TMI Blog1984 (12) TMI 27X X X X Extracts X X X X X X X X Extracts X X X X ..... expenses of Rs. 4,190 and Rs. 710 were not allowable under section 37 of the Income-tax Act, 1961, as they were expenses of a capital nature ? Assessment year 1968-69 Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that the expenses of Rs. 10,506, Rs. 3,876 and Rs. 15,000 were not allowable as they were expenses of capital nature? " We have on an examination of the case decided to reframe the questions in the following way so as to bring out the real point in controversy for the assessment years 1967-68 and 1968-69 : Assessment year 1967-68 : " Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that the expenses of Rs. 4,190 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the assessee not being the owner of the cinema theatre. There was an appeal against the disallowance to the Appellate Assistant Commissioner who sustained the disallowance in respect of repairs and replacements of urinals. The Appellate Assistant Commissioner gave some further relief to the assessee which led to the assessee's further appeal to the Tribunal against the disallowed amounts. For 1967-68, the disallowed amount was Rs. 4,190 and Rs. 710 on account of repairs and replacements of urinals. The Tribunal held that these were expenses on reconstruction and not to be treated as a revenue expenditure. For the assessment year 1968-69, the same was the position. This disallowance of Rs. 10,506 was on account of replacement and rep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n is section 30, which allows certain rents, rates, taxes, repairs and insurance for premises, if the same is used for the purposes of business or profession. Sub-clause (a) reads: "(a) where the premises are occupied by the assessee (i) as a tenant, the rent paid for such premises; and further if he has undertaken to bear the cost of repairs to the premises, the amount paid on account of such repairs ? " The contention of the learned counsel is that these expenses are to be allowed as repairs, as under the terms of the lease, the repairs have to be done by the tenant. Learned counsel has urged that all repairs have to be allowed whatever be their nature. In this connection, it is necessary to note that the District Magistrate, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r alternative contention, namely, that the expenditure can be allowed under section 37 as a business expenditure, we have to first ascertain whether the expenditure is on revenue account or is on capital account. The learned counsel for the parties have cited very large number of authorities bearing on this question. We may take it for granted that the expenditure incurred for the running of the cinema would be a revenue expenditure and expenditure incurred otherwise, i.e.. for bringing into existence assets of an enduring benefit, would be treated as a capital expenditure. Whether the particular expenditure is to be treated as on capital account or on revenue account, will depend on the particular facts and circumstances of the expenditure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... This is a capital expenditure because as many as 20,000 bricks were used. So, the finding is that this is a new construction. Furthermore, there is nothing in the order of the District Magistrate regarding this wall, so this cannot be allowed. Similarly, the amount of Rs. 15,000 which has been treated as a capital expenditure cannot be allowed as deduction because it cannot be related to the order of the District Magistrate. In any event, the finding is that this is on capital account. The result is that we would answer the question for the assessment year 1967-68 in the negative, in favour of the assessee and against the Department. The sums of Rs. 4,190 and Rs. 710 have to be treated as revenue expenditure. For the assessment year 1968 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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