2004 (7) TMI 290

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....m the manufacture and sale of sugar. The AO during the course of assessment proceedings found that the assessee-company had purchased a boiler and turbine for Rs. 8 crores from M/s ITC Classic Financial Company. In addition to lease rent, the company agreed to pay a fee @ 1 per cent of Rs. 8 crores as management fee. The AO observed that the amount of Rs. 8 crores paid was relatable to the entire lease period of 60 months and as such the deduction was to be spread over a period of 5 years. He accordingly allowed a deduction of Rs. 20,000 and disallowed the remaining amount of Rs. 7.80 lakhs. 3. Before the CIT(A), it was submitted that there was no justification for making the impugned disallowance as the expenditure was incurred in conne....

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....se the whole amount could had been retained by the lessor. Learned Authorised Representative also filed a copy of the agreement entered into by the assessee with the lessor and submitted that such payment was to be held to be revenue in nature and not capital, as held by various Courts. He placed reliance on the following decisions: (i) Plantation Corporation of Kerala Ltd. vs. Commr. of Agrl. IT (1994) 117 CTR (Ker) 174 (ii) CIT vs. Cinceita (P) Ltd. (1982) 28 CTR (Bom) 250 : (1982) 137 ITR 652 (Bom) (iii) CIT vs. Bombay Cycle & Motor Agency Ltd. (1979) 12 CTR (Bom) 243 : (1979) 118 ITR 42 (Bom) (iv) CIT vs. Hoechest Pharmaceuticals Ltd. 1978 CTR (Bom) 523 : (1978) 113 ITR 877 (Bom) and (v) India Cement Ltd. vs. CIT (1966) 6....