Lease deed registration fees treated as capital expenditure where the payment secures an enduring property benefit.

Registration fees paid for executing a new lease deed were treated as capital expenditure because the deed extended the lease term and conferred a long-term advantage in the nature of an enlarged interest in property. The benefit was not confined to the relevant accounting year and created an enduring benefit for the assessee. On that basis, the expenditure was not allowable as revenue in nature, and the disallowance was upheld.

---

---

Issues: Whether the registration fees paid for executing a new lease deed extending the lease period and enhancing lease rent were capital expenditure or revenue expenditure.

Analysis: The expenditure was incurred in connection with execution of a new lease deed that extended the lease term from 2022 to 2047 and secured a long-term benefit in the nature of an enlarged interest in property. The advantage obtained was not confined to the relevant accounting year and resulted in an enduring benefit to the assessee. On that footing, the expenditure could not be treated as revenue in nature.

Conclusion: The registration fees were held to be capital expenditure and the disallowance was upheld.

Ratio Decidendi: Expenditure incurred to secure a long-term lease advantage and an enduring benefit in property is capital expenditure, even if it is described as registration or incidental execution .

---