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TMI Blog2022 (11) TMI 374X X X X Extracts X X X X X X X X Extracts X X X X ..... proofing treatment, installation charges, flooring charges, etc for leased premises is current repairs which cannot be considered as capital expenditure which gives enduring benefits to the Assessee. The substance of ratio laid down by various Courts and Tribunals is that, if certain expenditure incurred to make the leasehold premises functional like partitions works, temporary repairs, flooring, etc., then the said expenditure should be allowed as revenue in nature. Therefore, we are of the considered view that the Assessing Officer has completely erred in making addition on furniture and maintenance expenditure as capital in nature. CIT (Appeals) without appreciating the above facts had simply sustained the additions made by the Assessing Officer. Hence, we set aside the order passed by the learned Commissioner of Income Tax (Appeals) and direct the Assessing Officer to delete the addition - Appeal of assessee allowed. - I.T.A No. 151/CHNY/2021 - - - Dated:- 19-10-2022 - SHRI MAHAVIR SINGH , VICE PRESIDENTAND SHRI G. MANJUNATHA , ACCOUNTANT MEMBER Appellant by : Mr. T. Banusekar , Chartered Accountant Respondent by : Mr. P. Sajit Kumar , JCIT ORDER P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed premises and thus, the same cannot be capitalized, as the Assessee is not creating asset which gives enduring benefit. 5. The Assessing Officer, however was not satisfied with the explanation furnished by the Assessee, but was of the view that the expenditure incurred under the head Furniture Maintenance is not in the nature of temporary repairs but it is a capital expenditure which gives enduring benefit and thus, rejected the arguments of the Assessee and made an addition towards the said expenditure after allowing depreciation at the rate of 5%. 6. Being aggrieved by the Assessment Order, the Assessee preferred an appeal before the Commissioner of Income Tax (Appeals). The Assessee reiterated its submissions made before the Assessing Officer and contended that the expenditure incurred for renovation of the leased premises cannot be treated as capital expenditure which gives enduring benefits. The Commissioner of Income Tax (Appeals) after considering to the Assessee s contentions, relied upon certain judicial proceedings, and sustained the additions made by the Assessing Officer towards the disallowance of furniture maintenance expenditure on the ground that the expe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovisions by way of Explanation to Section 32(1) of the Act. The said explanation reads as under: Explanation 1 - Where the business or profession of the Assessee is carried on in a building not owned by him but in respect of which the Assessee holds a lease or other right of occupancy and any capital expenditure is incurred by the Assessee for the purposes of the business or profession on the construction of any structure or doing of any work in or in relation to, and by way of renovation or extension of or improvement to the building them, the provisions of this clause shall apply as if the said structure or work is a building owned by the Assessee. 10.4 In view of the foregoing, I am of the view that the expenditures incurred by the Appellant would partake the character and nature of Capital Expenditure at the first place and that the nature of such Capital expenditure does not undergo metamorphosis in view of the position of law in terms of the above explanation inserted in the statute with effect from 01.04.1988. The expenditures have been incurred in such rented premises; and such expenditures have been incurred by the Appellant in such premises gives enduring ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cted to the issue of capitalization of furniture expenditure are dismissed. 7. The learned Authorized Representative for the Assessee referred to a plethora of judicial proceedings including the decision of the Jurisdictional High Court of Madras in the case of the Commissioner of Income Tax-I, Chennai Vs. Armour Consultants Private Limited reported in [2013] 355 ITR 418 (Madras) and submitted that the Hon ble High Court clearly held that the expenditure in the nature of partitions, vinyl flooring and interior decoration to make a leasehold office premises functional, is a revenue expenditure. 8. The learned Departmental Representative, Shri. P. Sajit Kumar, JCIT supporting the order of the Commissioner of Income Tax (Appeals) submitted that the Assessing Officer had brought out clear facts to the expenditure incurred under the head Furniture Maintenance as capital in nature which gives enduring benefits to the Assessee and therefore their order should be upheld. 9. We have heard both the parties, perused the materials available on record and had gone through the orders of the lower authorities. The Assessee had incurred an expenditure amounting to Rs.1,12,16,205/- to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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