Court rules reconstruction expenditure on hotel building as revenue expenditure

The High Court of Allahabad dismissed an application under section 256(2) of the Income-tax Act, 1961. The court held that the expenditure on the reconstruction of a hotel building was revenue expenditure and allowable, as it aimed to restore the building to its previous state and repair fire damage, rather than for new construction. The application was dismissed with no costs.

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The High Court of Allahabad dismissed an application under section 256(2) of the Income-tax Act, 1961. The court found that the expenditure on the reconstruction of a hotel building was revenue expenditure and allowable, as it was for restoring the building to its earlier position and repairing fire damage, not fresh construction. The application was dismissed with no costs. (Case citation: 1991 (1) TMI 107 - Allahabad High Court)

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