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2015 (2) TMI 399 - AT - Income TaxSheds constructed on lease-hold land - Capital expenditure v/s revenue expenditure - whether case of assessee falls within the ambit of Explanation-1 to Section 32(1) of the Income Tax Act, 1961? - Held that:- Perusal of the records show that the assessee was allotted four yards for storage i.e., open space without shed. The assessee contributed for construction of sheds on the space provided by the Tamil Nadu Foodgrains Marketing Yard Ltd. Thus, there was no building or any structure in existence on the land in relation to which any renovation or extension or improvement or any similar work was carried out by the assessee. The Hon'ble Madras High Court in the case of CIT Vs. TVS Lean Logistics Ltd., (2007 (6) TMI 44 - HIGH COURT, MADRAS ) has held that Explanation-1 will not apply where there is no building. In the present case, the facts as emanating from records show that the assessee has not taken any building on lease. Further, the assessee has stated that with the contribution for construction of sheds, the assessee shall be entitled for lower monthly lease rents. This fact has not been disputed by the Revenue. The payment of lease rentals is a revenue expenditure. Thus, the contribution made by assessee initially would save revenue expenditure in later years. Thus, in the light of the judgments discussed above, it can be safely construed that the expenditure incurred towards construction of sheds by the assessee is revenue in nature. - Decided in favour of assessee.
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