TMI Blog2014 (1) TMI 887X X X X Extracts X X X X X X X X Extracts X X X X ..... ith the scope and ambit of Explanation 1 to s. 32(1), before the AO - The CIT(A) having already allowed depreciation, i.e., on merits, which has not been contested by the Revenue, the assessee's claim with reference to its revised computation stands admitted for being considered – Decided in favour of Assessee. - I.T.A. No. 3056/Mum/2011 - - - Dated:- 28-6-2013 - I.P. Bansal and Sanjay Arora, JJ. For the Appellant : M. Subramanian For the Respondent : Pankaj Kumar ORDER:- PER : Sanjay Arora This is an Appeal by the Assessee directed against the Order by the Commissioner of Income Tax (Appeals)-18, Mumbai ('CIT(A)' for short) dated 11.01.2011, partly allowing the assessee's appeal contesting its assessment u/s.143(3) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en be renewed. In fact, the law specifically envisages incurring of such expenditure, i.e., capital in nature, in relation to a leased premises, allowing depreciation thereon under Explanation 1 to section 32(1), marking a departure from the normal rule that depreciation is only available to the person who owns the asset, while it is apparent that the property in the structure that the licensee may choose to leave at the end of the licence/lease period, would vest in the Licensor. In fact, much of the work is detachable, so that it could be utilized by the assessee in the event of the license being not renewed and concomitant shift of its office premises; the leased premises being used by the assessee-licensee as its office. 3. We have he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k in or in relation to, and by way of renovation or extension of, or improvement to, the building, then, the provisions of this clause shall apply as if the said structure or work is a building owned by the assessee." The Act, therefore, draws no distinction between the capital expenditure incurred in relation to the user's own building or that in respect of which he enjoys leasehold or the other right of occupancy, i.e., for the purpose of grant of depreciation thereunder. Further, the written down value of the relevant block of assets would not, on all or some of the asset/s comprising the same being discarded, stand to be reduced accordingly, and depreciation continued to be claimed on the WDV of the block, of course reducing it by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, which stand listed out in sufficient detail in the bill dated 22.01.2007 for the work executed by the contractor, M/s. Saakaar Projects (PB pgs.22-40), we, even as observed during hearing, are of the prima facie view that the expenditure is capital in nature. The existing walls and the floors have been demolished (refer the bill under the head 'site preparation expenses' at pg.25), and new walls erected and flooring laid at the raised level. We could continue further; the first appellate authority has also on perusing the final bill of the contractor, which is for civil, carpentry and electrical work, held that it was abundantly clear that renovation work had been undertaken in extenso, so that the expenditure thereon is definitely capit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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