AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2020 (4) TMI 854
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....and to avoid the conflicting decision. With the consent of parties, the fact in appeal for Assessment Year 2010-11 is treated as lead case. The assessee has raised the following grounds of appeal: 1. The learned (IT (A) -Mumbai 49 has erred in confirming the disallowance of Rs. 1,11,30,167/- on account of amortization of the additional premium paid on the leasehold land. The appellant submits that the learned CIT(A) failed to appreciate that the claim made was for its legitimate business expenditure and ought to have been allowed. 2. The learned (IT (A) has erred in confirming the part addition under section 14A of the Income Tax Act after allowing prorata relief on account of investment made in Lift & Shift India Pvt. Ltd. 3. The (CIT (A) has erred in confirming the addition of Rs. 1,20,54, 127/ - under section 40(a)(ia) of the Income Tax Act towards amount paid to Saikrupa Foods Services Pvt. Ltd. 4. The learned (CIT(A)-Mumbai 49 has erred in confirming the disallowance of Rs. 8,20,356/- on account of professional charges paid to Mr. Bhagwan Madhha. 5. The appellant craves leave to alter, amend or add any grounds of appeal as may be ne....
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.... that ground of appeal raised by revenue in its appeal is covered by the decision of Tribunal in assessee's own case for Assessment Year 2006-07 to 2008-09 In ITA No. 2146 & 2148/Mum/2009 & 2283/Mum/2011 dated 20.11.2015. The ld. AR of the assessee further submits that on similar ground of appeal, the Tribunal directed the Assessing Officer to ax 1/25th share of club entrance fees in each year. 6. On the other hand, the ld. DR for the revenue submits that similar direction may be given to the Assessing Officer. 7. We have considered the rival submission of the parties and perused the material available on record. We have noted that during the year, the assessee received one time membership entrance fees of Rs. 3.11 crore (approx) as one time membership fees for life time membership of club (15 years). The Assessing Officer treated the said receipt as revenue receipt against the assessee's treatment for treating it as a capital receipt. We have noted that on similar ground of appeal, the co-ordinate bench of Tribunal in assessee's own case for Assessment Year 2006-07 to 2008-09 on similar set of fact passed the following order: 8. We have considered rival contentions ....
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....B, Chembur. The said plot is owned by Natvar Parikh & Brothers. The assessee obtained the lease of said plot from owner upto 02.02.2013. During the previous year, the assessee paid compensation of Rs. 3,33,90,500/- to the State Government. The State Government demanded this compensation from Natvar Parikh & Brothers for releasing the land from Urban Land Ceiling Authority (ULCA). The assessee claimed 1/3rd deduction paid on account of compensation by amortizing the lease premium for a period of three years. The Assessing Officer treated the leased premium paid by assessee as capital expenditure. The Assessing Officer also concluded that the cost incurred on land is always capital in nature unless assessee's engaged in dealing in land. Further, no depreciation allowable on such cost of land and therefore, no question for allowing amortization of such cost of land. The ld. AR of the assessee submits that the expenses were incurred for business purpose and was admissible under section 37. The utility of leased land prevails on little lease period. No new asset was added in the block of asset of assessee. The asset was already held by assessee. The case law relied by lower authorities ....
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....he Ready Recknor 2008-09 rate. Since the said plot was acquired by us under lease from the owner, owner requested us to pay the additional premium on the basis of clause II(1) of the lease deed. Clause II(1) of the lease deed is reproduced below.' During the said terms to pay the rent hereinabove reserved in manner aforesaid AND ALSO to bear pay and discharge all existing and future rates, taxes, charges assessment duties impositions, outgoings and burdens of every description whatsoever payable by the Lessor to Government or Municipal Corporation in respect of the land, buildings structures and construction erected or to be erected thereon including urban immovable property tax and riot tax if any assessed charged or imposed upon the demised premises or upon the owners or occupiers in respect thereof or in respect of land or building erected thereon. The present taxes payable are Rs. 90,720/- (Rupees Ninety thousand Seven Hundred & twenty only) per year. In view of the above clause we have paid the additional premium of Rs. 3,33,90,500/- on behalf of the Lessor and amortized the same over the balance lease period of 3 years . As required by ....
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....ent was treated as revenue in nature. However, premium was treated as capital in nature. 15. We have independently examined the facts of the issue under consideration. There is no dispute that plot of land situated on survey no. 411B, Chembur was under the lease of Natvar Parikh & Brothers. The assessee developed its club on this plot. From the reply furnished by assessee, it is clear that lesser of assessee i.e. Natvar Parikh & Brothers, related party of assessee made an application to Urban Development Authority (UDA) to release the surplus vacant land from Urban Land & Ceiling Authority (ULCA). The UDA ordered to the owner/lesser of assessee to pay additional premium on the basis of rate in 2008-09. The assessee claimed that said plot was acquired by the assessee from its owner on lease. Thus, the owner requested the assessee to pay the additional premium on the basis of clause-II(i) of lease-deed. Clause-II of lease-deed is also reproduced by Assessing Officer from the reply of assessee, which we have extracted (supra). We have also perused the Clause-II(i) of lease-deed, copy of which is available at page no.8 of Paper Book and the same is correctly extracted by Asses....
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....mercial sense and it is only where the advantage is in the capital field that the expenditure would be disallowable on an application of this test. If the advantage consists merely in facilitating the assessee's trading operations or enabling the management and conduct of the assessee's business to be carried on more effectively or more profitably while leaving the fixed capital untouched, the expenditure would be on revenue account, even though the advantage may endure for an indefinite future. In the instant case, the advantage which was secured by the assessee by making the expenditure in question was the securing of absolution or immunity from liability to pay municipal rates and taxes under normal conditions for a period of 15 years. If the liability had to be paid, the payments would have been on revenue account and, hence, the advantage secured was in the field of revenue and not capital. And as a result of the expenditure incurred, there was no addition to the capital assets of the assessee and no change in its capital structure. 18. With utmost regard to the decision of Hon'ble Supreme Court, in our humble view, the ratio of the decisions are not helpful to the ....
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....f assessee was not accepted by Assessing Officer by taking view that the assessee has made considerable transaction in mutual fund and transacted in preference share in its wholly owned subsidiary company. The transaction required manpower and other operational expenditure. The Assessing Officer invoked the provision of Rule 8D and made the disallowance of direct expenditure under Rule 8D(2)(i) of Rs. 1739/- (same as disallowed by assessee). No disallowance on account of interest expenses under Rule 8D(2)(ii). However, the Assessing Officer made disallowance under Rule 8D(2)(iii) @ .5% of average value of investment and worked out the disallowance of Rs. 11,10,993/-. On appeal before the ld. CIT(A), directed not to consider the investment made in Lift and Shift India Pvt. Ltd., being made in group companies. And rest of the disallowance under Rule 8D(2)(iii) was affirmed. However, the Assessing Officer wrongly deducted Rs. 1739/- from disallowance of Rule 8D(2)(iii) which was directed to be rectified. Before us, the ld. AR of the assessee vehemently argued that only those investment which yielded the exempt income should be considered for considering the average value of investment....
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....de any investigation about the genuineness of payment and services rendered by the Civil Engineer. The Assessing Officer simply disallowed the charges paid to Civil Engineer by taking view that project is yet to start. Similarly, the ld. CIT(A) the action of Assessing Officer holding that assessee failed to establish the nexus between the expenses and corresponding income without disputing the fact that services of Civil Engineer are integral part of civil construction activities. Considering the fact that professional charges paid to Civil Engineer are disallowed without bringing any adverse evidence on record and business of assessee is not in dispute, we direct the Assessing officer to delete the addition. In the result, this ground of appeal is allowed. 26. In the result, appeal of the assessee is partly allowed. ITA No. 5854/Mum/2015 for A.Y. 2011-12 by revenue 27. Ground No.1 relates to one time membership fees. We have noted that this ground of appeal is identical to the ground no.1 in appeal for A.Y. 2010-11 by revenue, wherein we have directed the Assessing Officer to the decision in assessee's own case for A.Y. 2006-07 to 2008-09 in ITA No. 2146 & 2148/Mum/2009 a....