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Lease Hold Improvement

Lease Hold Improvement

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Published by yagay
income tax, case law, judgment
income tax, case law, judgment

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Categories:Types, Business/Law
Published by: yagay on Mar 11, 2013
Copyright:Attribution Non-commercial

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03/11/2013

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TMI ID= 221045
2013 (2) TMI 450 - MADRAS HIGH COURT
 Other Citation: [2013] 350 ITR 0324 (Mad.)
Thiru Arooran Sugars Ltd. Versus Deputy Commissioner of Income-tax
 Repairs and renovation expenses - Revenue or Capital Expenditure - Whether therepairs and renovation expenses incurred on the leased business premises iscapital expenditure or revenue expenditure
Assessee is in the occupation of theleased premises
Assessee carried on renovation work by providing false ceilingand furniture modification - Held that:- Temporary structure by means of falseceiling and office renovation had not resulted in any capital expenditure
Asdecided in CIT v. Madras Auto Service P. Ltd. [1998] 233 ITR 468 (SC)expenditure incurred in respect of the maintenance of the leased premises wasdeductible as revenue expenditure
In favour of assessee.
Dated
- July 26, 2011
CHITRA VENKATARAMAN MRS., JAICHANDREN M. JJ
 
JUDGMENT
The judgment of the court was delivered by2. Mrs. Chitra Venkataraman J.-The assessee has preferred the present taxcase (appeal) as against the order of the Income-tax Appellate Tribunal,raising the following substantial question of law:"Whether, on the facts and inthe circumstances of the case, the Tribunal was right in holding that therepairs and renovation expenses incurred on the leased business premises ascapital expenditure ?"3. The assessee, herein, who is in occupation of the leased premises, carriedon renovation work by providing false ceiling and furniture modification to theextent of 
Rs.
1.71 lakhs and
Rs.
9.19 lakhs. The assessee claimed that theywere eligible for depreciation at 100 per cent. However, this expenditure wastreated as capital expenditure. Thus, the assessment made on the assesseeholding that part of the furniture and fittings were eligible for depreciation atthe rate of 10 per cent. Aggrieved by the same, the assessee preferred anappeal before the Commissioner of Income-tax (Appeals), who agreed withthe contention of the assessee and deleted the addition made. As against theorder of the Commissioner of Income-tax (Appeals), the Revenue preferred anappeal before the Income-tax Appel-late Tribunal. Distinguishing the judgmentrelied on by the assessee in the case of CIT v. Kisenchand Chellaram (India) P.Ltd. reported in [1981] 130 ITR 385 (Mad), the Tribunal held that after theamendment to Explanation 1 to section 32(1)(ii) of the Income-tax Act, thesaid judgment could not be of any assistance of the assessee's case and,hence, only the Explanation would apply. In the circumstances, the Tribunalheld that the assessee was entitled to depreciation at 10 per cent. Accordingly,the matter was remitted back to the Assessing Officer for re-computation.Aggrieved by the same, the assessee has preferred the present tax case(appeal).Learned counsel appearing for the assessee placed reliance on thedecision of this court reported in CIT v. Ayesha Hospitals P. Ltd. [2007] 292

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