lean Logistics Ltd. In this case it was held that where the assessee did not acquire the capital asset, but had put up construction of building only for the business purpose, the entire construction cost admissible as revenue expenditure. In Roger Enterprise (P) Ltd. vs. C.I.T.- 169 Taxmman 41, it was held that expenditure for renovation of leased premises can be revenue expenditure. In the case of 322 ITR 590 C.I.T. vs. Delhi Press Samachar P Ltd. the Hon'ble Jurisdictional High Court was considering the case where the assessee had a press building, assessee has incurred expenditure on repairs / replacement/ replacing of dilapidated beams, pillars, walls etc. of existing press building, the Hon'ble court upheld the order of the tribunal which adjudicated that assessee h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see has increased or the mere construction is made by the assessee on the building making more space available to it only then that expenditure would be of capital and hit by the Explanation 1 to section 32(1) of the Act. Accordingly, the first ground taken by both the revenue and assessee in assessment year 1999-2000 is allowed for statistical purposes." 8. We further find that ITAT, Delhi in the case of G4S Security Services India (P) Ltd. vs. DCIT in I.T.A. No. 4315/Del/2005 vide order dated 31.3.2008 has inter-alia held as under:- "10. Before parting we may also discuss the arguments advanced from the side of the Revenue. The first argument taken up by the Assessing Officer is based upon the provisions of Explanation 1 to Section 32(1) of the Act. It is urged by the Revenue that the assessee was only entitled to depreciation on the capital expenditure incurred in terms of Explanation 1 to Section 32(1) and not for the deduction of the whole of the amount as a revenue expenditure. In this regard, a perusal of the said Explanation, which has been reproduced by us elsewhere in the order, reveals that it seeks to facilitate the allowance of depreciation in case any capital exp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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