Case Law Details
Klaus Multiparking Systenms Pvt. Vs DCIT (ITAT Pune)
ITAT Pune held that expenditure incurred on repairs and renovation of the asset is revenue expenditure as no new asset has been created.
Facts- It is mentioned in the assessment order that during the year assessee company purchased an existing factory shed along with its land. Assessee spend Rs.53,20,820/- on repairs and renovation of the said newly purchased factory premises. The Assessing Officer(AO) called for the details and held that it is a capital expenditure relying on various case laws. The ld.CIT(A) upheld it. Aggrieved by the order of the ld.CIT(A), the assessee filed appeal before this Tribunal.
Conclusion- The Hon’ble Bombay High Court in the case of CIT Vs. Oxford university Press in (1971) 108 ITR 166 has held that merely maintaining and preserving an asset which it already possessed and thus though to some extent the life of the asset had been prolonged and the asset was made to give better service than it was doing in the past, the expenditure will have to be regarded as a revenue expenditure.
The facts of the present case are identical to the facts of the Oxford University Press decided by the Hon’ble Bombay High Court, therefore, respectfully following the decision of Hon’ble Bombay High Court it is held that the expenditure of Rs.53,20,820/-incurred on repairs and renovation was revenue in nature and hence, allowable as revenue expenditure.
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