AI Drafter - (New and Powerful) 
Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter. 
TaxTMI 
TaxTMI 
2020 (6) TMI 439
X X X X Extracts X X X X
X X X X Extracts X X X X
....s Court vide order dated 06.02.2012 on the following substantial questions of law: (i) Whether the tribunal is correct on facts and in law in holding that the expenditure said to have been incurred by the assessee amounting to Rs. 89,23,817/- on improvement of interiors, electrical works, modeling and networking of computers, work stations and other miscellaneous works in a leased premises is revenue expenditure without appreciating that this one-time expenditure incurred in providing necessary infrastructure resulted in a benefit of enduring nature which will be available to the assessee for many years? (ii) Whether the tribunal is correct on facts and in law in holding that ATMs and encoders are computers eligible for 60....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s, improvement of interiors and electrical works, fee paid to the architect, cabling work for networking of computers in connection with setting up of office. Thus, the expenditure was incurred to bring into existence an asset or an advantage for enduring benefit of business, his property is computable as capital expenditure. Accordingly, the leasehold improvement for an amount of Rs. 89,23,817/- was disallowed and added back and depreciation towards furniture and fitting at the rate of 15% was allowed. The assessing officer further held that the assessee has changed the revenue recognition method and therefore it is not possible to ascertain true and correct profit of the assessee for the accounting year in question. It was further held....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... COMMISSIONER OF INCOME-TAX, MYSORE', 112 ITR 12. It is further submitted that ATMs are not Computers and the tribunal erred in holding that ATMs are computers and assessee is entitled to deduction to the extent of 60%. In support of aforesaid submission, reliance has been placed on decision of this court in 'DIEBOLD SYSTEMS PVT. Ltd. VS. COMMISSIONER OF COMMERICAL TAXES (KARNATAKA)', ILR (KAR)-2005-0-2210. It is also urged that change of accounting method is impermissible as the same has resulted in a loss to the revenue. 5. On the other hand, learned counsel for the assessee has pointed out that premises were taken on lease for a period of three years and expenditure was incurred towards purchase of workstations, improvemen....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e Court in 'JAGATRAM AHUJA VS. COMMISSIONER OF GIFT-TAX', (2000) 113 TAXMAN 459 (SC). It is also submitted that it is open for the assessee to change the method of accounting and the burden is on the department to prove that the method in vogue is not correct and distorts the profits of a particular year. It is also argued that in the instant case the aforesaid burden has not been discharged by the revenue. In support of aforesaid submission, reliance has been placed on a decision of the Supreme Court in 'COMMISSIONER OF INCOME-TAX VS. BILAHARI INVESTMENT (P.) LTD.,', (2008) 168 TAXMAN 95 (SC). 6. We have considered the submissions made on both the sides and have perused the record. Admittedly, in the instant case, the as....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... The aforesaid principles were referred to with approval in MADRAS AUTO SERVICES (P) LTD., supra on the touchstone of aforesaid well settled legal principle, if the facts of the case in hand is examined, it is evident that the assessee had taken the premises on lease for a period of three years and had incurred expenditure of Rs. 89,23,817/- for improvements in the lease premises. The premises did not belong to the assessee and the expenditure did not bring into existence any capital asset for the assessee. The expenses were incurred for conducting the business of the assessee more profitably and more successfully. The assessee therefore, got the business advantage and therefore, the tribunal has rightly treated the expenses incurred as rev....