Assessee, running a travel agency, took a premises on lease for carrying out its business operations . During relevant year, assessee incurred certain expenses on interior decoration and office equipments .Assessee claimed deduction of said expenses under section 37(1).   AO rejected assessee’s claim on ground that said expenditure was capital in nature  and allowed depreciation . Tribunal allowed assessee’s claim for business expenditure . On appeal by the revenue the Court held that since expenses were fixed and capital in nature, in terms of Explanation 1 to section 32, it became immaterial as to whether assessee was owner of premises or it was taken on lease . accordingly the order of the Tribunal is set aside . ( AY.2003-04)