Court held that the expenses incurred for repairs, refurbishing and making improvements to the buildings taken on lease were deductible. If it were found that the investments made in the property spread over the period of lease, together with the lease rent payable as per the agreement, would constitute the ostensible lease rent for the building, the investment made for constructing superstructures, has to be deemed to be revenue expenditure, otherwise it should be treated as capital expenditure and in the latter event allowable as depreciation. Matter remanded. The court directed that since the lease deeds produced before the court were not registered the Deputy Commissioner was to impound the documents and refer them to the District Registrar for proper stamping and the assessee would also be obliged to register the deeds. ( AY.2007-08 to 2010-11)
Indus Motor Company Pvt. Ltd. v. DCIT (2018) 407 ITR 112 /253 Taxman 97 / 161 DTR 377 /301 CTR 715 (Ker) (HC) Editorial: SLP is granted to revenue, Dy. CIT v. Indus Motor Co. (P) Ltd ( 2018) 257 Taxman 259/ 406 ITR 19 (St.) ( SC)/ 257 Taxman 559 (SC)
S. 37(1) : Business expenditure –Capital or revenue- Business carried on leased premises – Expenditure on repairs and refurbishing is revenue expenditure — Expenditure on erecting structures —Matter remanded – The court also directed that since the lease deeds produced before the court were not registered the Deputy Commissioner was to impound the documents and refer them to the District Registrar for proper stamping and the assessee would also be obliged to register the deeds. [ S.32(1)]