Kerala H.C : Where assessee had been in possession of property after expiry of lease period, benefit of written down value of cost of construction could not be allowed

High Court Of Kerala

Coastal Resorts (India) Ltd. vs. ACIT

Assessment Year : 2007-08

Section : 31

Dr. Manjula Chellur, Cj. And A.M. Shaffique, J.

IT Appeal No. 41 Of 2014

March 20, 2014


A.M. Shaffique, J. – This appeal is filed against the order passed by the Income-tax Appellate Tribunal, Cochin Bench, in I. T. A. No. 256/Coch/ 2013. The assessment year under consideration is 2007-08.

2. The facts involved in the case would show that the assessee took a certain extent of land on lease from the Government of Kerala and constructed a building for business purpose. After the expiry of the lease period, the Government did not extend the lease. This matter was under challenge before this court and there was a stay of the directions issued by the Government and a direction to maintain status quo.

3. During the year under consideration, the assessee claimed written down value of the cost of construction as revenue expenditure, under the head “current repairs”. This was not permitted by the Assessing Officer. Matter was confirmed in appeal and further, matter was carried in appeal before the Tribunal.

4. The Tribunal found that the assessee continuing in possession of the property after expiry of the lease period has to be construed as holding over of the property after expiry of the lease period. Therefore, there is no question of allowing the written down value and the cost of construction as “current repairs”. Further, it is found that, “current repairs” is an expenditure incurred by the assessee for the purpose of maintaining machinery, building, etc., used for the purpose of business and, therefore, it cannot be the written down value of the cost of construction. The Tribunal also came to the finding that the judgment relied upon by the assessee in CIT v. TVS Lean Logistics Ltd. [2007] 293 ITR 432 (Mad.) has no application to the facts of the case.

5. It is apparently clear that the assessee cannot claim the benefit of written down value of the cost of construction which he had incurred under the head “Current repairs”. Hence, we do not think that any question of law arises for consideration in this appeal.

6. Accordingly, the appeal is dismissed.

[Citation : 363 ITR 482]