The Pune Bench of Income Tax Appellate Tribunal (ITAT) has while allowing the revenue expenditure observed that the repairs and renovation expenses were ‘revenue’ in nature.
In the assessment order it was mentioned that during the year assessee company Klaus Multi parking Systems Pvt purchased an existing factory shed along with its land. Assessee spend some amount on repairs and renovation of the said newly purchased factory premises. The Assessing Officer (AO) called for the details and held that it is a capital expenditure relying on various case laws. The Commissioner of Income Tax (CIT(A)) upheld it. Aggrieved by the order of the CIT(A), the assessee filed appeal.
Kishor B Phadke, on behalf of the assessee submitted bills for the said expenditure in the paper book and photographs of the repairs carried out and contented that assessee had done flooring, painting, piping, plumbing and compound wall repairs and was done because the asset purchased was an old asset. He also contended that by spending the amount, the assessee had not created a new asset, had merely renovated the existing asset.
Ramnath P Murkunde, on behalf of the revenue submitted that, by changing the flooring, the assessee had increased the life of the asset which caused enduring benefit. He further submitted that by repairing the compound wall, life of the compound wall had increased giving rise to enduring benefit.
The Pune Division Bench of S.S.Godara, (Judicial Member) And Dipak P. Ripote, (Accountant Member) allowed the appeal referring to the Hon’ble Bombay High Court decision in the Oxford University Press case. The Bench held that the expenditure incurred on repairs and renovation was revenue in nature would be allowable as revenue expenditure.
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