Case Law Details
Maharastra Film Cultural Development Corporation Ltd. Vs JCIT (ITAT Mumbai)
Hon’ble Jurisdictional High Court in the case of CIT vs. Oxford University Press (108 ITR 166) has expounded that the test for judging the nature of capital or revenue expenditure is to see whether as a result of expenditure what is being done is to preserve and maintain an already existing asset or whether as a result of expenditure a new asset or a new advantage is being brought into existence. The mere quantum of expenditure is not by itself decisive of the question whether it is in the nature of revenue or capital. Simply because of repair the life of building was prolonged for at least 15 years and it could not be said that the expenditure was in the nature of capital expenditure.
Furthermore, we note that Hon’ble Apex Court in the case of CIT vs. Kalyanji Mavji and Co. (122 ITR 49), has held that cost on repairs which are not current repairs can be allowed under section 37 (1). Section 30 and 31 are not a bar in this regard. From the above case law it is apparent that expenditure on repairs although prolonging the life and increasing durability of the asset is not necessarily of capital nature. Hence, in our considered opinion expenditure incurred by the assessee with regard to repairing/ renovating of existing make-up rooms have to be allowed as deduction as revenue expenditure, as they cannot be treated as capital expenditure meant for bringing into existence a new asset or a new advantage, and they are laid out wholly and exclusively for the purpose of business of the assessee.
FULL TEXT OF THE ITAT JUDGMENT
This appeal by the assessee is directed against order of learned CIT-A dated 24/11/206 and pertains to assessment year 2012-12. The grounds of appeal read as under :-
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