By Ashok Dhere, Jagdish D. Shah, Chartered Accountants
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(Full texts of the following Tribunal decisions are available
at the Society’s office on written request. For members desiring that the
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12 Fition Hotel v. ITO
ITAT ‘E’ Bench, Mumbai
Before J. Sudhakar Reddy (AM) and
Sushma Chowla (JM)
ITA No. 7035/Mum./2003
Decided on : 8-3-2007
Counsel for assessee/revenue : K. Shivaram/
K. Kamakshi
S. 30 of the Income-tax Act, 1961 — Expenditure incurred on
construction of glass curtain wall for better look of hotel building — Whether
allowable as revenue expenditure — Held, Yes.
Per Sushma Chowla :
Facts :
The assessee was engaged in the business of running a hotel.
During the year under consideration it had spent a sum of Rs.7.06 lacs on
construction of glass curtain wall on the front side of the hotel, which was in
addition to the existing building wall. The assessee claimed that the entire
expenditure was revenue in nature which was incurred to improve the look of the
existing building and for trendy and better look to attract customers. According
to the AO, the work done was of enduring nature and held the same to be capital
in nature. On appeal, the CIT(A) observed that the expenses incurred by the
assessee resulted in creation of new assets, as it was an addition to the
existing hotel building.
Held :
According to the Tribunal, the glass curtain did not bring
into existence any new assets. The expenditure incurred was towards the
improvement of the look of the existing building which was about 20 years old.
The Tribunal further noted that the enhancement in the look of the building was
essential, as the assessee was in the business wherein customers are to be
attracted. Accordingly, the Tribunal held that there was no merit in holding
such expenditure as capital in nature and it allowed the expenditure claimed as
current repair.
