Kirtilal Kalidas Jewellers Private Limited Vs ACIT (ITAT Chennai)
ITAT Chennai held that expenditure towards furniture maintenance which is incurred to make the lease premises workable and functional is revenue in nature.
Facts-
During the course of the assessment proceedings, AO noticed that the Assessee has debited huge expenditure under the head “Furniture Maintenance” and therefore called upon the Assessee to file necessary details. In response, the Assessee had filed details of expenditure under the head “Furniture Maintenance” which includes plywood purchases, hardware items and payment for carpentry works amounting to Rs.1,12,16,205/-. The Assessee claimed that these are temporary repairs for renovation of branch office of a leased premises and thus, the same cannot be capitalized, as the Assessee is not creating asset which gives enduring benefit.
AO, however rejected the arguments of the Assessee and made an addition towards the said expenditure after allowing depreciation at the rate of 5%.
CIT(A) rejected the appeal. Being aggrieved, the present appeal is filed.
Conclusion-
The Jurisdictional High Court of Madras in the case of the Commissioner of Income Tax-I, Chennai Vs. Armour Consultants Private Limited reported in [2013] 355 ITR 418 (Madras) held that the expenditure in the nature of partitions, vinyl flooring and interior decoration to make a leasehold office premises functional, is a revenue expenditure.
We find that although the Assessing Officer has considered the said expenditure as capital in nature which gives enduring benefit to the Assessee, but has not given any plausible reasons to the said conclusion. On the other hand, the Assessee has filed enough materials including certain judicial proceedings to justify its case, where the Hon’ble High Court of Madras in case of Commissioner of Income Tax-I, Chennai Vs. Armour Consultants Private Limited had considered very similar nature of expenditure like partitions, vinyl flooring and interior decorations for leased premises and held that the said expenditure incurred to make the lease premises workable and functional is revenue in nature.
