9911796707
TMI Blog2002 (8) TMI 246X X X X Extracts X X X X X X X X Extracts X X X X ..... earned CIT(A) have erred in treating this expenditure as capital expenditure and has thereby erred in adding the same to the book profits for the purpose of applying 115J of the Indian IT Act." 3. Briefly stated the facts of the case are that the assessee-company derived income from the business of processing of colour films and printing of colour photographs. The company was incorporated w.e.f. 21st June, 1988, when the main object being to take over as running concern along with all assets and liabilities and the business of M/s Agra Colour Photo Lab on 1st April, 1990. The company took over the aforesaid firm vide duly executed agreement dt. 1st April, 1992. The assessee was required to explain the reasons as to why the expenses amoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee as per provisions of s.115J, which was worked out as under: Net Profit shown before taxation Rs. 8,42,002 Add : Expenditure of capital nature debited to P L a/c as discussed above in the body of order. Rs. 80,656 30 per cent of Rs. 9,22,658 Rs. 2,76,797 Thus, 30 per cent of the book profit worked out by the AO came to Rs. 2,76,797. 3.1 Being aggrieved, the assessee preferred appeal before first appellate authority. After considering the submissions, the CIT(A) has held, thus: "The submissions filed have been considered. It is found that the expenditure incurred on false ceiling is necessarily of capital nature as the same would provide enduring benefit to the assessee under the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be deducted for the purposes of arriving at the book profit according to s. 115J of the IT Act. He has emphasized that in none of the clauses mentioned in s. 115J for making addition to the book profit there is mention of any adding back of any item alleged to be of the capital nature. He has submitted that the book profit for the purpose of s. 115J is to be computed only with reference to s. 115J itself and not from any other section of IT Act, consequently the addition of Rs. 80,656 made by the AO for arriving at the book profit treating the same as capital expenditure is unwarranted and cannot be made under law. Thus, the adoption at Rs. 2,76,797 made by the AO, is incorrect and it should be 30 per cent of Rs. 8,42,002. Hence, he has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the income of the company as per provisions of IT Act. The AO, in the instant case, while computing the income of the assessee-company under the IT Act, has disallowed the expenditure incurred by the assessee on false ceiling etc. treating the same as of capital in nature. It is seen that as per audit report, the shop where the expenditure has been incurred, is rented shop of the assessee. The expenditure incurred by the assessee on the false ceiling of the rented shop cannot be termed as capital in nature. The issue whether the expenditure incurred on repair or alteration of rented premises should amount to revenue expenditure or capital expenditure, came up for consideration before, the jurisdictional High Court in the case of Girdharilal ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
