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TMI Blog2022 (12) TMI 575X X X X Extracts X X X X X X X X Extracts X X X X ..... MEMBER Appellant by: None Respondent by: Shri Alok Kumar, CIT DR ORDER PER T.R. SENTHIL KUMAR, JUDICIAL MEMBER: This appeal is filed by the Revenue against the order dated 09.07.2018 passed by the Commissioner of Income Tax (Appeals)- 8, Ahmedabad relating to the Assessment Year 2015-16. 2. Solitary ground raised by the Revenue is that the Ld. CIT(A) erred in law and on facts in treating capital expenditure of Rs. 10,48,11,003/- as revenue expenditure. 3. The brief facts of the case is that the assessee is engaged in the business of sales and services of Skoda cars and spares. The assessee company during this Financial Year has renovated its four showrooms at Ahmedabad, Rajkot, Surat and Baroda as per Skoda Company's Corporate Identity Look Policy. The assessee had to change the signboard, logo, color, tiles, furniture, etc. completely with that of the old one. Thus, the assessee claimed under repair and maintenance of building expenses account, Rs. 11,29,19,528/-. The Assessing Officer issued a show-cause notice why the renovation expenses of four showrooms should not be treated as capital expenditure and allow appropriate depreciation. In response the assessee replied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urring these expenses, the appellant has not acquired any new capital asset. Out of the major expenses of Rs.71,86,752/-, only 45% is disallowed being capital expenses which is not in accordance with law. Under the scheme of the Income Tax Act, the expenses can be either a capital expenditure or revenue expenditure but there is no provision to hold very same expenditure partially as capital and partially as revenue. The treatment to 45% expenditure as capital is purely subjective and without any basis. If major part thereof i.e. 55% is considered as revenue expenditure, it supports the view of the appellant that the entire expenditure which is purely for renovation of the existing building without adding any further floor area will always be revenue expenditure and not capital expenditure. As regards the expenses of Rs.24,25,216/- considered entirely as capital expenditure, the same is broadly classified as under:- 1. Expenses on flooring by replacing with marble, tiles & wood. 13,17,318/- 2. Consultancy fees to Architect, Engineers, Designers 6,10,750/- 3. PCC work in workshop 1,46,228/- 4. SS Railing in the stairs. 1,37,709/- 5. Sanitary & Hardware fit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in this fast changing area of medical science. The state of the Art in some of these areas of high priority research is constantly updated so that the know-how cannot be said to be the element of the requisite degree of durability and non-phemerality to share the requirements and qualifications of an enduring capital asset. The rapid strides and science and technology in the field should make us a little slow and circumspect in too readily pigeonholing an outlay, such as this as capital." The idea of 'once for all' payment and 'enduring benefit' are not to be treated as something akin to statutory conditions; nor are the notions of 'capital' or 'revenue' adjudicial fetisn. What is capital expenditure and what is revenue are not eternal varieties but must needs be flexible so as to respond to the changing economic realities of business. The expression 'asset or advantage of an enduring nature' was evolved to emphasize the element of a sufficient degree of durability appropriate to the context. There is also no single definite criterion which by itself, is determinative whether a particular outlay is capital or revenue. The 'once for al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... added or any capital asset has come into existence and hence, the expenses on repairs & renovation are allowable as revenue expenditure. The AO was also not justified in partially treating the major expenses of Rs.71,86,7527- to the extent of 45% as capital and balance 55% as revenue. The expenses based on the copies of the bills filed and the nature of the same are found to be revenue in nature and hence allowable as such. Accordingly, the disallowance of Rs.56,59,254/- is to be deleted. Consequently, the depreciation allowed on the same is also to be withdrawn. As such appellant gets relief of Rs.50,93,329/-." 9. The Departmental Representative supported the order of the Assessing Officer and the Authorized Representative of the assessee supported the order of the CIT(A). 10. We have heard the rival submissions and perused the orders of the lower authorities and material available on record. In the instant case, we find that no material was brought on record to show that any new asset was acquired by the assessee. We find that the Hon'ble Gujarat High Court the case of ACIT vs. Desai Bros., (1977) 108 ITR 14 (Guj.), held that even replacement of the petrol engine by a d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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