TaxTMI 
TaxTMI 
2013 (8) TMI 751
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....ing figures of the last year. The AO on scrutinizing the details as well as financial account of the assessee observed that the aforesaid increase in operating expenses was on account of assessee's claim of capital expenditure as revenue expenditure, which were included in the operating expenses during the year. The assessee was asked to file the details in respect of each of the capital expenditure debited in the profit and loss account. 4. The AO has stated that the assessee debited an amount of Rs. 49,52,153/- on account of repairs to building and an amount of Rs. 20,61,093/- on account of repairs to others under the head "Other Operation Expenses" in the profit and loss account in the assessment year under consideration. The AO has given details of the said repairs in table (1) and (2) as under : Table 1 S. No Name of the Party Nature of payment Amount (Rs. ) 1. K.K. Interior Civil Work 1,12,72,93 2. Patel & Company Civil Work 1,6,05,710 3. Shree Kumar Pillai Plumbing Work 49,000 4. Om Sai Construction Painting work 63,548 5. M.B. Interior Carpentry work 1,65,615 6. Kumkum Designer Tiles Tiles 4,512 7. Padma Prabhu Granite & Marble Tiles 3,....
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....ide letter dated 9.11.2010 stated interalia that the sum of Rs. 49,52,153/-, major amount of expenses was incurred to renovate the two floors which were given on lease @ Rs. 15,00,000/- per month. The said buildings is more than 40 years old and requires lot of repair works. The expenses were incurred for repairing of the said building in order to get such high rent and claimed as revenue expenses. The assessee further stated that Rs. 40,406/- paid to Mr.Rajesh Patel for interior designing fees for rented property and hence debited to professional fees and claimed as revenue in nature. 5. The AO did not accept the said contention of the assessee. The AO has stated that the assessee has incurred huge expenditure to the tune of Rs. 59,65,835/- for carrying out renovation work. However, it is noticed from the balance sheet as on 31.3.2008 that as per Schedule-5, gross block of the factory premises during the year was Rs. 32,36,383/- and the net block was Rs. 11,54,050/-. He has further stated that from the Form 3CD of the tax audit report the written down value as on 1.4.2007 of the building was Rs. 6,67,754/-. Therefore, the repair and maintenance to the building incurred during the....
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....nature is justified. Ground No.1 is dismissed." Hence the assessee is in appeal before the Tribunal. 7. The ld. AR submitted that the assessee had taken the premises under consideration on lease from a partnership firm vide agreement dated 1.4.2005 for a period of 9 years. It is relevant to state that the said partnership firm is the sister concern of the assessee. The ld. AR submitted that the said premises was used by the assessee for its business purpose i.e Research and Development Laboratory. Subsequently, the assessee decided to shift its Research and Development Laboratory to renovate the premises. After renovating the premises has let out to S.Kumar Nationwide Ltd. vide agreement dated 9.2.2007 for a period of 24 months on monthly rent of Rs. 15,00,000/-, besides interest free refundable deposit of Rs. 1,80,00,000/- during the period agreement. The ld. AR stated that the AO has considered the rent received by the assessee as business income of the assessee. That the expenditure incurred by the assessee to make it administrative office as per the requirement of the tenant M/s S.Kumar Nationwide Ltd, and therefore, the said expenditure incurred by the assessee is revenue in....
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.... observe that the assessee has taken the said premises vide agreement dated 1.4.2005 at a monthly rent of Rs. 3000/- per month from its sister concern, a partnership firm, for a period of 9 years. It is relevant to state that the said agreement is on stamp paper of Rs. 20/- is not registered agreement, though, the lease deed executed for a period of 9 years. The complete area of the premises comprises approximately 1500 sq.ft on first floor and 2nd floor with 16 to 18 car parking places allocated in the said premises. We observe that the assessee has renovated the said premises by incurring the expenditure aggregating to Rs. 59,65,835/- in Financial Year 2007-08, relevant to the assessment year under consideration. We are not aware as to whether the assessee has incurred any expenditure in the preceding Financial Year and/or in the succeeding assessment year as well. The assessee after incurring the said expenditure has let out the said premises to M/s S.Kumar Nationwide Ltd at a monthly rent of Rs. 15,00,000/- for a fixed period of 24 months, besides taking interest free refundable advance of Rs. 1,80,00,000/-. On perusal of the agreement entered by the assessee, it is observed fr....