ITAT rules leased premises expenses as revenue, not capital, expenditure.

The ITAT allowed the appellant's appeal, considering the expenditure on leased premises as revenue expenditure, not resulting in an enduring asset. Referring to judicial precedents and distinguishing between repairs and current repairs, the ITAT held that the expenditure was for making the premises suitable for business, qualifying as revenue expenditure. The judgment emphasized that the appellant, as a tenant, incurred the expenditure for repairs, not creating a new capital asset, entitling the appellant to claim it as revenue expenditure.

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Issues Involved:
Assessment of revenue expenditure as capital expenditure for additions to leased premises.

Detailed Analysis:

Issue 1: Assessment of Revenue Expenditure
The appellant, engaged in manufacturing, filed its return for A.Y. 2010-11, admitting a total income. During assessment, the AO observed a claimed sum as revenue expenditure with the narration 'other deductions'. The AO found additions to leased premises claimed as revenue expenditure. The appellant explained the additions were for fixtures like partitions, false roofing, glass, and minor civil works. The AO considered the additions as capital expenditure, disallowed the claim, and allowed depreciation. The CIT (A) upheld the AO's decision. The appellant appealed, arguing the expenditure was for repairs and renovation, not resulting in an enduring asset. The appellant cited case laws supporting the revenue nature of such expenditure. The DR supported the lower authorities' decision, citing case laws considering the expenditure as capital in nature.

Issue 2: Judicial Precedents
The ITAT considered the appellant's lease of properties and the expenditure incurred on false ceiling, partitions, etc., to make the premises suitable for business. Referring to judicial precedents, including the Hon'ble Delhi High Court case, it held that such expenditure, not creating an enduring asset, is revenue in nature. The ITAT distinguished between 'repairs' and 'current repairs', emphasizing that the expenditure was for repairs to make the premises conducive to business activities. It concluded that the appellant was entitled to claim the expenditure as revenue expenditure, not subject to depreciation.

Conclusion:
The ITAT allowed the appellant's appeal, considering the expenditure on leased premises as revenue expenditure, not resulting in an enduring asset. Referring to judicial precedents and distinguishing between repairs and current repairs, the ITAT held that the expenditure was for making the premises suitable for business, qualifying as revenue expenditure. The judgment emphasized that the appellant, as a tenant, incurred the expenditure for repairs, not creating a new capital asset, entitling the appellant to claim it as revenue expenditure.

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