Deduction of lease charge allowed, professional fees not deductible. Tax Case Appeal dismissed.

The High Court allowed the deduction of lease equalization charge for the Assessment Year 1998-1999, following the Supreme Court's ruling that the Respondent could claim such deduction using the method prescribed by the Institute of Chartered Accountants of India. Additionally, the Court held that professional charges paid to M/s. PCR Investments were not allowable as a deduction, as they were deemed of a capital nature. As a result, the Tax Case Appeal was dismissed without costs, with both substantial questions of law decided against the appellant / Revenue.

---

---

Issues:
1. Deduction of lease equalization charge.
2. Allowability of professional charges as deduction.

Deduction of Lease Equalization Charge:
The tax case appeal challenged the Income Tax Appellate Tribunal's order regarding the deduction of lease equalization charge for the Assessment Year 1998-1999. The High Court admitted the appeal based on substantial questions of law related to this issue. The first substantial question of law was whether the assessee was entitled to deduction of lease equalization charge, which was considered by the Supreme Court in a previous judgment. The Supreme Court ruled that the Respondent could claim deduction for lease equalization charges by applying the method prescribed by the Institute of Chartered Accountants of India (ICAI). The Court emphasized that the Respondent's calculation of real income for tax purposes was valid and not in contravention of the Income Tax Act. Consequently, the High Court answered the first substantial question of law in favor of the assessee, as per the Supreme Court's decision.

Allowability of Professional Charges as Deduction:
The second substantial question of law in the appeal concerned the allowability of professional charges paid to M/s. PCR Investments as a deduction. The appellant contended that these charges, representing a non-compete fee, were not allowable as they were of a capital nature. The learned counsel for the respondent pointed out that a similar issue raised in a previous case was not admitted by the Co-ordinate Bench. Acknowledging this, the High Court determined that this issue also had to be answered against the appellant. Consequently, the Tax Case Appeal was dismissed without costs, as both substantial questions of law were decided against the appellant / Revenue.

---

---