COMMISSIONER OF INCOME TAX Vs. LAWRENCE D'SOUZA

JUDGEMENT

(1.) THIS is a Revenue appeal against the order passed by the Tribunal which has allowed expenditure towards renovation expenses, post operative rent and post, operative interest.

(2.) THE assessee was engaged in running a hotel under the name Ceasar's Restaurant. He filed returns admitting an income of Rs. 18,07,260. The return was processed under S. 143(1)(a) on 19 Sept., 1997. In response to the notice issued the assessee appeared through chartered accountants and furnished the particulars. The case of the assessee is that he stopped his business from August, 1994 onwards due to labour problem. The business premises was maintained with an intention to sell the same as a going concern. It is a leased premises. Ultimately the business premises along with furniture, fixtures, etc., was sold for a consideration of Rs. 70,00,000 to Sri S.M. Dayanand who is presently running the restaurant. After claiming the various expenses towards sale proceeds, the assessee declared the net income at Rs. 16,84,510 in the form of long-term capital gain. The assessee broadly claimed deductions under three heads-assets taken over, amount not recovered and expenses incurred. The assessing authority disallowed the expenditure of a sum of Rs. 8,52,490representing renovation expenses. Similarly, it disallowed a sum of Rs. 2,56,994-claimed as post operative rent and a sum of Rs. 2,86,100 claimed as post operative interest. It also disallowed the expenses under various heads.

(3.) AGGRIEVED by the said order, the Revenue preferred an appeal to the Tribunal. The appeal came to be dismissed upholding the order of the Appellate CIT. Aggrieved by the said order, the present appeal is filed by the Revenue.