Expenses towards Renovation of Business Showrooms 'Revenue' in Nature: ITAT allows Income Tax Deduction to Skoda Dealers [Read Order]

The Income Tax Appellate Tribunal (ITAT), Ahmedabad bench has held that the expenses incurred by the car dealers towards renovating its four business showrooms are revenue in nature for the purpose of allowing deduction under the Income Tax Act, 1961.

The assessee, Torque Automotive Pvt. Ltd, is engaged in the business of sales and services of Skoda cars and spares.The assessee company during this Financial Year has renovated itsfour showrooms at Ahmedabad, Rajkot, Surat and Baroda as per Skoda Company’s Corporate Identity Look Policy. The assessee had to change the signboard, logo, color, tiles, furniture, etc. completely with that of the old one. Thus, the assessee claimed under repair and maintenance of building expenses account, Rs. 11,29,19,528/-.

However, the Assessing Officer disallowed the expenses holding that the same are capital in nature.

A bench of Smt. Annapurna Gupta, Accountant Member and Shri T.R. Senthil Kumar, Judicial Member allowed the plea of the assessee relying on the decision in the case of Landmark Automobiles Pvt. Ltd. and held that“the Coordinate Bench followed jurisdictional High Court judgment in the case of Desai Bros. (cited Supra) and other High Court judgments. In our considered view this issue is no more res integra. Therefore, respectfully following the ratio of the judgment rendered by the Coordinate Bench in the case of Landmark Automobiles Pvt. Ltd. we have no hesitation in confirming the order passed by the CIT(A) holding that the expenditure incurred by the assessee for renovating its four business showrooms are revenue in nature. Thus, the Revenue’s ground is devoid of any merits and the same is rejected.”

To Read the full text of the Order CLICK HERE

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