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| The Tax Publishers2022 TaxPub(DT) 0708 (Del-Trib) : (2022) 093 ITR (Trib) 0001 INCOME TAX ACT, 1961
Section 37
In order to run a Dominos outlet having a specific ambience and outlook, assessee was required to make extensive modifications in the premises that was obtained on lease and the modification did not create any new asset. He has further noted that the process of setting up new stores to be a continuous process thereby implying that by every year some new stores are set up and thus, the expenditure on renovation and repairs of stores assumed the character of revenue in nature. Therefore, expenditure incurred by assessee fell under section 37(1).
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Capital or revenue expenditure - Leasehold improvements - -
Assessee is a franchise of 'Domino's Pizza' and 'Dunkin Donuts' and had taken on lease bare shell premises of various entities during the year under consideration. Assessee had claimed deduction on account of leasehold improvements. AO was of the view that expenditure being in the nature of extensive renovation and beautification of the stores, resulted into an enduring benefit to assessee. He, therefore, held the expenditure incurred to be of capital in nature.Held: In order to run a Dominos outlet having a specific ambience and outlook, assessee was required to make extensive modifications in the premises that was obtained on lease and the modification did not create any new asset. He has further noted that the process of setting up new stores to be a continuous process thereby implying that by every year some new stores are set up and thus the expenditure on renovation and repairs of stores assumed the character of revenue in nature. Therefore, expenditure incurred by assessee fell under section 37(1).
Relied:CIT v. Hi Line Pens (P) Ltd. (2008) 175 Taxman 132 (Del-HC) : 2008 TaxPub(DT) 2301 (Del-HC)
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2013-14 & 2012-13
INCOME TAX ACT, 1961
Section 254(1)
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