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2022 (12) TMI 382 - AT - Income TaxNature of expenditure - expenditures incurred towards change of flooring and bathroom fittings without changing the structure of the building - revenue or capital expenditure - HELD THAT:- Admittedly, fact is that assessee is in the business of hotel/resort wherein the up-keep or maintenance of hotel/resort/property is of prime importance so as to give the customers best possible experience for their continued patronage. The regular maintenance including the replacement of worn out furnishing his continuous requirement of the hotel industry. As noted by AO he assessee has also taken up dismantling of wall and also brick work. The above facts bring out the fact that the assessee has replaced the flooring in part of Hotel and made modifications to renovate the hotel to make it more appeasing to the customers. This resulted into the improvement of value of the building.” and held the expenditure as capital in nature. It is also fact on record that no new addition of assets or facilities has come into existence in respect of the existing resort/hotel of the assessee. We note that the expenditure incurred by the assessee have been made to provide the same benefit as were available at the time of their initial installation. There have been no addition to the number of rooms of the resorts/hotel or any other space to generate the additional income from that place. Thus, respectfully following the decision of Goa Tourism Development Ltd. [2019 (3) TMI 287 - BOMBAY HIGH COURT] and Mac Charles (India) Ltd. [2015 (1) TMI 476 - KARNATAKA HIGH COURT] we hold that the expenses which have been treated as capital in nature by the Ld. CIT(A) are to be allowed as revenue expenditure. We also find force from the decision of Pandiyan Hotels Ltd [2020 (7) TMI 688 - MADRAS HIGH COURT] wherein similar issue was dealt holding it in favour of the assessee as revenue expenditure. Thus expenditure incurred by the assessee is revenue expenditure and not a capital expenditure and thus answered the substantial question of law in favour of assessee and against the revenue.
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