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Tribunal directs reassessment of lease expenses, grants fresh hearing. The Tribunal partially allowed the appeal, directing the Assessing Officer to reexamine the disallowance of part of monthly lease rentals and revenue ...
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Tribunal directs reassessment of lease expenses, grants fresh hearing.
The Tribunal partially allowed the appeal, directing the Assessing Officer to reexamine the disallowance of part of monthly lease rentals and revenue expenditure on leasehold improvements in light of relevant case laws. The appellant was granted a fresh hearing opportunity for both issues. The decision was pronounced on 26.06.2018.
Issues: 1. Disallowance of part of monthly lease rentals as capital expenditure 2. Disallowance of revenue expenditure on leasehold improvements
Issue 1: Disallowance of part of monthly lease rentals as capital expenditure: The appeal was against an order disallowing part of the monthly lease rentals, alleging it to be an expenditure of capital nature. The appellant argued that the vehicles were capitalized in accordance with Accounting Standard-19, and depreciation was not claimed under section 32 of the Income Tax Act. The appellant relied on relevant case laws to support their claim. The Tribunal noted a previous decision against the appellant but considered the Special Bench decision and High Court rulings. The Tribunal directed the Assessing Officer to reexamine the issue in light of the case laws cited, allowing the appellant an opportunity for a fresh hearing. The appeal on this issue was partly allowed for statistical purposes.
Issue 2: Disallowance of revenue expenditure on leasehold improvements: The appellant claimed expenses on leasehold improvements as revenue expenditure, but the Assessing Officer disallowed it as capital in nature. The appellant argued that the expenses were for temporary structures in the rented premises necessary for business operations. The Tribunal referred to a Delhi High Court decision stating that certain expenses, including flooring, partition, wiring, fall ceiling, etc., could be considered revenue expenditure. The Tribunal remanded this issue to the Assessing Officer for proper justification, considering the nature of the expenses and provisions of the Act. The appellant was granted an opportunity for a fresh hearing. The appeal on this issue was partly allowed for statistical purposes.
In conclusion, the Tribunal partially allowed the appeal, directing a reassessment of both issues by the Assessing Officer in accordance with relevant case laws and principles of natural justice. The decision was pronounced on 26.06.2018.
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