2011 (1) TMI 928

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.... the Income Tax Act, 1961 (in short "the Act") against the order dated 16.7.2009 passed by the Income Tax Appellate Tribunal, Delhi Bench "C", New Delhi, in ITA No. 2212/Del/2008 for the assessment year 2001-02, claiming the following substantial questions of law:-   "I. Whether on the facts and in the circumstances of the case, the Ld. ITAT was right in law in upholding the order of the Ld. CIT (A) to the effect that the expenditure of Rs.2,19,466/- is revenue expenditure to be allowed u/s 37(1) of the Income Tax Act, 1961 even though the payments may be enduring benefit to the assessee firm for the period of 5 years as claimed by the assessee?   II. Although tax involved is Rs.82,146/- which is less than the monetary limit....

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....ed the expenditure incurred on construction of tennis court by holding the same to be capital in nature, as according to him, the benefit of enduring nature had been evolved and, therefore, not admissible in the year under consideration. However, the CIT(A) while allowing the appeal of the assessee had held in para 8.4 of its order as under:-   "8.4. I have carefully considered the submissions of the Ld. A.R. and perused the order of re-assessment as well as other documents on record. The Ld. A.R. has made fresh arguments regarding the AO's action for the disallowance of the above expenditure u/s 35D. She has brought to my notice that there is no such evidence on records regarding the amortization of such expenditure u/s 35D either ....

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....e Apex Court has clearly laid down its decision in the case M/s Empire Jute Mills Limited versus CIT 124 ITR 1, that the test of benefit of enduring nature of the expenditure for the purpose of determining it to be capital or revenue is not the sure test, and if the expenditure is incurred in the commercial sense or the interest of commercial expediency, even the benefit may be enduring, on the facts and circumstances the expenditure is revenue to be allowable u/s 37(1) of the I.T. Act. As is evident from the past history of the present case as well as clarity of the facts and the circumstances of the case now brought as above, the expenditure on Black Rose Tennis Court by the appellant firm is allowable u/s 37(1) of the Act and hence the d....