Home Case Index All Cases Income Tax Income Tax + HC Income Tax - 2006 (10) TMI HC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2006 (10) TMI 117 - HC - Income TaxExpenditure incurred on flooring and partitions, etc - Newly extended area of space - Revenue Or Capital - co-owners of the property and the directors of the assessee-company are same persons? - HELD THAT:- The co-owners were admitting the rental income. They were also paying tax on the profits arising out of the hospital. The lease deed spoke of the normal requirements which the co-owners provide. The assessee was putting the building to a special use. No landlord would ever incur or undertake to bear the expenditure. Here the expenditure was incurred by the assessee on a leased property and the same has to be allowed as revenue expenditure. The Tribunal has correctly followed the judgment in the case of CIT v. Madras Auto Service P. Ltd.[1998 (8) TMI 1 - SUPREME COURT] held that the expenditure incurred on construction of a leased premises by the assessee was deductible as revenue expenditure. The nature of the expenditure indicates that it is only revenue expenditure for the purpose of carrying on business. Thus, it is clear that if the lessee incurs capital expenditure on the building of the nature mentioned above, the said provision treats the building as if owned by the assessee. The Explanation is an exceptional one which permits depreciation in cases were the assessee does not own a building. In the present case, the Tribunal had given a finding that it is a revenue expenditure on the ground that the expense is incurred only towards painting, re-laying of the damaged floors, partitions, etc. This expenditure can never be considered to be a capital expenditure of the nature mentioned in the above Explanation. Hence, we find no error or legal infirmity in the order of the Tribunal and the same does not require interference. Thus, we answer the questions of law in favour of the assessee and against the Revenue and the tax case is dismissed.
|