SILVER SCREEN ENTERPRISES Vs. COMMISSIONER OF INCOME-TAX

JUDGEMENT

(1.) HAS the amount of Rs. 49,097 been rightly held by the Tribunal as an expenditure of a capital nature ? That is the question involved. The assessee claims this amount as an expenditure exclusively incurred by him for the purpose of his business. The Tribunal has held it to be of capital nature.

(2.) THE assessee is a registered firm. Its business is that of a distributor of films. It too runs a cinema house. In order to exhibit films, it had taken on lease the cinema house known as "ashok Cinema". This building was taken along with its equipment, furniture, fittings, fixtures, etc. In the assessment year 1959-60, for which the accounting year ended on 31st August, 1958, an amount of Rs. 49,097 was claimed by the asses-see as having been solely expended for purposes of its business. The case of the assessee before the Income-tax Officer was that "the building was very old and in view of the change in the outlook as well as the standard of living of the public at large and also to attract the foreigners; etc. , it became very necessary for the assessee-firm to give the cinema building a modern shape and to improve it with all types of modern amenities". With this end in view the lessor of the building agreed to reimbiirse the assessee to the extent of Rs. 16,000. A sum of Rs. 6,000 had already been received by the assessee in the year relevant to the immediately preceding assessment year. During the relevant previous year, the assessee had to receive a further sum of Rs. 10,000. He, however, was only paid Rs. 5,000. Regarding the balance the dispute was taken to law courts. The break-up of the amount claimed as capital amount is as follows : Rs. Cost of frames for chairs (i 14. 9 )71 Cost of cloth, etc. , for chairs (i including Rs. 600 for cloth, i)rexin and sewing charges of screen 2,47 8 Cost of sanitary fitting (i 6,11 ii 5 ) Cost of electricity fitting 885 (i v ) Cost of oils and paints ( 3,95 v5 ) Cost of cement, bajri and other ( expenses 20,3 v 93 i)Total 49,0 97 The Income-tax Officer rejected the assessee's contention that the above amount was an expenditure of a revenue nature. He treated the same as capital expenditure. The assessee preferred an appeal to the Appellate Assistant Commissioner. The said Commissioner held that out of this amount an expense to the extent of Rs. 4,555 had been incurred for current repairs and was, therefore, admissible as deduction. The break-up of this amount is as follows : Rs. ( i Cost of oils and paints, etc. , for painting the cinema building specially ball 3,955 ) Cost of cloth and sewing charges of screen 600 ( i i )Total Rs. 4,555 Thus, only a sum of Rs. 44,542 was held to be expenditure of capital nature.

(3.) THE assessee was dissatisfied with the order of the Appellate Assistant Commissioner. A further appeal was preferred to the Income-tax Appellate Tribunal. The Tribunal, after going through the various items of expense, found some others as permissible deduction. The Tribunal increased the deduction from Rs. 4,555 to Rs. 6,555. Thus, only the balance of Rs. 42,542 was held as expenditure of a capital nature.