Case Law Details
CIT Vs M/s. Viswams (Madras High Court)
It is not in dispute that the Assessees had taken on lease the premises and had put up further additional construction and had also renovated and incurred expenses for improvement of the building. The contention of Mr.M.P.Senthil Kumar, learned counsel placed only in the written submissions and not advanced during oral arguments that the Court cannot examine the lease agreements since they were not registered has to be rejected because, the lease documents are being examined only to determine a collateral transaction viz., nature of expenditure incurred by Assessee. It is a fact that the Assessee had taken on lease the premises in consideration. They are not the owners.
They always claimed to be lessees only. Consequently, this submission, raised by way of written submission has to be rejected. It had been an admitted stand before the Assessing Officer and before the CIT (Appeals) and before the Tribunal that the Assessee is only a Lessee of the premises in question. This being a fact which had been settled, cannot be re-examined on the basis of the specious argument advanced.
Expenditure incurred by the Assessee in the present case are Capital in nature and come within the mischief of Explanation 1 to Section 32(1) of the Act. The alternate submission advanced by Mr. M.P. Senthil Kumar that the repairs to the premises cannot be capitalised in view of Section 30(a)(i) of the Act is rejected since the renovations made are Capital in nature in the first Assessment Year and only further repairs may attract the provisions under Section 30(a)(i) of the Act.
In the present case, the Assesses had incurred substantial expenditure towards renovation leading to enduring benefit. They are not merely repairs. The Assessees had also incurred expenditures towards improvement and construction of the building. These cannot be termed as ‘repairs’.
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