TaxTMI 
TaxTMI 
2020 (12) TMI 520
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....dated 24/10/2018 of the Income- Tax Appellate Tribunal (in short 'the Tribunal') in ITA No. 2244, 2245 & 5126 to 5141/del/2014 for assessment year 1992-93 to 2010-11. The learned DR also could not controvert this fact but relied on the order of the lower authorities. 3. We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. In the instant case the assessee was engaged in the business of manufacturing and sale of "Katha" and "Cutch". The assessee has taken factory on lease from "Mehta Charitable Prajnalaya Trust" (in short 'MCPT'). This trust was also engaged in same business, however, surrendered its certain business rights in favour of the assessee. Payment for surrender of such business rights was not paid separately by the assessee and it was paid in the form of enhanced lease rentals per month. The assessee treated entire lease rental per month as revenue expenditure whereas the Revenue treated part of the enhanced lease rental as capital expenditure. In earlier years, this dispute went before the Hon'ble Delhi High Court. The Hon'ble court laid down test for treating part of the enhanced lease rental as revenue exp....
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....1 12,00,000 20,22,070 12,32,524 13,92,281 61,13,602 19,86,398 1995-96 81,00,000 26,99,251 12,00,000 22,44,497 13,82,514 16,74,538 66,18,286 14,81,714 1996-97 81,00,000 26,99,251 12,00,000 24,01,332 13,82,514 18,33,619 70,24,262 10,75,756 1997-98 81,00,000 26,99,251 12,00,000 27,65,445 13,82,514 20,07,813 74,72,509 6,22,491 1998-99 81,00,000 26,99,251 12,00,000 30,09,644 13,82,514 21,98,555 79,67,450 1,32,550 1999-00 94,50,000 26,99,251 12,00,000 34,07,305 13,82,514 24,07,418 85,13,974 9,36,026 2000-01 99,22,500 26,99,251 12,00,000 37,82,108 13,82,514 26,36,123 91,17,482 8,05,018 2001-02 1,04,18,628 26,99,251 12,00,000 41,98,140 13,82,514 28,86,554 97,83,945 6,34,683 2002-03 1,09,39,560 26,99,251 12,00,000 46,59,936 13,82,514 31,60,777 1,05,19,964 4,19,506 2003-04 1,14,86,544 26,99,251 12,00,000 51,72,529 13,82,514 34,61,051 1,13,32,831 1,53,713 2004-05 1,14,86,544 26,99,251 12,00,000 57,41,507 13,82,514 3....
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....00,000 17,99.501 2,06,514 9,21,676 29,27,691 39,72,305 1996-97 69,00,000 17.99,501 2,76,840 9,21,676 29,96,017 39,01,983 I 997-98 69,00,000 17,99,501 3,50,682 9,21,676 30,71,859 38,28,141 1998-99 69,00,009 17,99,501 4,28,216 9,21,676 31,49,393 37,50,607 1999-00 82,50,000 17,99,501 5,09,627 9,21,676 32.30,804 50,19,196 2000-01 87,22,500 17,99.501 5,95,108 9,21,676 33,16.285 54,06,215 2001 -02 92,18,628 17,99,501 6,84,864 9,21,676 34,06,041 58,17,587 9002-03 97,39,560 17,99,501 7,79,107 9,21,676 35,00,284 62,39,276 2003-04 1,02,06,544 57,99.501 8,78,062 9,21,676 35,99,239 66,87,305 2004-05 1,02,86,544 17,99,501 9,81,965 9,21,676 37,03,142 65,83,402 2005-06 1,02,86,544 17,99,501 10,91,064 9,21,676 38,12,241 64,74,303 2006-07 1,02,86,544 17,99,501 12,05,617 9.21,676 39,26,794 63,59,750 2007-08 1,02,85,544 17.99.501 13,25,898 9.21,676 40,47,075 62,39,469 2008-09 1,02.86.544 17.99,501 14,52,193 9,21,676 41,7....
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...., to whom assessee has paid sum Rs. 30 lac per annum by way of lease rental to the said government undertaking which is much smaller in size and if same is compared then it is at arm's length transaction. Following comparability analysis of the area of land and sale of annual product was given: MCPT HPMC (1) Investment in Fixed Assets 56,18,414 6,49,177 (2) Area of land 21800 sq. mt. 2000 sq. mt. (3) Sale of Annual Product in F.Y. 1993-94 14.82 crore 2.98 crore 14. Based on this comparability analysis, it was contended that lease rent cannot be held to be excessive. The assessee had requested to allow normal escalation in the fixed lease rent @11% per annum of the last year, whereas the learned Assessing Officer has held that it would be reasonable to adopt lease rental @5% per year. 15. Before us, the learned counsel submitted that the normal appreciation in rent in the case of commercial property is more than 10%, whereas the learned DR submitted that assessee could not produce any evidence from any competent local authority which can supply input, and therefore, such an escalation of 10% or 11% is no....
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....icted it to 12% on the ground that 12% of interest on investment is the proper benchmark. 18. Before us, the ld. counsel for the assessee had given SBI BPLR to point out that 1992-93 when lending rate was 12% and in Assessment Year 2010-11 it was 13%. He pointed out that if the wholesale price index is taken into consideration then annual variation of 18% is very reasonable. 19. The learned Department Representative on the other hand submitted that PLR takes into account inflation and devaluation of rupees taken on account and WPI cannot be made applicable here in this case. Thus, rent attributed by the Assessing Officer @12% is reasonable. 20. After considering the rival submissions and on perusal of the material facts on record, we find that the Hon'ble High Court has directed that enhancement of lease rent which is attributable to improvement and modernization of plant and machinery, building, etc. by the Trust has to be worked out. The basis given by the Assessing Officer that 12% on interest on investment should be given into account. If one goes by SBI Prime Lending Rate right from the Assessment Years 1992-93 to 2010-11, it is seen that it rang....