On appeal, the Tribunal held that to invoke the provisions of Explanation 1 to Section 32(1) of the Act, a finding has to be given first as to the nature of expenditure incurred by the assessee. If the nature of expenditure is capital in nature, then the provisions of Explanation 1 to Section 32(1) of the Act shall apply. Accordingly, this issue required fresh examination since the nature of expenditure incurred by the Assessee had to be examined in order to apply the provisions of Explanation 1 to Section 32(1) of the Act. (AY.2012-13, 2013-14)
Century Link Technologies India Pvt. Ltd. v. DCIT (2020) 78 ITR 71 (SN) (Bang) (Trib)
S. 32 : Depreciation – Capital or Revenue expenditure — Expenditure on leasehold premises – Nature of expenditure to be examined before applying provision relating to ownership of asset