INCOME TAX ACT, 1961

Section 32(1)

Capital or revenue expenditure - Renovation expenses for office premises taken on lease - No capital asset of enduring nature brought into existence -

Assessee claimed deduction of renovation expenses for office premises which has not brought into existence any capital asset of enduring nature. Therefore, Explanation 1 to section 32(1) did not get attracted and expenses were to be treated as revenue in nature. Held: Reference to Explanation 1 to section 32(1) would reveal that it speaks of capital expenditure incurred towards construction of any structure or renovation or extension or improvement to the building. In the instant case, assessee by incurring renovation expenses for office premises has not brought into existence any capital asset of enduring nature. Therefore, Explanation 1 to section 32(1) did not get attracted and expenses were to be treated as revenue in nature.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2011-12

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