TaxTMI 
TaxTMI 
2021 (8) TMI 128
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....of adjudicating Ground No.14 raised by the assessee in its appeal IT(IT)A No.698/Bang/2016. 2. Ground No.14 raised by the assessee and the decision of the Tribunal on the same reads as follows: "19. Another corporate tax issue that remains for consideration in Assessee's appeal is Gr.No. B 1 which reads as follows:- "B. Corporate tax 14. Disallowance of lease rentals claimed as revenue expenditure -- Rs. 14,965,386 a. The learned AO erred in law by disallowing lease rentals paid by the Appellant during Financial Year 2010-11. b. The learned AO erred in disallowing the lease rentals while passing the final order when the same was neither disallowed in the draft assessment order nor by the Hon'bl....
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....per the requirements of the Company. The lease rentals for such fit-outs shall be payable in equal monthly instalments for a period of five years after which the Company shall not be liable to pay any monthly rentals to ITPL on account of fit-out charges. The lease rentals paid to ITPL towards such fit-outs has not been debited to the profit and loss account. Accordingly. the Company has claimed the lease rental paid to ITPL amounting to Rs. 16,445,484 towards such fit-out charges as revenue expenditure in the computation of income. The copies of lease rental agreement are enclosed as Annexure 1." 21. The AO, however, came to the conclusion that the payment was capital in nature and therefore cannot be allowed as ....
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....rentals of Rs. 1,64,45,484/-. The approach of the AO in the final order of assessment is not accordance with law and in compliance with the directions of the DRP. As per directions of DRP, the AO should have allowed deduction on account of depreciation of Rs. 14,80,094. We hold and direct accordingly and allow ground 14 raised by the Assessee. Other grounds of appeal are either consequential or were not argued." 3. In this MP, it is the plea of the assessee that the assessee had raised Grounds of appeal, inter alia, against the action of the AO in disallowing the lease rentals expenditure of Rs. 1,49,65,386/- by treating the same as capital expenditure, the assessee had raised Grounds objecting to the disallowance, both on facts and on l....
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.... "1. Ground of objection - Consequential depreciation on leased rent. a) The learned Assessing Officer ("AO") has erred in not allowing consequential depreciation amounting to Rs. 14,80,094 on written down value of lease rentals capitalized during the AY 2010-11. b) The learned AO ought to have granted depreciation on written down value of lease rentals in accordance with the directions of Hon'ble DRP for the AY 2010-11. 5. On the above grounds, the assessee submitted that for previous year ended on March 31, 2010 relevant to AY 2010-11, the assessee had claimed deduction for lease rentals amounting to Rs. 1,64,45,484. The AO had disallowed the claim treating the same as capital expenditure. The DRP upheld the ....
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....at 10% for the A Y 201041_ However in A Y 2011-12 also assessee's claimed the expenditure of Rs. 1,64,45,480/- towards lease rentals. Considering the assessee's objections, DRP has directed the A.0 to grant deprecation at the rate of 10% relying on own order for the A Y 2010-11. Accordingly, depreciation of lease rental is worked out as under:- Particulars Amounts(Rs.) Lease rentals 1,64,45,484/- Less: Depreciation for the A Y 2010-11 16,44,548/- Written Down Value as on April 1,2011 1,48,00,936/- Less: Depreciation for the A Y 2011-12 14,80,094/- Written Down Value as on April 1,2012 1,33,20,842/- Accordingly, disallowance of lease rental worked out at Rs. 1,49,65,386/- (Rs. 1,64,45,480 ....