INSTALMENT SUPPLY PRIVATE LIMITED Vs. COMMISSIONER OF INCOME TAX
LAWS(DLH)-1983-9-29
HIGH COURT OF DELHI
Decided on September 06,1983

INSTALMENT SUPPLY P. LTD Appellant
VERSUS
COMMISSIONER OF INCOME TAX Respondents




JUDGEMENT

S.S.CHADHA, J. - (1.)THE question of law formulated for the opinion of this Court in this reference under S. 256(1) of the IT Act, 1961 (for short called "the Act"), is:
"Whether, on the facts and circumstances of the case, the Tribunal was right in disallowing the sum of Rs. 30,000 or any lesser sum on the ground of its being capital expenditure ?"

(2.)THE case relates to the asst. year 1965 -66 for which the accounting period is the year ending March 31, 1965. The assessee is a private limited company engaged in the business of dealing as agents for sale of Tata Mercedes Trucks in Western U.P. It has also hire -purchase business. It has no premises of its own. It had taken on lease for its business the premises at 46, Janpath, New Delhi, about 25 years back. The assessee is now paying a monthly rent of Rs. 340.25 and the total area occupied is 5,405 sq. ft. The assessee felt that in the interest of its business certain repairs had to be carried out, and as the need for such repairs had accumulated for a long time, the assessee spent a sum of Rs. 47,186 for carrying out necessary repairs. Out of this the assessee capitalised a sum of Rs. 9,399 and claimed the balance of Rs. 37,787 as revenue expenditure. The break -up or the details of the expenditure are these : . Rs. P.
(i)Sanitary fittings 4,257.61 (ii) Designing and supervision 750.00 (iii) Layout drawings and sketches 300.00 (iv) Consultation fee for structural work 4,000.00

At the time of framing the assessment, the ITO expressed the view that apart from construction expenses payments have been made for designing and supervision, layout drawings and sketches and consultation fee for structural work. The ITO concluded that the renovation consisted of additional and modified construction aimed to have long -term advantages and was not of such a nature as could be called current repairs, which would cover only expenses incurred to keep the existing construction in shape. Estimating a sum of Rs. 7,788 on last year's basis, as one spent for current repairs, the ITO added Rs. 30,000.

(3.)ON appeal, the AAC expressed the view that the assessee did not, by incurring this expenditure, bring into existence any new assets nor did the assessee secure any enduring benefit. It was explained before the AAC that no new additions were made, rather nothing was possible and the flat was only redesigned to suit the increased office need and, of course, better fittings and better material was used. The AAC concluded that the assessee by replacing the fittings did not incur any capital expenditure. He, therefore, reversed the finding of the ITO and allowed the entire expenditure as revenue expenditure.
;


Click here to view full judgement.
Copyright © Regent Computronics Pvt.Ltd.