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M/s. Computer Access Pvt. Ltd Versus The Assistant Commissioner of Income Tax, Company Circle I (3) , Chennai

2015 (12) TMI 98 - ITAT CHENNAI

Expenditure incurred on partitions and structures for the leasehold building - CIT(A) treated as capital expenditure and granted depreciation at 15%, where the assessee claimed it as Revenue Expenditure - Held that:- In the case of Thiru Arooran Sugar Ltd. vs. DCIT [2013 (2) TMI 450 - Madras High Court] wherein it was held that "the Expenditure incurred in respect of maintenance of leased premises is deductible as revenue expenditure’’. Similar view was also taken in the case of CIT vs. Ayesha H .....

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rder of the Commissioner of Income Tax (Appeals)-I, Chennai, dated 24.07.2014 for the assessment year 2005-2006. 2. The grievance of the assessee in this appeal is with regard to treating an expenditure of A3,89,670/- incurred on partitions and structures for the leasehold building, as capital expenditure and granted depreciation at 15%, where the assessee claimed it as Revenue Expenditure. 3. The facts of the case are that the assessee incurred an expenditure of A3,89,670/- towards partitions a .....

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eved, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals). 4. The Commissioner of Income Tax (Appeals) considered the argument of assessee and observed that the assessee had put up wooden partitions, plywood fixation and other interior works by way of renovation and improvement in the leased premises. There was also no hard and fast rule that all the expenditure on leasehold premises will partake the character of revenue expenditure. The expenditure incurred by the a .....

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ssessee. Against this, the assessee is in appeal before us. 5. Both sides heard and perused the material on record. In this case there is no dispute with regard to assessee incurring the above expenditure on leasehold premises. The fact is that the expenditure was incurred for making wooden partitions and temporary structures in the leasehold building and the above additions does not have any civil work. Being so, the findings of the Tribunal in the case of M/s. Sundaram Asset Management Co. Ltd .....

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ls) following the decision of the co-ordinate Bench of this Tribunal in assessee s own case for the assessment year 2008- 09 deleted the disallowance, against which the Revenue is in appeal before us. This Tribunal while dealing with similar issue in assessee s own case for the assessment year 2008-09 observed as under:- iv. The fourth ground of appeal of the assessee relates to repairs of lease-hold premises. The assessee has placed on record at Page No. 42 of the Paper Book, the nature of work .....

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hat where the business or provision of the assessee is carried on in a building not owned by him, in respect of which the assessee holds a lease or other rights of occupancy, any capital expenditure is incurred by the assessee for the purpose of the business or profession on the construction of any structure or doing of any work in or in relation to and byway of renovation or extension or improvement to the building, then the provisions of this clause shall apply as if the said structure or work .....

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shows that the expenditures are on the interior decorations and creation of the office atmosphere. The expenditure has not resulted in any building coming into existence nor has the existing building been modified or the structure altered. As the existing building has not been altered and there is no change to its structure as a result of the expenditure incurred by the assessee, it cannot be said that the expenditure incurred by the assessee is in the capital field. Further a perusal of the exp .....

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diture in regard to the said expenditure. Consequently, the depreciation as allowed by the Assessing Officer on the said expenditure which has been capitalized would stand reversed. Whether the expenditure incurred on renovation of a building is capital or revenue, is a question of fact. The same has to be decided on the facts of each case. We find that the facts of the case of the assessee are similar to the one adjudicated by the Tribunal mentioned above. The civil work relates to the interior .....

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