Roger Enterprises (P) Ltd. vs Commissioner of Income Tax

The following questions of law have been referred for our opinion u/s 256(1) of the Income Tax Act, 1961:

Whether on the facts and in the circumstances of the case, the Tribunal was justified in holding that expenditure of Rs. 91,200 was of capital nature ?

Whether the Tribunal was justified in invoking the provision of Section 32(1A) and to hold that expenditure of Rs. 91,200 was an expenditure of capital nature ?

Admittedly, the premises in question of which renovation work was undertaken by the assessee was leased premises and that the only work that was to be done was to change the flooring by replacing mosaic by marble.

Two decisions have been brought to our notice by learned Counsel for the assessee, namely, Commissioner of Income Tax Vs. Bharat Commercial Corporation, and CIT v. HEDE Consultancy (P) Ltd. (2002) 258 ITR 3801 (Bom). In both these cases, in circumstances similar to the present case, it was held that the expenditure incurred for renovation would be revenue expenditure and Section 32(1A) of the Income Tax Act, 1961 would not be attracted. Under the circumstances, following these two decisions, which we have no reason to disagree, we answer the questions in the negative, in favour of the assessee and against the revenue.

The reference is disposed of accordingly.