The assessee was engaged in the business of running a hotel. During the year under consideration it had spent a sum of Rs.7.06 lacs on construction of glass curtain wall on the front side of the hotel, which was in addition to the existing building wall. The assessee claimed that the entire expenditure was revenue in nature which was incurred to improve the look of the existing building and for trendy and better look to attract customers. According to the AO, the work done was of enduring nature and held the same to be capital in nature. On appeal, the CIT(A) observed that the expenses incurred by the assessee resulted in creation of new assets, as it was an addition to the existing hotel building.
Fition Hotel v. ITO