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2014 (12) TMI 130 - AT - Income TaxTreatment of expenses incurred on construction of superstructure on leasehold land Revenue expenses or capital expenses - Whether the assessee is carrying on business or profession in a leased building or other rights of occupancy and whether the assessee has incurred any capital expenditure for the purpose of business on the construction of any structure or doing of any work in or in relation to and by way of renovation or extension or improvement in the building Held that:- The assessee has taken the land on leasehold on which the assessee constructed super structure and claimed as revenue expenditure revenue contended that the assessee constructed the building in the leased land and it is not the case of renovation of the leased building or improvement of the leased building - These construction activities carried out by the assessee if put on to the test of Explanation 1 would show that the construction made by the assessee on the leased out premises would amount to capital expenditure in Commissioner of Income-Tax Versus Madras Auto Service Pvt. Limited [1998 (8) TMI 1 - SUPREME Court] - what advantage did the assessee get by constructing a building which belonged to somebody else and spending money for such reconstruction - The assessee got a long lease of a newly constructed building suitable to its own business at a very concessional rent - The expenditure was made in order to secure a long lease of new and more suitable business premises at a lower rent - it is essential that the expenditure incurred on the construction of any structure on the leased premises should result in enduring benefit - the case of the assessee very much falls within the ambit of Explanation 1 of section 32(1) of the Act Decided in favour of revenue.
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