2006 (10) TMI 117

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.... law: (i) Whether, on the facts and circumstances of the case, the Tribunal was right in allowing the expenditure incurred on flooring and partitions, etc., for the newly extended area of space, as revenue expenditure, when very clearly new infrastructures have been provided and the space and capacity of the hospital has been increased? (ii) Whether, on the facts and circumstances of the case, the Tribunal was right in allowing the expenditure incurred on flooring and partitions, etc., for the newly extended area of space, co-owners of the property and the directors of the assessee-company are same persons? 2. The brief facts arising out of the above tax case are as hereunder: 3. The assessee is a private limited company running a hos....

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....s of the property and the directors of the assessee-company are the same persons and had colluded and have evaded the assessability of the capital expenditure in the hands of the co-owners. An alternative submission also has been made that the Tribunal ought to have applied the proviso under Explanation 1 to Section 32(1) of the Income Tax Act, which is inserted by the Taxation Laws (Amendment and Miscellaneous Provisions) Act, 1986, with effect from April 1, 1988, and held as capital expenditure. 5. Learned Counsel appearing for the assessee submitted that whenever the tenant had incurred expenditure, it would amount to only revenue expenditure and further stated that Explanation 1 to Section 32(1) of the Act is not applicable to the fact....