TMI Blog2015 (1) TMI 476X X X X Extracts X X X X X X X X Extracts X X X X ..... these repairs are done to preserve and maintain an already existing asset. In the course of such repairs, if they have upgraded the facilities to international standards, then that would not constitute a new asset. Therefore, the Tribunal was justified in holding that the expenditure incurred towards repairs and replacement of old parts would be in the nature of revenue expenditure and not capital expenditure. - Decided in favour of assessee. - ITA NO.488/2009 - - - Dated:- 17-11-2014 - R. N.KUMAR AND MR. B.MANOHAR, JJ. For the Appellant : Sri.K.V.Aravind, Advocate For the Respondent : Sri.S.Parthasarathi, Sri.V.K.Gurunathan, Jinita Chatterjee, Advocates JUDGEMENT Per: N Kumar: The Revenue has preferred this appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rm. The target was therefore only the customers who are used to certain basic amenities when booking a room in a star rated international chain of hotels. Ambience and luxury are related terms which cannot be assigned a life or duration for a business house to capitalize for a term to claim depreciation. In such business reputation is at stake especially when it booms only when a repeat customer patronises it and records satisfaction for a third visit which only results meeting the variable costs and not the fixed costs. Therefore, the assessee cannot be suggested to capitalize the same when the intention was to purely come up to a standard required of it for being part of an International Chain. Therefore, the Tribunal held the said expend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... NAVAL KISHORE AND ANOTHER v/s COMMISSIONER OF INCOME TAX reported in (1997) 224 ITR 414 (SC) and another judgment in the case of the COMMISSIONER OF INCOME TAX, ETC ETC. v/s SARAVANA SPINNING MILLS (P) LTD. reported in (2007) 293 ITR 201 (SC). 5. In BALLIMAL case, what the assessee did was not only mere repair, but total renovation of the asset by installing new machinery, new furniture, new sanitary fittings and new electrical wiring besides extensively repairing the structure of building. In that context it was held that by no stretch of imagination, can it be said that the said repairs qualify as current repairs . It was a case of total renovation and therefore, the High Court has rightly treated the said expenditure as capital in n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... capital expenditure giving enduring benefit to the assessee. Further, the assessee though not created any extra space but by replacing the flooring, the false roofing, furniture, carpets, the refurbishing of the rooms in tune with the international standards of 'Meridian SA', the assessee-Company definitely derived an enduring benefit by an upward revision of the existing Tariffs for the hotel rooms and the upward revision of the charges for various other services rendered and attracting more number of international customers. The increase in the occupancy rate is evident from the total receipts admitted during the previous year from room rents, restaurants, banquets and other services which were ₹ 28.29 crores as against S ..... X X X X Extracts X X X X X X X X Extracts X X X X
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