2001 PLP 2788 (PTD)

K.A. THANIKKACHALAM, J.--At the instance of the Department, the Tribunal referred the following two questions for the opinion of this Court under section 256(2) of the Income Tax Act, 1961: "(i) Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal has rightly held that the expenditure of Rs.33,800 incurred by the assessee-company in providing extra amenities in the lease-hold premises is allowable as revenue expenditure? (ii) Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was correct in law in holding that in view of the finding of the Tribunal in its order, dated June 27, 1983, the question of application of section 32(lA) did not arise, and accordingly, in rejecting the miscellaneous petition filed by the Department?. The assessee is a company which carries on business in building materials and was allotted on lease-hold some bays in Nehru Stadium Shopping Complex. Some construction work, providing minimum facilities like walls, racks, minimum electrical fittings and the like, had to be done to make the property suitable for business purposes. The Stadium Committee permitted the allottees to do such construction work. The Committee undertook to bear the expenditure up to Rs.64,

000. If additional facilities were required, the same would have to be provided by the assessee itself at its cost. The total cost of construction worked out to Rs.97,

880. So, the assessee claimed the balance amount of Rs.33,800 as revenue expenditure. The Income-tax Officer considering the same as capital in nature, disallowed the claim. On appeal, the Commissioner of Income-tax (Appeals) considering the expenditure as revenue in nature allowed the same. On further appeal, the Tribunal affirmed the decision of the Commissioner of Income-tax (Appeals) Inasmuch as no capital asset was brought into existence, which is of enduring nature by incurring an expenditure of Rs.33,800, the Tribunal held that expenditure of Rs.33,800 is allowed as revenue expenditure. A similar view was taken in CIT v Andavar Calendering Mills (1994) 210 ITR-815 (Mad.) In CIT v. Kisenchand Chellaram (India) (P.) Ltd. (1981) 130 ITR 385 (Mad.), it was held that on the building taken on lease, expenditure incurred for partition wall panelling construction, etc., would be of revenue nature. In view of the foregoing decisions, we answer the first question referred to us in the affirmative and against the Department. In so far as Question No.2, is concerned, the assessee claimed depreciation under section 32(lA) of the Income Tax Act, 1961. Inasmuch as the expenditure incurred by the assessee was held to be revenue expenditure, the question of allowing depreciation would not arise. Therefore, Question No.2 does notarise out of the order of the. Tribunal. There will no order as to costs. M.B.A./310/FC?????????????????????????????????????????????????????????????????????????????????? Order accordingly