Law:

Section:

Section 37(1) of the Income-tax Act, 1961 - Business expenditure - Allowability of - Assessment year 1996-97 - Assessee, an advocate, occupied a rented premises for office use - During relevant assessment year, he carried out certain repairs and renovations in office premises in order to see that said premises was kept in a proper condition and professional activities were carried out effectively and smoothly - Whether since expenditure incurred by assessee was in connection with profession/business and for smooth working thereof, leaving fixed capital untouched, expenditure in question was revenue expenditure and, hence, allowable under section 37(1) - Held, yes FACTS The assessee was a practising advocate. He occupied a rented premises as his office. During the relevant assessment year, the assessee incurred expenditure on certain repairs and renovations carried out in his office premises used for the profession and claimed same as deduction under section 37(1). The Assessing Officer treated the said expenditure as capital expenditure and disallowed the same under section 37(1). On appeal, the Commissioner (Appeals) held that the expenditure in question was a revenue expenditure eligible for deduction under section 37(1). On revenue's appeal, the Tribunal confirmed the order of the Commissioner (Appeals). On appeal under section 260A : HELD In the instant case, the assessee, who was lessee of the premises, had carried out certain renovations in order to see that the office premises was kept in a proper condition and the professional activities were carried out effectively and smoothly for which certain repairs were carried out by the assessee in the rented premises. The quantum of expenditure was not relevant for determining the issue in question. On appreciation of evidence, both the fact finding authorities, i.e., the Commissioner (Appeals) as well as the Tribunal had found that the expenditure in question was a revenue expenditure. The expenditure incurred by the assessee was not for the purpose of bringing into existence any asset or advantage, but incurred for running the profession effectively and in smooth manner. It could not be said that the…

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