TaxTMI 
TaxTMI 
2016 (12) TMI 743
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....the assessee filed return of income declaring loss of Rs. 5,95,36,759/- on 13/10/2007. The case was selected for scrutiny under Computer Assisted Selection of Scrutiny (CASS) and statutory notice was issued and complied with. In the scrutiny proceedings, the Assessing Officer made certain additions including the disallowance of depreciation claimed of Rs. 31,97,677/- on temporary structure at the rate of 100% by the assessee. The learned Assessing Officer, however, allowed depreciation at the rate of 10% on the expenses of Rs. 31,97,677/- amounting to Rs. 3,19,767/-. The learned Commissioner of Income-tax (Appeals) also sustained the disallowance of 100% depreciation and allowed 10% depreciation on the expenses claimed by the assessee as in the nature of temporary erections. Aggrieved with the finding of the learned Commissioner of Income Tax (Appeals) on the issue of depreciation on temporary structure, the assessee is in appeal before the Tribunal raising the grounds as reproduced above. 3. In the ground No. 1, the assessee has challenged the upholding of disallowance of depreciation claimed at the rate of 100% on structure claimed to be temporary in nature. 4. The learned Auth....
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....vation of the leased premises and thus the case laws referred by the learned Authorized Representative were not applicable over the facts of the assessee. 6. We have heard the rival submissions and perused the relevant material on record. We find from the para -B of terms of lease agreement, which is available on page 1 to 20 of the assessee's paper book that the assessee, has taken factory premises on lease for a initial period of five years from 01/03/2006. The relevant financial year in the case of the assessee started from 01/04/2006, therefore, the premises have been taken on lease, one month prior to the beginning of the relevant financial year. In the year under consideration, the assessee carried out various works, which have been claimed by the assessee of temporary nature. On perusal of page- 21 of the assessee's paper book, we find that the assessee carried out work from following parties:- Details of Temporary Shed From 01.04.2006 to 21.03.2007 SI. No. Date of Entry Name of Party Date Amount 1 20/06/2006 Design Studio 02/06/2006 78,297.00 2 01/07/2006 Aluminium Craft 29/06/2006 ....
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....f civil construction like Crane girder fixing, Exhaust Fan fixing, motor foundation for cooling tower, Air washer tank foundation, diesel tank foundation. According to the page No. 40, which is a bill of design studio for work of construction of brickwall, plaster, steel door window etc. carried out. On page 23, a copy of Bill of M/s Abhishek Engineers, amounting to Rs. 23,596/- for Gypsum Board Partition with glass wool filled, is available. On page 26 and 27, copies of bills issued by M/s. Baseline, amounting to Rs. 2,23,425/- and Rs. 19,12,943/- for supply of carpet and providing and fixing false ceiling, partition, display in reception, laminated door, teak wood doors, air conditioners ducting etc. On pages, 28 and 29 copies of bills raised by M/s Deepak Floorings, amounting to Rs. 50,625/- and Rs. 22,550/- for supply of air curtain and installation material for ceilings respectively have been filed. On page 32 and 33, copies of bills of M/s. Deepak Floorings, amounting to Rs. 1,33,583/- and Rs. 14,062/- for supply of Diaken mineral fibre ceiling with aluminium grid, installation materials etc. have been filed. On page 30, a copy of Bill of M/s Mukta Industries amounting to Rs.....
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.... the expenses of temporary wooden structure and partitions for running computer centres is eligible for 100% depreciation, but from the facts of the case it is not clear whether the expenses were in the nature of repairs or first-time installments. In the case of Peri (India) (P) Ltd (supra) also the Tribunal has held the expenses incurred by the assessee as repair expenses rather than leasehold improvements . 11. Whereas, in the facts of the instant case we find that expenses are not in the nature of repair or renovation of the existing premises but same are taken on lease only a month prior to the beginning of the financial year under consideration and, thereafter, the assessee has incurred expenses on construction of brick walls, plasters, aluminium and teak doors. From the bills raised, it is also apparent that expenses have been incurred for foundation of cooling tower, diesel tank etc. which appears to be part of plant and machinery. In view of above facts and circumstances, we find that the decisions cited by the Authorized Representative are not applicable over the facts of the case of the assessee. 12. Further, we find that the provisions of Expl. 1 of s. 32 of IT Act, 1....
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.... lac and Rs. 33.14 lac as reduced by depreciation). The ld. CIT(A) allowed the assessee's claim in respect of payment to architect amounting to Rs. 33.14 lac. However, the remaining amount of Rs. 23.90 lac was treated as capital in nature. The assessee is aggrieved against the confirmation of addition to this extent, while there is no appeal filed on behalf of the Revenue. 18.3. We have heard the rival submissions and perused the relevant material on record. It is noticed that the assessee took the premises on lease and also started business during the year under consideration. A sum of Rs. 23.90 lac was incurred on complete renovation of such premises as it is apparent from the details placed on record. The Hon'ble Supreme Court in Ballimal Naval Kishore vs. CIT 1997 224 ITR 414 (SC) has held that the expenditure incurred by the assessee on total renovation of cinema theatre by installing new machinery, new furniture, new sanitary fitting and new electrical installation besides extensive repair of structure of building, to be capital expenditure and not allowable as current repairs. This judgment indicates that any capital expenditure on total renovation is liable to be ....