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[2007] 292 ITR 266 (MAD.) HIGH COURT OF MADRAS Commissioner of Income-tax v. Ayesha Hospitals (P.) Ltd. R. BALASUBRAMANIAN AND P. P. S. JANARTHANA RAJA, JJ. TAX CASE (APPEAL) NO. 42 OF 2004 OCTOBER 10, 2006 Section 37(1) of the Income-tax Act, 1961 - Business expenditure - Allowability of â–  Expenditure on painting and re-laying of damaged floors and partitions of premises taken on lease, was allowable as revenue expenditure [Assessment year 1991-92] The assessee was a private limited company running a hospital in a leased premises. While completing the assessment, the Assessing Officer made an addition of Rs. 1,85,557 as unwarranted expenses on repairs and maintenance of building and held that it was a capital expenditure. Held that the assessee had spent a sum of Rs. 1,85,557 towards painting, re-laying of the damaged floors and partitions, etc. The co-owners were the directors of the appellant. But they were separate entities. The co-owners were admitting the rental income. They were also paying tax on the profits arising out of the hospital. The lease deed spoke of the normal requirements which the co-owners provided. The assessee was putting the building to a special use. No landlord would ever incur or undertake to bear the expenditure. Here the expenditure was incurred by the assessee on a leased property and the same has to be allowed as revenue expenditure. JUDGMENT P.P.S. Janarthana Raja, J.- Th e Revenue has filed this appeal under section 260A of the Income-tax Act, 1961 against the order dated June 30, 2003, made in I. T. A. No. 665 (Mds) of 1996 on the file of the Income-tax Appellate Tribunal, Madras "A" Bench. On February 3, 2004, this court admitted the appeal and formulated the following substantial questions of law: "( i)Whether, on the facts and circumstances of the case, the Tribunal was right in allowing the expenditure incurred on flooring and partitions, etc., for the newly extended area of space, as revenue expenditure, when very clearly new infrastructures have been provided and the space and capacity of the hospital has been increased? (ii)Whether, on the facts and circumstances of the case, the Tribunal was right in allowing…

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