RUPRAG PRIVATE LIMITED Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE Income-tax Appellate Tribunal has stated a case arid referred the following question under Section 256(2) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), for the opinion of the court pursuant to a direction given by the court:

(2.) THE year of assessment is 1965-66. THE assessee was engaged in the business of exhibiting cinematograph films. It laid claim for deduction on two counts, namely, (i) repairs and replacements to the tune of Rs. 27,158, and (ii) directors' remuneration of Rs. 24,000. For the purposes of cinema exhibiting business, the assessee had engaged an exhibition hall. According to the assessee Rs. 18,659 were spent on furniture and machinery account and the remainder out of Rs. 27,158 went for improvement of the cinema building. All the claims were rejected. THE claim with regard to the remuneration of directors has become final and need not be discussed. Similarly, rejection of Rs. 18,659 which represented expenditure on furniture and machinery account is also no more in dispute. THE deductibility of about Rs. 17,000 which represented expenditure for improvement of the cinema hall is now to be considered. THEre is no dispute that if the expenditure is of revenue character it would be admissible as a deduction and if it is in the nature of capital expenditure no deduction would be permissible.