TMI Blog2004 (12) TMI 50X X X X Extracts X X X X X X X X Extracts X X X X ..... stomers to the cinema hall without bringing into existence any new asset or an advantage of enduring nature considering the status of the assessee as a lessee. – Thus question isanswered in the affirmative, i.e., in favour of the assessee - - - - - Dated:- 15-12-2004 - Judge(s) : D. A. MEHTA., MS. H. N. DEVANI. JUDGMENT The judgment of the court was delivered by D. A. Mehta J.- The Income-tax Appellate Tribunal, Ahmedabad Bench "C", Ahmedabad, has referred the following question under section 256(2) of the Income-tax Act, 1961 ("the Act"), at the instance of the Commissioner of Income-tax, Gujarat-III, Ahmedabad: "Whether, on the facts, circumstances and legal positions, the assessee is entitled to allowance of an amount of Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure on renovating, refurnishing and remoderning a business premises can be allowed as a deduction on revenue account when a tenant incurs such an expenditure on the rented premises inasmuch as it does not acquire any capital asset thereby, more so, when the building does not belong to him. Thirdly, when the expenditure is incurred for running of the business and does not involve any extension of business or substantial replacement of existing business asset such an expenditure would be revenue expenditure. Fourthly, the expenditure on restoration of stage, screen to put the same in the condition in which they were before the repairs were undertaken could be legitimately held to have been incurred on repairs and did not bring into existe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ri Vinubhai Panchal and as per the terms of the lease deed, entered into between the parties, repairs, if any, to the premises were to be carried out by the lessor-Hindu undivided family. That the assessee was under no obligation to carry out any such repairs or renovation and in the circumstances it could not be permitted to contend that the expenditure incurred by the assessee was allowable expenditure incurred for the purpose of business. Secondly, it was urged that even if the expenditure was considered to be incurred for the purpose of business it resulted in an enduring benefit to the assessee and hence was on capital account and was required to be disallowed. That the Tribunal having failed to do so the impugned order of the Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are made not only once and for all, but with a view to bringing into existence an asset or an advantage for the enduring benefit of a trade/business. If they are not entailed for extension of business or for advantage of the enduring benefit to the business, but made for the purposes of running the business or working it with a view to produce profits, they would be chargeable to revenue account. The aim and object of the expenditure would determine the character of the expenses. It is only in those cases where these tests also fail that the court may consider as to whether the expenditure incurred was a part of the fixed capital of the business, or part of its circulating business. The words used for qualifying the advantage 'as being of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee in the present case did not derive any enduring benefit as the assessee was operating as a lessee in leased premises. However, even if it could be termed to be an advantage of enduring nature it is not in every case that such advantage would result in the character of the expenditure being treated as capital. As laid down by the apex court in the case of Empire Jute Co. Ltd. [1980] 124 ITR 1: "There may be cases where expenditure, even if incurred for obtaining an advantage of enduring benefit, may, none the less, be on revenue account and the test of enduring benefit may break down. It is not every advantage of enduring nature, acquired by an assessee that brings the case within the principle laid down in this test. What is mate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... age of enduring nature and therefore must be held to be on revenue account." Thus applying the tests formulated by the apex court and this court to the facts found by the Tribunal it is apparent that the assessee had merely incurred the expenditure in rented premises to facilitate its trading operations in a more efficient manner leaving the fixed capital untouched. The result of the expenditure incurred was that it would enable the assessee to generate more revenue by inviting greater flow of customers to the cinema hall without bringing into existence any new asset or an advantage of enduring nature considering the status of the assessee as a lessee. Thus there is no infirmity in the order of the Tribunal which would require this court ..... X X X X Extracts X X X X X X X X Extracts X X X X
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