The Income Tax Appellate Tribunal, Chennai bench has held that the amount of expenses incurred on a leased property in order to produce the right ambience to attract customers shall be allowable as the same would amount to revenue exependiture.
The assessee a firm, engaged as retailer of silk goods. It incurred expenses in the nature of general stores changes, additional gondolas fittings, room alteration, civil and interior work etc on the leased property and claimed the same as revenue expenditure.
However, the AO held that the same were towards creation of new assets and therefore, the same was disallowed.
The assessee contended that expenditure was incurred on a leased property for smooth conduct of the business as the property could not be put to use for business purposes as such. Expenses such as reflooring, painting of walls, false ceiling, temporary wooden structures were incurred to produce the right ambience to attract customers.
The Tribunal bench comprising Shri Mahavir Singh, Vice President and Shri Manoj Kumar Aggarwal, AM held that the same were revenue expenditure as held by Tribunal in assessee’s own case for AY 1995-96 as well as for AYs 2006-07 to 2009-10.
Dismissing the plea of the Revenue, the Tribunal held that “The revisional jurisdiction on this issue for AYs 2002-03 & 2003-04 was also quashed by the Tribunal on the ground that the expenditure was revenue in nature. Concurring with the same, Ld. CIT(A) allowed the expenditure against which the revenue is in further appeal before us. We find that the fact that similar issue, in other years, has been held by Tribunal in assessee’s favor, remain undisturbed before us. Even otherwise, we note that the expenditure has been incurred on leased property to produce the right ambience to attract customers. Therefore, the expenditure would be revenue in nature. Respectfully following the consistent view of the Tribunal, we dismiss this ground raised by the revenue.”
Advocate Shri R. Vijayaraghvan appeared for the assessee.
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