IN INCOME TAX APPELLATE TRIBUNAL BENCH : CHENNAI BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI G.PAVAN KUMAR, JUDICIAL MEMBER I.T.A.Nos.1952 & 1953/Mds./2016 Assessment years : 2008-09 & 2009-10 M/s.Cholamandalam, Vs. Assistant Commissioner of Distribution Services Ltd., Income Tax, No.1, NSC Bose Road, Corporate Circle-I(2), Chennai 600 001. Chennai 600 034. [PAN AABCC 4868 ( Appellant) (Respondent) Appellant by : Mr.Saroj Kumar Panda,Advocate Respondent by : Smt.Jayanthi Krishnan,CIT DR Date of Hearing : 15-09-2016 Date of Pronouncement : 05-10-2016 O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER These two appeals of assessee are directed against different orders of Commissioner of Income-tax (Appeals)-I, Chennai dated 05.04.2016 pertaining to assessment years 2008-09 and 2009-10. Since issues involved in these Assessee s appeals are common in nature, these appeals are clubbed together, heard :- 2 -: ITA No.1952/Mds./2016 together, disposed off by this common order for sake of convenience. 2. grievance of assessee in both appeals is with regard to findings of Ld.CIT(A) that expenditure incurred with reference to partitions and other work in lease hold premises just by way of renovation or improvement, is capital expenditure entitled for depreciation @ 10% instead of treating it same as revenue expenditure. 3. facts of case are that originally assessee came in appeal before this Tribunal in IRA No.540/Mds./2013 for assessment year 2008-09 dated 07.03.2014 & ITA No.1417/Mds./2014 for assessment year 2009-10 dated 18.08.2014 wherein Tribunal remitted issue back to file of AO with direction to re-examine issue afresh in accordance with law. In second round also, lower authorities observed that expenditure incurred by assessee is with regard to renovation carried out in rental premises located various part of country, which includes interior decoration/partition as capital expenditure, assessee is entitled for only depreciation in view of provisions in Explanation-1 to Sec.32(1) of Act. Against which assessee is in appeal before us. :- 3 -: ITA No.1952/Mds./2016 4. We have heard both parties and perused material on record. Admittedly in this case assessee carried out renovation work which includes false ceiling, flooring, interior works, electrical works, carpets, partitions, wooden structures etc. in various rental premises so as to make premises habitable and assessee cannot extend or any improvement to leased premises so as to hold it as expenditure brought benefit to assessee which is enduring nature. Further, it is noted that in case of M/s.Rialto Enterprises Pvt Ltd., Vs. JCIT in ITA No.803/Mds./2016 for assessment year 2008-09 vide order dated 11.08.2016, Tribunal observed that expenditure incurred by assessee on painting, relaying of damaged floors, partitions etc. in leasehold premises is allowable as revenue in nature. Further, Jurisdictional High Court in case of CIT Vs. Ayesha Hospitals (P) Ltd. reported in 292 ITR 266(Mad.) observed same. Further, Jurisdictional High Court in case of THIRU AROORAN SUGARS LTD Vs. DCIT reported in [2013] 350 ITR 324 (Mad) held as under:- 3. Learned counsel appearing for assessee placed reliance on decision of this court reported in CIT v. Ayesha Hospitals P. Ltd. [2007] 292 ITR 266 (Mad), wherein in respect of claim made for assessment year 1991-92, assessee claimed amounts spent on painting, relaying of damaged floors, partitions, etc., as revenue expenditure. :- 4 -: ITA No.1952/Mds./2016 On appeal before this court by Revenue, it was pointed out that assessee incurred expenditure for relaying of damaged floors, painting and partition in respect of leased property. Referring to decision of apex court reported in CIT v. Madras Auto Service P. Ltd. [1998] 233 ITR 468 (SC), this court pointed out that expenditure incurred in respect of maintenance of leased premises was deductible as revenue expenditure. 4. As regards contention taken by Revenue placing reliance on Explanation 1 to section 32(1)(ii) of Income-tax Act, which was inserted with effect from April 1, 1988, this court pointed out that Explanation is exceptional one which permits depreciation in cases where assessee does not own building, in respect of which assessee incurs capital expenditure on construction of any structure or doing of any work, in or in relation to, and by way of renovation or extension of, or improvement to building. 5. Applying above said decision of this court to facts of present case, we hold that temporary structure by means of false ceiling and office renovation had not resulted in any capital expenditure. benefit of above said decision of this court hence, applies to facts of case. Accordingly, question is answered in favour of assessee and tax case (appeal) stands allowed. No costs. In view of binding decisions of jurisdictional High Court, we are inclined to hold that expenditure incurred by assessee for renovating existing leased premises is only in field of revenue :- 5 -: ITA No.1952/Mds./2016 and it cannot be said that expenditure was in nature of capital field. More so, all judgments cited by ld.A.R were decided in favour of assessee holding that expenditure incurred in leased premises without extending area of construction, said expenditure is revenue in nature. Accordingly, appeals of assessee in both assessment years are allowed. 5. In result, both appeals of assessee in ITA Nos.1952 & 1953/Mds./2016 are allowed. Order pronounced on 05th October, 2016, at Chennai. Sd/- Sd/- (G.PAVAN KUMAR) (CHANDRA POOJARI) JUDICIAL MEMBER ACCOUNTANT MEMBER Chennai Dated: 05th October, 2016 K S Sundaram Copy to: 1. Appellant 3. CIT(A) 5. DR 2. Respondent 4. CIT 6. GF M/s. Cholamandalam Distribution Services Ltd. v. Assistant Commissioner of Income-tax, Corporate Circle-I(2), Chennai