TMI Blog2012 (11) TMI 1244X X X X Extracts X X X X X X X X Extracts X X X X ..... Complex as revenue expenditure. 3. Briefly, the facts are the assessee, a private limited company is engaged in the business of exhibiting feature films in a theatre complex taken on lease at Chennai. For the assessment year under dispute, the assessee filed its return of income on 26-10-2007 declaring a total income of Res.4,11,07,505/- and after set off of brought forward losses, the income was reduced to Ni. Under the normal provisions of the Act and paid tax on book profits of ₹ 1,41,93,351/- as per section 115JB of Income-tax Act. In course of scrutiny assessment proceedings, the AO while examining the accounts of the assessee noticed that during the year, the assessee has incurred substantial expenditure for modernisation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... create any fresh seating capacity or any capital asset of enduring benefit in nature and therefore the expenditure is of revenue nature. Since the said expenditure is not of capital nature, it cannot be capitalised. The AO however did not accept the contention of the assessee to treat the expenditure claimed as revenue expenditure. The AO observed that the renovation and modernisation work commenced during the assessment year 2003-04 and continued till the assessment year 2007-08. The AO opined that on account of renovation of the theatre, the business of the assessee was improved and the benefit of enduring nature accrued to the assessee during the subsequent years also . The AO observed that though the theatre has not been demolished and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iture. 6. The learned DR supporting the reasoning made by the AO in the assessment order, submitted that the expenditure incurred, since in the nature of providing enduring benefit to the assessee, it has to be treated as capital expenditure. 7. The learned AR, on the other hand submitted that the issue is covered by the decision of ITAT, Hyderabad Bench in assessee s own case for the assessment years 2003-04, 2005-06 and 2006-07 in ITA Nos.250, 251 and 252/Hyd/2010 dated 30-6-2010. 8. We have heard rival submissions and perused the material on record. We have also perused the order of the Co-ordinate Bench delivered in assessee s own case in ITA Nos.250, 251 and 252/Hyd/2010 dated 30-6-2010 (supra). On examining the order of the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Therefore, it has to be allowed as revenue expenditure. 23. In view of the above case laws, it is obvious that whenever an expenditure was incurred in the process of earning of profit it has to be allowed as revenue expenditure. In such a case the expenditure incurred by the assessee would be outside the purview of Explanation (1) to section 32 of the Act. In the case before us, it is not in dispute that the expenditure was incurred for earth filling, repair of chairs, replacement of damaged chairs, repair of underground slump, drainage and cable work, wall paper fixing, dust opening repair, carpentry and plumbing, repair of false ceiling, etc. The assessee has also changed the marble flooring, incurred expenditure on cleaning mater ..... X X X X Extracts X X X X X X X X Extracts X X X X
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