TaxTMI 
TaxTMI 
TaxTMI 
2012 (4) TMI 761
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.... of lease premium." 3. Brief facts leading to the above issue are that the assessee filed its return of income for the relevant Assessment Year 2008-09 on 28.09.2008. Assessment was framed u/s. 143(3) of the Act vide order dated 06.12.2010 thereby making addition of lease premium claimed as expenditure u/s. 37 of the Act at Rs. 23,50,000/-. The assessee is engaged in the business of manufacturing of Indian container, grease and lubricant, tea, trading in tea and services in the nature of logistic management, sea port facility and travel and tour. The Assessing Officer disallowed the said claim as deduction on account of lease premium by treating the same as capital in nature. Aggrieved, assessee preferred appeal before CIT(A), who relying on the Tribunal's decision in assessee's own case in ITA No.348/K/2007, Assessment Year 2003-04 dated 11.04.2008 allowed the claim of assessee being a covered issue. Aggrieved, now revenue is in appeal before us. 4. We have heard rival submissions and gone through facts and circumstances of the case. The brief facts leading to the above issue are that the assessee claimed in its....
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....d into an agreement with the Maharashtra Industrial Development Corporation (MIDC) on 5-3-1992, by which it was given 50 acres of land by the MIDC in the 'K' industrial area, for the purpose of factory/plant and the period of lease was 99 years. Facts in that case were that the assessee paid an amount of Rs. 2.04 crore to the MIDC which was styled as 'premium on leasehold land'. The rent was fixed at Re. 1 per annum and the premium of Rs. 2.04 crore was over and above rent fixed in the agreement. The assessee claimed the amount of Rs. 2.04 crore as revenue expenditure. The Assessing Officer disallowed the same by holding it as being of capital nature. The reasoning given by the Assessing Officer was that the assessee did not claim the amount as revenue expenditure in the original return of income but only claimed that in the revised return of income and that the premium of Rs. 2.04 crore was over and above the rent fixed in the agreement, which meant that the lessor had differentiated between the rent and the premium in the agreement itself. CIT(A) held that the payment of Rs. 2.04 crore was an advance rent paid by the assessee for the land to the MIDC and, therefore, the ent....
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....en used in all relevant terms of the agreement dated 5-3-1992 but also considering the terms of the agreement dated 5-3 -1992 as a whole it was clear that the amount of Rs. 2.04 crore was paid as 'premium' for acquisition of leasehold rights in the premises. Clause 5(b)(i) of the said agreement dated 5-3-1992 provided that in case of termination of lease, the 'premium' is non-refundable. It provided that in case the licensee failed to complete the said factory building within the time aforesaid and in accordance with the stipulations provided therein, the MIDC without making any compensation or allowance to the licensee for the same and without making any payment to the licensee for refund or repayment of the premium aforesaid or any part thereof, could resume the land in question. Thus, in case of termination of lease, the 'premium' was non-refundable and, therefore, the same could not be considered as advance payment of rent. There was no clause in the agreement to show that the amount of Rs. 2.04 crore was paid by the assessee as advance rent for all future years and the lump sum payment of future years rent had been paid to avail some concession for advance payment of rent or f....
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....ase of the assessee. According to him in that case assessee obtained lease of land allowing to use the same for excavation of minerals for a period of 15 years and the assessee paid a sum of Rs. 10,752/- during the accounting year calculated @ Rs. 35/- per month per acre for the entire period of 15 years. The terms of lease deed stated, that the lessee shall deposit with the lessor by way of guarantee for due performance of this lease deed for 15 years, the amount equal to the rent of lease of land for the full period of lease which will be adjusted against rent of every month. This entire guarantee deposit shall not carry any interest payable to the lessee by the lessor, the lease deed granted to the assessee the liberty 'to use the land for excavation purpose and subsidiary purpose'. For the assessment year in question, the assessee claimed the rent amount worked out at Rs. 10,752/- p.a. as revenue expenditure which were turned down by all the authorities below. The Supreme Court after considering all the facts, came to the conclusion that the case was at par with Pingle Industries Ltd.' s case (40 ITR 67) (SC) and distinguished it from the case of Gotan Lime Syndicate 59 ITR 718....
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.... respect of advance rent paid does not render the payment anything more than rent paid in advance instead of paying the same in future periodically. There is absolutely no indication in the agreement with the amount paid by the assessee as a consideration paid by it for being let into possession of the premises while reserving a separate or economic rate of rent to be paid periodically thereafter. Ld. Counsel also relied on Hon'ble Supreme Court in the case of Madras Industrial Investment Corporation Ltd. vs. CIT 225 ITR 802 (SC) wherein it has been held that facts may justify an assessee, who has incurred expenditure particular year, to spread and claim it over a period of ensuing years. In fact, allowing the entire Expenditure in one year might give a much distorted picture of the profits of a particular year.The Hon'ble ITAT, Kolkata Bench, has in the assessee's own case for the Assessment Year 2003- 04 upheld the contention of the assessee on an identical issued, held that the entire lease premium ought to be allowed as deductible business expenditure, as per its decision in ITA No. 3481K/2007. 7. We find that the assessee has entered into several agreements with differ....