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Aggrieved by the order of the CIT (Appeals) both the assessee and the revenue are in appeal before us. The assessee has in its appeal disputed the disallowance of this sum of Rs. 3,08,703; whereas in revenue's appeal the relief granted by the learned CIT (Appeals) to the assessee has been disputed.

8. During the course of assessment proceedings for assessment year 1993-94 the assessee claimed deduction of a sum of Rs. 7,98,32,489 under the head 'Repairs and maintenance' out of which admittedly expenditure to the tune of Rs. 3,64,11,478 pertained to Renovation and Refurbishment Project. In addition, according to the assessee, a further expenditure of Rs. 1,043.12 lakhs had been incurred by the assessee shown under the fixed capital heads in the accounts of the assessee and accordingly not claimed as deduction. The learned Assessing Officer held the opinion that the assessee should have capitalized expenditure to the tune of Rs. 3,64,11,478 also instead of debiting under the head 'Repairs and maintenance expenses'. He held the view that out of the revenue expenditure under the head 'Repairs and maintenance expenses' claimed by the assessee at Rs. 7,98,32,11,489, expenditure to the tune of Rs. 3,64,11,478 pertaining to Renovation and Refurbishing Project could not be allowed as normal repairs and maintenance expenditure or even an expenditure incurred on accumulated repairs and maintenance. Following the facts found during the course of assessment proceedings for assessment year 1992-93, the learned Assessing Officer held that this expenditure was part of all pervasive Renovation & Refurbishing of the hotel being carried out by the assessee spread over a number of years. He, therefore, made the disallowance of Rs. 3,64,11,478. The learned Assessing Officer made disallowance of Rs. 2,81,525 also being the amounts paid by the assessee to M/s. GEL and charged to profit & loss account. The learned Assessing Officer found that the assessee had entered another agreement in connection with Renovation and Refurbishing Project with M/s. Hirsch Bedner & Associates (hereinafter called 'HBA') to whom a sum of Rs. 5,62,280 was paid and charged to profit & loss account. For the same reasons as in the case of GEL the learned Assessing Officer disallowed the assessee's claim of deduction of the sum of Rs. 5,62,280 as well.

10. The learned CIT (Appeals) however, found the disallowance made by the Assessing Officer in respect of expenditure claimed by the assessee on account of payments to GEL and HBA to be sustainable, as in his opinion, the expenditure was in the nature of capital expenditure. While the assessee has accepted the disallowance of the expenditure of Rs. 5,62,280 paid to HBA, as per grounds of appeal taken originally the assessee has disputed disallowance of the sum of Rs. 2,81,525 paid to M/s. GEL.