- (1.) This appeal is directed against the judgment delivered by Tribunal, Jodhpur Bench, Jodhpur, in ITA No. 395/1999, by which the Tribunal dismissed the appeal filed by Revenue and affirmed the order passed by CIT(A).
(2.) The question which requires consideration in this appeal is whether the expenditure incurred by respondent-assessee in connection with renovation of his office be treated as capital expenditure or the revenue expenditure?
(3.) The respondent-assessee is an advocate mainly practicing before the Supreme Court of India. For the relevant asst. yr. 1996-97, he disclosed his professional receipts at Rs. 1,40,78,129 for the previous year. Besides professional receipts, the assessee also derived income from house property, dividend, interest, agricultural income, etc. In all, for the relevant previous year, the assessee claimed an expenditure of Rs. 12,43,902 under the head "Office repairs and maintenance". During the aforesaid period, the assessee, who was occupying a rented premises had carried out certain repairs and renovation in his office premises used for the profession. The AO, after considering the aspect of current repairs, treated the said expenditure incurred to the extent of Rs. 7,07,018 as capital expenditure and disallowed the same under sec. 37 of the Act. Against the decision of AO, dt. 30th Dec, 1998, the respondent-assessee preferred an appeal before the CIT(A), Jodhpur. The CIT(A) vide its order dt. 28th April, 1999 allowed the said appeal bearing No. 652/1998-99 and deleted the addition of Rs. 7,07,018 by holding that the office premises was not owned by the assessee as he was occupying the premises as a tenant and that he was required to incur the expenditure for repairing/renovating the office premises. The CIT(A), accordingly found that the said expenditure was required to be deducted under sec. 37 of the Act. The Revenue challenged the aforesaid decision of the CIT(A) by preferring appeal before the Tribunal, Jodhpur. The Tribunal, by the impugned order dt. 29th Aug., 2003, dismissed the said appeal by holding that the expenditure in question is revenue expenditure and deductible under sec. 37 of the Act. The Tribunal, accordingly, confirmed the decision of the CIT(A). Being aggrieved by the aforesaid decision of the Tribunal, the Revenue has preferred this IT appeal under sec. 260A of the IT Act, 1961. This Court formulated following substantial question at the time of admission of this appeal on 12th July, 2004: Whether on the facts and in the circumstances of the case, the Tribunal was justified in law in deleting the additions made by the AO on account of disallowance of capital expenditure of Rs. 7,07,018 being incurred on extensive repairs and renovation of office premises and the finding of the Tribunal is perverse ?;