TaxTMI 
TaxTMI 
2011 (12) TMI 188
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....penses incurred are capital in nature. 2. The appellant prays that the order of the CIT(Appeals) on the above ground be set aside and that of the Assessing Officer restored." 2. The assessee is an individual and carries on profession as a solicitor in the firm name of M/s. Thakker & Thakker as a sole proprietor thereof. The assessee field return of income for A.Y 2001-02 on 31st Oct. 2001 declaring total income of Rs. 10,98,79,460/-. The original Assessment Order was passed u/s.143(3) r.w.s. 143 of the Income Tax Act, 1961 determining the total income at Rs. 11,00,77,560/-. The said Assessment Order was reopened on 14.02.2008 by issue of notice u/s. 148 of the Income Tax dated 14.02.2008 on ground that the assessee incurred extensiv....
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....s works which included plastering, tiling and electrification works had been carried out in the rented premises and which was not removable and hence belongs to the owner as per the clause 7(e) of the Agreement. As per Clause 7(e) the assessee was not entitled to remove any fixed items like POP, tiles, partitions at the time of vacating the office. It was pointed out that under Clause 7(e) of the agreement it has been provided as follows: "Not to carry out any alterations, additions , improvements, repairs in the Centre without the prior consent of the Company in writing, which consent shall not be unreasonably withheld, provided that the Client shall be at liberty to bring into the Centre loose furniture and articles and things including ....
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....e amount paid on account of the cost of repairs referred to in sub-clause (i) and the amount paid on account of current repairs referred to in sub-clause (ii) of clause (a) shall not include any expenditure in the nature of capital expenditure. The Explanation referred to above was inserted by the Finance Act, 2003 w.e.f. 1.4.2004. The assessee placed reliance on the decision of Hon'ble Supreme Court in the case of Empire Jute Co. Ltd. v. CIT [1980] 124 ITR 1/3 Taxman 69 (Supreme Court), wherein Hon'ble Supreme Court explained as to how test of enduring benefit was not conclusive in the following words "there may be cases where expenditure, even if incurred for obtaining advantage of enduring benefit, may none the less be on reve....
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....he purpose of proper utilization of premises taken on lease cannot be said to bring into being any asset of an enduring character or any benefit of an enduring character. It was further observed by the Hon'ble court in that case that the dividing wall or plaster to the wall or construction of a gate can by no stretch imagination treated as capital assets in the hands of lessee. The Hon'ble Bombay High Court had also considered the Hon'ble Supreme Court's view in Assam Bengal Cement Co. Ltd. v. CIT [1955] 27 ITR 34 (SC) that the word 'enduring' means enduring in way that fixed capital endures and it does not denote a benefit that endures in the sense that for a good number of years it relieves the assesses of a revenu....
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....ure. It is also seen that in respect of furniture and fixtures, a large sum has been capitalized by the appellant himself. Further that an amount considered by the A.O. for disallowance of i.e. Rs. 15,38,287/- is that which has been capitalized by appellant and was not claimed as revenue expenditure. The decisions of Hon'ble Bombay High Court supra and the principles laid down by Hon'ble Supreme Court supra squarely apply. It is held that the expenses incurred by appellant on account of office renovation are revenue expenses. Therefore, the disallowance made by the A.O. in treating them as capital expenditure is deleted." 6. Aggrieved by the order of CIT(A), the Revenue is appeal before the Tribunal. We have heard the submission of....
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....permission of lessor. The expenses can therefore be considered as allowable u/s.30(a)(i) of the Act. We are also of the view that the expenses in question are allowable u/s.37(1) of the Act for the reasons given by the CIT(A). We have already listed items of expenses incurred by the assessee. Perusal of the same reveals that the assessee has not made any construction of structure or carried out any work in the form of renovation or extension, improvement of the building. The building that was taken on lease remained intact. What has been done was only to create a better working environment. In this regard, we are also of the view that the principles laid down by Hon'ble Supreme Court in the case of Empire Jute Co. Ltd. (supra) supports ....