2005 (11) TMI 37

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....al is directed against the order of the Income-tax Appellate Tribunal in I.T.A. No. 1314/Mds/2001 dated May 17, 2005, for the assessment year 1997-98. The Revenue is the appellant. The assessee is a dealer in two-wheelers manufactured by TVS Suzuki Limited and was doing business in leasehold premises. During the relevant period, the assessee constructed a ground floor over the existing basement....

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....ppellate Tribunal was right in law in allowing the expenditure of a sum of Rs. 4,82,688 on constructing the ground floor over existing basement floor as revenue expenditure, under section 37(1) of the Income-tax Act, even though a new permanent capital asset has been brought into existence?" It is fairly conceded by learned counsel appearing for the Revenue that the issue raised in the question....

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....is an annual business expense chargeable against revenue, the lump sum payment should equally be regarded as a business expense, but if the lump sum payment brings in a capital asset, then that puts the business on another footing altogether; (3) Whether for the purpose of the expenditure, any capital was withdrawn, or, in other words, whether the object of incurring the expenditure was to employ ....

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....htly pointed out by the Appellate Tribunal, that the assessee had put up the ground floor over the existing basement floor only to have the business premises according to the specifications put forth by TVS Suzuki Limited and further, there is a clear-cut stipulation in the lease deed that reimbursement of the expenditure is not possible from the owner of the premises. Hence, in view of the busine....