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2022 (7) TMI 1079 - AT - Income TaxDepreciation on Temporary Structure - expenditure in relation to renovation of leasehold premises - assessee submitted that these are purely temporary structures on which 100% depreciation has to be allowed - HELD THAT:- Assessee has incurred certain expenditure in relation to renovation of leasehold premises. The details of the same have been mentioned in the AO’s order. The items mentioned by no stretch of imagination can be said to be building construction material, hence the Explanation-1 referred by the ld. DR is not applicable. As regards the nature of expenditure, it is clearly emanating that the same is relating to interior design, electrification charges, furniture charges, wallpaper, toughened glass etc. These items are certainly revenue fixtures when used in the rented premises. How they are not temporary is beyond comprehension. Further, AO’s hypothesis that these are “probably” addition in furniture and fixture is a guess-work, not sustainable in law. CIT(A)’s observation that the construction made does not appear to be temporary in nature is similar to the guesswork of the AO de hors the facts on record which show that these are temporary furnishing and fixtures in its premises. Such expenditure were duly held to be allowable in the matter of Girdhari Dass & Sons [1975 (4) TMI 19 - ALLAHABAD HIGH COURT], and in the case of Peri India Pvt. Ltd. [2016 (5) TMI 426 - ITAT MUMBAI]. Accordingly, we set aside the orders of authorities below on this issue and decide the issue in favour of the assessee. Disallowance of depreciation - as argued the Appellant company engage in the business of tour and travel and vehicles have actually been used for carrying the travelers - HELD THAT:- We find that the orders of authorities below in denying depreciation @ 30% on commercial vehicles being used by the assessee in operating touring services leaves no doubt that Revenue authorities have failed to apply any mind. Moreover, even after submitting the RC Book of registration as taxi, ld. CIT (A) has made a bizarre remark that it was obtained with ulterior motives without any material having been brought on record. It is also noted that such depreciation rate was allowed in succeeding years i.e. AYs 2015-16, & 2017-18 u/s 143(3). Hence, we set aside the orders of the authorities below on this issue and decide the issue in favour of the assessee. Disallowance of loss incurred on foreign exchange - HELD THAT:- We find that the claim of the assessee has to be examined on the touchstone of Hon’ble Supreme Court decision in Woodward Governor India Pvt. Ltd. [2009 (4) TMI 4 - SUPREME COURT] as affirmed the allowability as revenue expenditure of the foreign exchange fluctuation determined on the basis of Accounting Standard-11 consistently on mercantile basis. Here, no case has been made out that the claim of assessee is not in consonance of this exposition. Hence, respectfully following the precedent, the assessee’s ground is allowed. Nature of expenditure - legal & professional expenses - Revenue or capital expenditure - HELD THAT:-. We note that we have already set aside the orders of the authorities below on the issue of interior expenditure on interiors held by the authorities below as capital in nature herein above. On the same reasoning, this expenditure is also allowable as revenue expenditure. Hence we set aside the order of the authorities below on this issue and allow the issue in favour of the assessee.
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