TMI Blog2012 (6) TMI 574X X X X Extracts X X X X X X X X Extracts X X X X ..... 49.12 lacs. Expenditure incurred over the office premises for renovation and paying compensation to the lessor which was taken on lease by the assessee - revenue or capital expenditure - Held that:- Amount of Rs 6.73 lacs actually spent by the assessee as a revenue expenditure could have been allowed as a deduction, however, other amount of Rs. 22,19,000/- admittedly paid by the assessee to its lessor can never partake the character of a revenue expenditure and not even as a capital expenditure as the assessee has not constructed the building part but the amount is paid to the lessor. Order of the Tribunal is set aside to this extent and on these two aspects, the matter is remanded to the Assessing Authority. - IT APPEAL NO. 633 OF 2006 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he orders of the Assessing Authority, First Appellate Authority and of the Tribunal. The submission of Mr. Indra Kumar, learned Senior Counsel for the appellant - Revenue is that while Assessing Officer simply followed the view of Commissioner of Income Tax taken in exercise of revisional jurisdiction for the earlier assessment years for the purposes of disallowing the claim of Rs. 4,99,22,862/- which had been claimed as foreign exchange loss by the assessee, insofar as the other question of expenditure claimed towards renovation of office premises etc., the Assessing Officer had rightly disallowed the amount of Rs. 28,98,119/- as it was not in the nature of revenue expenditure but in the nature of a capital investment as the assessee was g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see is fair and reasonable or is adopted only with a view to reducing the incidence of taxation". submitted that the view of the Assessing Officer which had been affirmed by the Commissioner of Income Tax (Appeals) has been reversed by the Tribunal but the Tribunal having not kept in mind nor having examined the question of allowing the foreign exchange loss on the guidelines as indicated by the Supreme Court in this judgment, and as the view taken by the Tribunal is at variance with the guidelines issued by the Supreme Court, the order of the Tribunal cannot be sustained. 7 . Second submission is that the assessee while can claim depreciation under section 31(1) in terms of the Explanation 1 in respect of the very type of expen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee towards renovation and putting up of new office premises for the benefit of the assessee, the Assessing Officer has not made a distinction at all between the expenses incurred by the assessee for renovating its office and amount paid to the lessor for getting the structure altered to the requirement of the assessee and disallowing the entire amount was not justified but even assuming for argument sake but without conceding that the amount paid to the lessor does not qualify as revenue expenditure, the amount spent for renovation of the office premises is definitely a revenue expenditure and to that extent the Assessing Officer should have allowed it as a deductible expenditure and therefore submits that even if the order of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dgment is now available and it is the duty of this Court to apply the law in all pending matters. 13. We have also noticed that there is a glaring factual error that has crept in, in the assessment order as the Assessing Authority who had in the body of the order indicated towards the end of para 3 of the assessment order that a sum of Rs. 4,99,22,862/- which was claimed as foreign exchange loss by the assessee is disallowed, we notice in the computation part of the order, the actual amount of foreign exchange loss disallowed is only Rs. 49,12,284/-. But when the Tribunal allowed the appeal of the assessee, the Tribunal has directed the admission of foreign exchange loss to the entire extent of Rs. 99,22,862/- on the premise this was th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the fact situation of the case particularly as the assessee himself had claimed that out of the total expenditure of Rs. 28,98,119 claimed in respect of building etc., an amount of Rs. 6,79,119/- had been claimed as expenses incurred by the assessee for the renovation of the office whereas Rs. 22,19,000/- was the amount paid to the lessor as compensation, to put up a structure or alter the structure to suit the requirements of the assessee. 17. We find that while at the best, the amount actually spent by the assessee as a revenue expenditure could have been allowed as a deduction the other amount of Rs. 22,19,000/- admittedly paid by the assessee to its lessor can never partake the character of a revenue expenditure. But whether the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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