TMI Blog2005 (11) TMI 37X X X X Extracts X X X X X X X X Extracts X X X X ..... nto existence?" - assessee had put up the ground floor over the existing basement floor only to have the business premises according to the specifications put forth by TVS Suzuki Limited and further, there is a clear-cut stipulation in the lease deed that reimbursement of the expenditure is not possible from the owner of the premises. Hence, in view of the business exigencies, the assessee had put ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g to the specifications given by TVS Suzuki Limited to all its dealers. The assessee claimed the said sum as revenue expenditure. The Assessing Officer disallowed the said claim as not relating to business, inasmuch as a new permanent capital asset had been brought into existence and added to the income. Against that order, the assessee preferred an appeal to the Commissioner of Income-tax (Appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt rendered in CIT v. Madras Auto Service P. Ltd. [1998] 233 ITR 468. The Supreme Court, in the said case, while considering whether a particular expenditure is capital or revenue, held as follows: "The general principles applicable in determining whether a particular expenditure is capital or revenue expenditure are as follows: (1) Outlay is deemed to be capital when it is made for the initia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... " Applying the above principles, the Supreme Court, while dismissing the appeal, held as follows: "Right from inception, the building was of the ownership of the lessor. Therefore, by spending this money, the assessee did not acquire any capital asset. The only advantage which the assessee derived by spending the money was that it got the lease of a new building at a low rent. From the busines ..... X X X X Extracts X X X X X X X X Extracts X X X X
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