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TMI Blog1984 (12) TMI 58X X X X Extracts X X X X X X X X Extracts X X X X ..... at Agra. The cinema in question is on a monthly rent of Rs. 1,750 with the assessee. The District Magistrate, Agra, had pointed out certain defects in the building which had to be removed in order to get a renewal of the cinema licence. In the accounting period ending March 31, 1964, an amount Rs. 91,250 was spent on repairs to sanitary fittings amounting to Rs. 6,767, repairs to auditorium Rs. 25,132, labour for repairs Rs. 7,597 and renovation account Rs. 51,754. The expenses were for providing automatic flush type latrines, shifting of the ladies latrines, replacement of staircase, reconstruction of the floor of the auditorium, provision of a ceiling to the auditorium and reconstruction of the balcony, replacement of junglas and shif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Council for the purpose of construction and development of roads between the sugarcane producing centres and sugar factories. There was a statutory obligation for developing these roads which remained the property of the Government even after the improvement was made. No enduring benefit came to the assessee. So, the Supreme Court held that this expenditure was not of a capital nature. It was expenditure incurred for running the business with a profit motive. The contention of learned counsel for the assessee is that the entire expenditure in this case was necessary, otherwise the licence would have been cancelled. It is, therefore, a business expenditure not leading to any enduring benefit. In the course of the judgment, the Supreme Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at Exchange Ltd. v. CIT [1965] 55 ITR 550 (Punj), there was a lease of a hotel building for two years with an option to renew. There was some expense of putting up partitions and other temporary structures in the existing building. It was held that the expenditure was of a capital nature which did not alter because the lease was for a period of two years. In Taj Mahal Hotel v. CIT [1967] 66 ITR 303 (AP), there was a hotel business in which new rooms were put up. It was held that capital improvement resulted which was of an enduring nature and hence it could not be treated as a revenue expense. On the other hand, in CIT v. Bharat Cinema [1980] 121 ITR 165 (P H), it was held that certain repairs were necessary in the cinema because of def ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned in his order : " 1. The rod of the lightning conductor is not placed at its place as the same is reported to be stolen. The rod should immediately be provided. 2. The latrines and urinals are in an awful condition. Crust of phosphates are deposited in all urinating pots. In view of the requirements laid down under rule 13(l 1) of the above rules, it is directed that the latrines and urinals should be made of automatic flush type. 3. The ladies urinals facing the classes spread foul smell within the classes. These should be removed to a suitable site. 4. The whitewashing of the walls and paintings of the iron and wood work of the cinema was not done yet. It should be taken up immediately. 5. Proper records of the maintenance of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing. Similarly, the jungla in front of the projection room is shaking and needs replacement. 13. The jungla over the main gate is in a broken condition and since it supports heavy publicity banners, it needs replacement to avoid any risk to life of the passer-by on the road and the public visiting the cinema. 14. The location of the ladies waiting room by the side of the booking office causes inconvenience to the public in purchasing tickets and is also not congenial to the purdhanashin ladies. It should be shifted to suitable place, preferably on the first floor by making a new construction beyond the staircase of the balcony-class after removing the tinshed placed over the passage of the booking of the second class. This would also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n enduring nature other than the existing cinema has resulted. When we consider that the assessee is not the owner and is only a monthly tenant, the principle applied by the Supreme Court in the case of CIT v. Kalyanji Mavji Co. [1980] 122 ITR 49, seems to be the appropriate rule to apply. Furthermore, the repairs and renovations were absolutely necessary, otherwise the cinema licence would not have been renewed. The only doubt that one can have is about the replacement of urinals. But, even those would belong to the landlord. So, we are of the view that these expenses cannot be treated as capital expenses, but have to be treated as revenue expenses. We would accordingly answer the question referred to us in the affirmative on the foo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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