TMI Blog2011 (12) TMI 188X X X X Extracts X X X X X X X X Extracts X X X X ..... penses in question are allowable u/s.37(1) of the Act – Decided against the Revenue. - IT Appeal No. 512 (MUM.) of 2010 - - - Dated:- 30-12-2011 - N.V. VASUDEVAN, PRAMOD KUMAR, JJ. P.C. Maurya for the Appellant. Sanjiv M. Shah for the Respondent. ORDER N.V. Vasudevan, Judicial Member This is an appeal by the Revenue against the order dt.30.11.2009 of CIT(A)-3, Mumbai relating to AY 01-02. The grounds of appeal of the Revenue read as follows: 1. On the facts and in the circumstances of the case and in law, the learned CIT(A) has erred in deleting the addition made by the AO of ₹ 50,43,127/- on account of renovation expenses without appreciating the fact the expenses incurred are capital ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Nariman Point, Mumbai - 400 021 vide Business Service Centre Agreement dated 18th March, 2000 on a monthly rental of ₹ 3,67,500/-. During the previous year relevant to A.Y 2001-02, the assessee carried out renovation work and furniture and fixtures for the said office premises. Renovation Expenses included civil work likes tiling, plaster, POP, Fixing of marbles, replacement of existing windows frames, replacing of existing hardware wherever required. (Copy of the details of expenses are at Page 58 59 of the Paper Book). The assessee made new furniture which includes making of new cabins, tables, chairs, wall cabinets etc. and the said expenditure was capitalized to the extent of ₹ 52,03,465/-. 4. It was argued that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nature. Without prejudice to above it was submitted that the renovation expenses is covered by section 30(a)(i) of the Act. The text of the provision is extracted below: Sec.30(a)(i) In respect of rent, rates, taxes, repairs and insurance for premises used for the purposes of the business or profession, the following deductions shall be allowed. (a) Where the premises are occupied by the assessee. (i) as a tenant, the rent paid for such premises; and further if he has undertaken to bear the cost of repairs to the premises, the amount paid on account of such repairs; (ii) otherwise than as a tenant, the amount paid by him on account of current repairs to the premises; Explanation: For the removal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... revenue account, even through the advantage may endure for an indefinite future. The test of enduring benefit is therefore not certain or conclusive test and it cannot be applied blindly and mechanically without regard to the particular facts and circumstances of a given case. It was submitted by him that none of the expenses incurred by the assessee gave the assessee any enduring benefit. It was submitted that while it is true that these may provide enduring benefit to the assessee for the period of his tenancy, they do not provide to the assessee benefit of a fixed capital asset. The Assessee relied on decisions of various courts including Hon'ble Bombay High Court in the case of Nila Products Ltd. v. CIT [1983] 148 ITR 99/13 T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v. Madras Auto Service (P.) Ltd. [1998] 233 ITR 468/99 Taxman 575 was also relied upon where it was held that since the created by spending the said amounts did not belong to the assessee but assessee got the business advantage of using modern premises at low rent saving considerable revenue expenditure for next 39 years, the both Tribunal and High Court rightly came to the conclusion that expenditure should be looked upon as revenue expenditure. 5. The CIT(A) accepted the submissions of the Assessee. He held as follows: 3.3 Facts and material on record including decisions of Jurisdictional High Court and Supreme Court cited by t1w appellant are considered. The appellant has expended monies on improving the premises taken on re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #39; it is permissible to infer that, as 'repairs'. A tenant having undertaken to bear the cost of repairs, it is reasonable that whatever he spends should be permitted to be deducted whether the repairs effected by him are 'current repairs' or otherwise. An expenditure incurred by a tenant towards repairs, even though it might be in the nature of 'capital expenditure, would be in the nature of allowable expenditure under section 30(a)(i) if it was in relation to the commercial activity of the assessee. In view of the Explanation added by Finance Act, 2003 with effect from 1-4-2004, such expenditure, if it is of capital nature, will not be admissible. The Agreement between the Assessee and the lessor in Clause7 (e) speci ..... X X X X Extracts X X X X X X X X Extracts X X X X
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