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2020 (2) TMI 939 - AT - Income TaxExpenses under “repairs and maintenance to building” - Revenue or capital expenditure - HELD THAT:- Under section 37(1), any expenditure (not being expenditure of the nature described in sections 30 to 36 and not being in the nature of capital expenditure or personal expenses of the assessee), laid out or expended wholly and exclusively for the purposes of the business or profession shall be allowed in computing the income chargeable under the head ”Profits and gains of business or profession”. Expenditure on current repairs to buildings, machinery, plant and furniture used for the purposes of the business is generally covered by sections 30 and 31 of the I.T. Act. In respect of types of repairs that do not fall under the above description, a deduction can still be allowed u/s. 37 if all the requirements for deduction under the said section are fulfilled. The expenses incurred by the assessee towards repairs and whether it is allowable as revenue expenditure or not, is a pure question of fact. In this case though the expenses incurred cannot be allowed as deduction as current repairs certainly expenses would not be a capital expenditure and all conditions being satisfied u/s. 37 expenses are to be allowed under the said section. The expenses incurred in a hotel industry may be current repairs which expenses are incurred on yearly basis and expenditure incurred on periodical basis. As mentioned earlier, assessee’s hotel was already having three star facility from the year 2006 and for renewal of three star facility, the assessee had to incur the impugned expenses on periodical basis. On basis of these expenses incurred, the assessee did not derive a new asset and there was no increase in the total rooms nor there was an increase in total area of the hotel. The expenditure incurred by assessee such as painting of the hotel, replacement of floor tiles, glazing works etc. are nothing but periodical expenditure which a hotel has to necessarily incur for its upkeep and cannot be termed as capital expenditure. Assessee is entitled to deduction u/s. 37(1) - Decided in favour of assessee.
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