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TMI Blog2015 (12) TMI 1065X X X X Extracts X X X X X X X X Extracts X X X X ..... x Act, 1961 (in short, "the Act") against the order dated 6.3.2014, Annexure A.6 passed by the income Tax appellate Tribunal, Chandigarh Bench 'A' Chandigarh in ITA No.929/CHD/2009, for the assessment year 2000-01, claiming following substantial questions of law:- "1. Whether on the facts and in the circumstances of the case and in law, the Hon'ble ITAT was justified in holding part of expenses related to large scale renovation running into more than one financial year and resulting into conversion of a hall into a full fledged top class show room as allowable being revenue expenditure and remaining part of these as not allowable being capital expenditure? ii) Whether on the facts and in the circumstances of the case and in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thereon. The Assessee company incurred substantial expenditure amounting to Rs. 4,77,59,930/- on renovation/interior decoration on leased office premises. The renovation expenditure was claimed by the assessee as revenue expenditure. The Assessing Officer while passing the original order dated 26.3.2003, Annexure A.1 made addition by disallowing expenditure incurred on renovation. The said addition was made primarily holding that the expenditure was capital in nature and accordingly depreciation @ 10% was allowed by the Assessing Officer. It was held that in terms of Explanation 1 to Section 32(1) of the Act, any expenditure incurred towards renovation/improvement of leased building was to be held as capital in nature. On appeal by the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,070/- towards architecture fees, temporary art work' iv) Rs. 72,12,870/- towards carpets and tile; v) Rs. 12,63,330/- towards travelling and shifting/installation expenses; vi) Rs. 8,87,694/- towards Stationeries, plants, boards; vii) Other revenue expenses like telecommunication expenses, expenditure on security services and other miscellaneous expenses." Hence the instant appeal by the revenue. 4. We have heard learned counsel for the parties. 5. Learned counsel for the revenue submitted that under Explanation 1 to Section 32 of the Act, the assessee could claim only depreciation as the amount spent by it was capital in nature. It was urged that the Tribunal had erred in bifurcating the renovation expenses by holding 70% a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itary fittings, fire detecting system, ducting for air conditioning etc. ii) Rs. 41,86,755/- towards consultancy expenses paid to Cushman and Wakefield, Currie and Brown and other consultants for rendering professional advice in relation to the renovation work; iii) Rs. 50,20,070/- towards architecture fees, temporary art work' iv) Rs. 72,12,870/- towards carpets and tile; v) Rs. 12,63,330/- towards travelling and shifting/installation expenses; vi) Rs. 8,87,694/- towards Stationeries, plants, boards; vii) Other revenue expenses like telecommunication expenses, expenditure on security services and other miscellaneous expenses." 9. The Tribunal on perusal of the evidence estimated the revenue expenditure and came to the conc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Rs. 25 lacs has been paid by the assessee for carrying out the different operations. In the totality of the above said facts and circumstances, we are of the view that the expenditure incurred by the assessee consist of both capital and revenue expenditure. However, in the absence of complete details, we are constrained to estimate the disallowance of capital expenditure in the hands of the assessee. We hold that out of the total expenditure, 30% of the expenditure incurred by the assessee is capital in nature and the same merits to be disallowed in the hands of the assessee in both the years. The said disallowance is in respect of two sub heads of expenditure of Rs. 4.18 cr. And Rs. 72.12 lacs. In respect of other expenses, we have alrea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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