Appellate authority's allowance of amortization for leasehold control costs upheld; AO recharacterization reversed for AY 2009-10

ITAT KOLKATA - AT upheld the appellate authority's allowance of amortization of expenditure incurred to secure control over leasehold land as revenue expenditure. The AO's recharacterization of the amount as capital in AY 2009-10 was reversed, the revenue's appeal dismissed, and the assessee's claim allowed, noting prior allowance in earlier years and applying the rule of consistency where facts and law remained unchanged. The Tribunal followed coordinate-bench precedent for a subsequent year in affirming relief to the assessee.

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Issues:
1. Disallowance of amortization expenditure of leasehold land.

Analysis:
The appeal was filed against the order of the Ld. CIT(A)-21, Kolkata for the assessment year 2011-12. The only ground raised was the disallowance of Rs. 56,28,718 claimed as amortization expenditure of leasehold land. The assessee argued that the issue was covered by the Tribunal's decision in earlier assessment years. The AO had allowed the claim in previous years, but in 2009-10, the claim was disallowed as capital expenditure. However, the Ld. CIT(A) and the Tribunal upheld the claim based on the principle of consistency as there was no change in facts or law. The Tribunal's decision in the earlier years was followed, and the claim was allowed.

The Ld. AR pointed out that the Tribunal had also upheld the claim in the assessee's case for the assessment year 2012-13. The Ld. DR did not contest that there was any change in facts or law in the current assessment year compared to previous years. The Tribunal noted that the expenditure was necessary for the smooth running of the hotel business and had been consistently claimed as revenue expenditure. The Tribunal emphasized the rule of consistency, citing the Supreme Court's decision in Radhasoami Satsang case and the jurisdictional High Court's ruling in CIT Vs. Hindustan Motors Ltd. The Tribunal held that since there was no change in facts or law, the view taken earlier should be maintained. Therefore, the appeal was allowed, and the disallowance of the amortization expenditure was reversed.

In conclusion, the Tribunal allowed the appeal of the assessee, emphasizing the importance of consistency in tax proceedings. The decision was based on the principle that if there is no change in facts or law, the view taken in earlier years should be upheld. The Tribunal relied on previous judgments and held that the amortization expenditure claimed by the assessee should be allowed.

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