2019 (3) TMI 287

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.... Appeals, as well as the ITAT, have concurrently held that the expenditures towards repairs and renovations of the Respondent-Assessee's hotel properties must be treated as a revenue expenditure and not as a capital expenditure.   3. Ms. Linhares submits that in the present case, the Respondent-Assessee has brought into existence a new asset or in any case, has secured new advantage of a enduring nature. She submits that in such circumstances, the expenditure incurred on repairs and maintenance which, ultimately, resulted in renewal and upgradation of hotels was required to be treated as a capital expenditure and not revenue expenditure. She submits that this is the ratio of the Apex Court decision in Ballimal Naval Kishore vs. ....

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....epairs and renovations, it can hardly be said that the Respondent-Assessee has gained some substantial advantage of enduring nature. In any case, as held by the Hon'ble Apex Court in Empire Jute Co. Ltd. vs. CIT (1980) 124 ITR 1, that every advantage of enduring nature acquired by an assessee cannot be routinely treated as a capital expenditure. In such a case, it is necessary to consider the nature of the advantage in the commercial sense and it was only where the advantage was in the capital field that the expenditure would be disallowable on the ground that it was capital, but if the advantage consists in merely facilitating the assessee's trading operations or enabling the management and conduct of the assessee's business le....

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....ing asset is the hotel and merely because the same can be used in a better manner or more profitably on account of repairs and renovation, it cannot be said that the expenditure incurred towards such repairs or renovation was capital expenditure and not the revenue expenditure. 10. The decision in Ballimal Naval Kishore (supra), is distinguishable in the context of the facts in the present case. In Ballimal Naval Kishore (supra), the Hon'ble Apex Court approved the ruling in New Shorrock Spinning and Manufacturing Co. Ltd. Vs. Commissioner of Income Tax, (1956 ) 30 ITR 338 in which this Court had held that if the amount spent was for the purpose of bringing into existence a new asset or obtaining a new advantage, then, obviously, suc....