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TMI Blog2020 (7) TMI 688X X X X Extracts X X X X X X X X Extracts X X X X ..... n be done only after considering further facts such as market condition remaining in Madurai City and with the concurrence of M/s.ITC Limited, as they only have a franchisee agreement with the assessee. Granite and marble used by them will not last long and there is no guarantee and they may develop cracks and lose their shine and even become obsolete in a couple of years. These facts were never disputed before the Assessing Officer or before the CIT(A). As rightly contended by assessee,Tribunal did not consider the issue, but was of the opinion that it was neither the case of the assessee nor that of the Revenue that the claim was for current repairs. Assessment is for the year 2012-13 and the facts are not in dispute. It is only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in a hotel would amount to capital expenditure or revenue expenditure ? 4. The appellant is engaged in the business of running a three star hotel and for the assessment year in question namely 2012-13, the assessee filed their return of income on 29.9.2012 admitting a total income of ₹ 19,06,620/- and an intimation under Section 143(1) of the Act was issued. Subsequently, the assessment was selected for scrutiny and the assessment was completed under Section 143(3) of the Act by order dated 31.3.2015, by which, there was a disallowance of the expenditure to the tune of ₹ 1,43,37,050/- incurred towards repairs and renovation expenses. 5. The assessee contended before the Assessing Officer that the expenses were incurred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d renovation only in the existing rooms and that too, only in 18 rooms out of 57 rooms available in the hotel. 7. The Revenue carried the matter on appeal to the Tribunal by contending that the Assessing Officer had correctly treated the repairs and renovation expenses as capital expenditure as against the claim of the assessee as a revenue expenditure. The Tribunal, by the impugned order, allowed the Revenue s appeal and this is how the assessee is before this Court by way of this tax case appeal. 8. On a reading of the order of the Tribunal, we find that the Tribunal had proceeded on a different footing as if the claim was as against current repairs. Though the Tribunal referred to the decisions, which were relied upon by the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not every advantage of enduring nature acquired by an assessee that brings the case within the principle laid down in this test. It was further held that what is material to consider is the nature of the advantage in a commercial sense and it is only where the advantage is in the capital field that the expenditure would be disallowable on an application of this test. It was also held that if the advantage consists merely in facilitating the assessee's trading operations or enabling the management and conduct of the assesse's business to be carried on more efficiently or more profitably while leaving the fixed capital untouched, the expenditure would be on revenue account, even though the advantage may endure for an indefinite futur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n expenditure would fall under the category of revenue expenditure in nature to be allowed, as a deduction under Section 37 of the Income Tax Act. In the aforementioned decision, the Division Bench followed the said assessee s own case viz CIT Vs. Dasaprakash [reported in (1978) 114 ITR 210 (Madras). 14. In the decision of the Karnataka High Court in the case of CIT Vs. Mac Charles (India) Limited [reported in (2015) 233 Taxman 0177], the assessee, carrying on the business of hotel, incurred expenses under repairs and maintenance of the hotel building. The Assessing Officer disallowed the said expenditure. The First Appellate Authority confirmed the said order and the assessee filed an appeal before the Tribunal. The Tribunal h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion. The Court, after referring to the decisions in the cases of Empire Jute Company Limited, Ballimal Naval Kishore and Comfort Living Hotels P. Ltd., held that the expenditure incurred by the assessee for renovating a hotel, rooms, conference halls, etc., was a revenue expenditure. 17. The decision of this Court referred to by the learned Senior Standing Counsel for the Revenue in the case of Viswams is distinguishable on facts principally because the building was leased out and the assessee firm therein put up further construction by raising the building upto five floors and taking note of the facts therein, the case was decided in favour of the Revenue. 18. In the instant case, the Revenue does not dispute the fact tha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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