2020 (1) TMI 80

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....income Tax (Appeals) - 6, New Delhi (hereinafter referred to as 'CIT(A)') has erred on facts and in law in passing the order dated 02.03.2017 under section 250 of the income Tax Act,, 1961 (hereinafter referred to as 'The Act'). Ground No. 2: The Ld CIT(A) erred in law and on facts in confirming the disallowance of Rs. 42,11,415/- on account of Lease hold rent paid by Appellant treating the same as capital expenditure. The appellant contends that the amount was paid by the appellant as per the terms of the agreements between the Appellant and Vishnu Apartments Pvt. Ltd. and not as leasehold rent, therefore no disallowance in this regard should be made. Ground No. 3: The appellant prays that he ma....

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....eement, the assessee was under an obligation to pay to the seller Government rate taxes and cess etc. from the date of agreement. Vide letter dated 22.06.2011, JDA required Vishnu Apartment Pvt. Ltd. to pay a cumulative sum of Rs. 1,35,34,794/- (Rs. 62,15,978 on account of Annual Lease Rent up to Year 2011-12 and lumpsum payment of Annual Lease Rent of Rs. 73,18,816/-). Proportionately the share of the assessee out of that payment was computed at Rs. 42,11,495/-. The assessee claimed the said payment of Rs. 42,11,495/- as rent paid by the assessee. The Assessing Officer disallowed the same on the ground that it is a capital expenditure relating to land. The CIT(A) confirmed the action of the Assessing Officer, however, held that the depreci....

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....ITR 257(SC) c) Commissioner of Income-tax vs. Gemini Arts (P.) Ltd. 254 ITR 201 (Madras) d) Deputy Commissioner of Income-tax vs. Sun Pharmaceutical India Ltd. 329 ITR 479 e) Commissioner of Income-tax vs. Madras Auto Service (P.) Ltd. [233 ITR 468 (SC)] f) Commissioner of Income-tax vs. H.M.T. Ltd. 203 ITR 820 6. The Ld. DR submitted that the Assessing Officer has rightly held that the payment during the year relates to land which is capital in nature and which should have been capitalized by the assessee. The assessee is an owner of the said land as per the terms of the lease deed and, therefore, the assessee's claim in its P&L Account of lease rent is not allowable. The Ld. DR further submitted that....

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....penditure incurred was for the business purpose only and therefore, it cannot be held as capital in nature. The Ld. AR relied upon the decision of the Hon'ble Apex Court in case of Commissioner of Income-tax vs. Madras Auto Service (P.) Ltd. 233 ITR 468, wherein it is held that expenditure which bring about some kind of an enduring benefit to the company as a revenue expenditure when the expenditure did not bring into existence any capital asset for the company are expenditure of the said company. The asset which was created belonged to somebody else and the company derived an enduring business advantage by expending the amount. The expenses have been looked upon as having been made for the purpose of conducting the business of the assessee....