COMMISSIONER OF INCOME TAX Vs. LAXMI TALKIES

JUDGEMENT

(1.) THE Tribunal, Ahmedabad Bench 'C', Ahmedabad, has referred the following question under Section 256(2) of the IT Act, 1961 (the Act), at the instance of the CIT. Gujarat -III, Ahmedabad :

(2.) THE assessment year is 1976 -77 and the relevant accounting period is S.Y. 2031. The assessee, a registered firm, carried on business of exhibiting cinema films. During the accounting period an expenditure to the tune of Rs. 2,17,285 was claimed under the head theatre renovation and repairing expenses. The assessee also claimed expenditure on account of stamp duty, interest, etc. amounting to Rs. 32,221. The AO held that the aforesaid expenditure did not amount to revenue expenditure and was capital in nature as it brought into existence an advantage of enduring nature.

(3.) THE Revenue challenged the said order before the Tribunal who upheld the order made by CIT(A) vide its order dt. 4th Aug., 1984. The Tribunal after referring to various decisions of the apex Court and High Courts culled out the following broad principles :