TMI Blog2007 (3) TMI 104X X X X Extracts X X X X X X X X Extracts X X X X ..... reinafter referred to as "the Tribunal") in I. T. A. No. 4223/Del/2001 for the assessment year 1998-99, whereby the Tribunal upheld the disallowance of Rs. 7 lakhs made on account of repair and maintenance expenses by the Commissioner of income-tax (Appeals). 2 The facts in brief are that the assessee is running its business at its retail departmental store situated at New Delhi South Extension Part-II The assessee claimed deduction of Rs. 15.15 lakhs on account of repair and maintenance expenditure. In addition, the assessee claimed deduction amounting to Rs. 2.65 lakhs for air-conditioner repair and maintenance. The Assessing Officer noted from the details filed by the assessee that most of the expenses related to supply of building m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aximum utilisation of existing floor area and the same was incurred during the ordinary course of business and this expenditure is in the nature of current repairs, allowable as revenue deduction. Learned counsel for the assessee in support of his contention cited a decision of the apex court in CIT v. Madras Auto Service P. Ltd. [1998] 233 ITR 468. 6 On the other hand, it has been argued by learned counsel for the Revenue that the assessee has incurred huge expenditure which resulted into long-term benefit to the assessee and such expenditure is not allowable as revenue expenditure and the same cannot be passed on as a repair and maintenance expenditure. 7 In the case Madras Auto Service P. Ltd . [1998] 233 ITR 468 (SC), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iod of 39 years by expending these amounts. The saving in expenditure was a saving in revenue expenditure in the form of rent. Whatever substitutes for revenue expenditure should normally be considered as revenue expenditure. Moreover, the assessee in the present case did not get any capital asset by spending the said amounts. The assessee, therefore, could not have claimed any depreciation. Looking to the nature of the advantage which the assessee obtained in a commercial sense, the expenditure appears to be revenue expenditure. The test for distinguishing between capital expenditure and revenue expenditure in our country was laid down by this court in Assam Bengal Cement Co. Ltd. v. CIT [1955] 27 ITR 34. In that case, the appellant- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... siness, for extension of a business, or for a substantial replacement of equipment. 2. Expenditure may be treated as properly attributable to capital when it is made not only once and for all, but with a view to bringing into existence an asset or an advantage for the enduring benefit of a trade . . . If what is got rid of by a lump sum payment is an annual business expense chargeable against revenue, the lump sum payment should equally be regarded as a business expense, but if the lump sum payment brings in a capital asset, then that puts the business on another footing altogether. 3. Whether for the purpose of the expenditure, any capital was withdrawn, or, in other words, whether the object of incurring the expenditure was to employ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee in the premises and this is pure question of fact and there are concurrent findings to this effect by three statutory authorities. During the course of the assessment proceedings, the assessee himself has admitted that during the year new counters were erected and this fact has been established from the record since huge expenditure on purchase of timber and plywood have been incurred by the assessee. Further, the assessee has altogether built a new shaft and shifted the old shaft to a new site and has spent huge amount on the construction of it. So, there is no doubt that these expenditure incurred by the assessee are for fixed capital assets and, therefore, the expenditure is in nature of capital and we unable to accept this contention ..... X X X X Extracts X X X X X X X X Extracts X X X X
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