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In [2023] 21 ITR-OL 613 (Ker) hotel meridian spent Rs. 7,13,89,107 for full scale renovation of their Convention Centre which has been held as capital by the revenue. 

Even while the CIT(A) allowed it the Tribunal confirmed the disallowance stating that such expenditure lead to a new asset creation or new advantage which cannot fit into current repairs definition u/s 31 while referring to Saravana Spinning Mills (P.) Ltd. [2007] 293 ITR 201 (SC). In the forward the Tribunal held that once such expenditure does not qualify for deduction u/s 31 the same would not quality either u/s 37. 

Striking such method of evaluation or reasonings as inappropriate the High Court directed the Tribunal to reconsider applying the settled principles and tests laid down by the binding precedents in

deciding whether the claim merits acceptance as revenue expenditure or not. 

It is here that the Court reminded the Tribunal of the Empire Jute case to look at the expenditure from the broad picture of the whole operation in respect of which the expenditure has been incurred and not decide just looking at the components or elements of such expenditure such as investment in new furniture, new flooring, new sanitary fittings etc. 

In this case there is a finding that no extra flooring space or extra room capacity is added on account of such expense thus apparently the Tribunal will have to hold in favour of the assessee. 

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