1. This is a reference at the instance of the Commissioner of Income-tax in the matter of income-tax assessment for the assessment year 1960-61. The assessed had spent a sum of Rs. 32,431 towards the remodelling of furniture in the various retail depots of the company and claimed it as a deductible expense. The ITO and the AAC were of the opinion that the expenditure was capital in nature but, on further appeal, the Tribunal took a contrary view. It was of the opinion that the expenses were necessitated by changes in design and were incurred in the ordinary course of business of the assessed.
2. The Tribunal has now stated a case as directed by this court in its order dated March 13, 1973, in I.T.C. No. 12 of 1971 and referred the following question for our opinion :
'Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the expenditure of Rs. 32,431 incurred on re-modelling of furniture was allowable as an expenditure on repairs ?'
3. We find that an application under s. 256(2) of the Act had been filed on behalf of the Commissioner, inter alia, in respect of the same question in relation to the assessment year 1962-63, in the case of the same assessed which was numbered as I. T.C. No. 8 of 1974. The Tribunal had declined to state a cases on the ground that there had been no dispute before it that the incurring of the expenditure was not for the purpose of business. In the above circumstances, this court also rejected the application under s. 256(2).
4. In the year under appeal also there is no finding that the expenditure had not been incurred for the purpose of business. In fact, the finding of the ITO that the expenditure was capital in nature impliedly accepted the position that it was incurred for the purpose of business. From the order of the Tribunal it is seen that the assessed had claimed a large sum of money in connection with the re-designing of its retail depots. Of these items, the Tribunal held that expenditure incurred for the making of furniture, for the acquisition of shops and fans were capital in nature but concluded, rightly in our opinion, that so far as the expenditure on remodelling of furniture is concerned, it could not be described as capital in nature, It was only an expenditure incurred for the purposes of remodelling the furniture, necessitated by changes in design and was revenue in nature. The decision of the Supreme Court in CIT v. Kalyanji Mavji & Co. : 122ITR49(SC) is in point.
5. In the circumstances, we are of opinion that the question referred to us has to be answered by saying that the sum of Rs. 32,431 was deductible as revenue expenditure and that the Tribunal was justified in holding so. In the result, the reference is answered in favor of the assessed.