TaxTMI 
TaxTMI 
2022 (8) TMI 682
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....ecific ground of the assessee that when refund is determined on 21.11.2019 but granted on 11.06.2020, the assessee is eligible for interest u/s 244A till 11.06.2020 and thereby allowing interest for lesser period of 7 months. 3. The appellant craves to alter, amend and modify and ground of appeal. 4. Necessary cost be awarded to the assessee. 2. The brief facts of the case are that the assessee is a Partnership Firm, engaged in the business of manufacturing and export of wooden handicrafts, durries, rugs, textile items, etc. The assessee filed its return of income on 04.02.2019 declaring total income of Rs. 31,43,91,380/- for the year under consideration. The return of income was processed by the CPC under section 143(1) of the Income Tax Act, 1961. The case of the assessee was selected for Scrutiny and notice under section 143(2) of the Act dated 22.09.2019 was issued for compliance on 07.10.2019. In response the assessee furnished its reply on 15.01.2020. Subsequently, in compliance to notice under section 142(1) of the Act 1961 dated 02.12.2020 along with questionnaire, the assessee furnished the details and reply vide its letters on 17.12.2020 and 19.01.2021 and the same w....
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.... buyers and the actual possession of the said godown and open land was also taken as specified in clause 3 & 8 of the sale agreement (PB 58-59). (ii) All the 4 buyers of this property are partners of the assessee. After entering into the agreement for purchase of the property,the same was given by them to the assessee from where it is carrying on its business of export since 1994. Thus, assessee is not the owner of property but is in possession of the property to carry its export business for which no rent is paid by the assessee to the buyers of property. (iii) As required by section 269UC of the Act, the buyers furnished the information about purchase of the said land to the appropriate authority along with the copy of agreement dt. 11.11.1993. The appropriate authority determined the value of said land at Rs.1,34,39,556/- and accordingly passed order dt. 30.03.1994 u/s 269UD(1) of the Act for acquisition and vesting the said land to the Central Government. (iv) Against the said order passed by the appropriate authority of Income tax department, a writ was filed in the High Court of Rajasthan on 13.04.1994 but the same was dismissed by Single Judge vide order dt. 14.09.1994....
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....um payment was made by the purchaser of the property to the sons of the seller to get release of their interest in the property. Thus, the payment was made to perfect a title or for getting rid of defect in the title or against the threat of litigation. As against this in the present case, the assessee has not purchased the property but it is in possession of property from where it is conducting its business activities without payment of rent. Therefore, in its business expediency, it incurred the legal expenditure so that the property does not vest to the Central Government. It is not a case of expenditure incurred for getting rid of defect in the tile or to perfect the title. The Ld. CIT(A) has also not relied on this decision in holding that expenditure is capital expenditure. 3.3. The Ld. CIT(A) has treated the expenditure as capital expenditure for the reason that the details of expenses have not been furnished, the nature of expenditure is different from the earlier years and the outcome of litigation & its present status is not known. This cannot be a reason to treat the expenditure as capital expenditure. The details of expenditure were duly furnished to the AO(PB 19-21) w....
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....e out from the material available on record and placed in the paper book filed by the ld. A/R. We note that the property under consideration was agreed to be purchased by the four partners of the assessee firm vide Agreement dated 11.11.1993 but the appropriate authority passed order under section 269UC of the Act for acquisition and vesting the said property to the Central Government. This property is in the possession of the assessee from where it is carrying out its export business without payment of any rent. Since the property was under acquisition proceedings, the assessee defended the case before the Hon'ble High Court of Rajasthan but the same was dismissed by Single Judge vide his order dated 14.09.1994. Further appeal to Divisional Bench and the review petition filed against the order of Divisional Bench were also dismissed vide orders dated 31.05.2007 and 24.07.2007 respectively. Against this order, appeal filed before the Hon'ble Supreme Court came to be dismissed vide order dated 29.07.2019, a copy of which is placed at paper book pages 63 to 71. In this connection the assessee incurred expenditure on payment of legal fees to Advocates/Consultants to protect its busine....
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....he proceeding and carrying it from Court to Court and incurring expenditure for that purpose again cannot be a ground for disallowing the claim." From these decisions it is clear that when litigation expenditure is incurred to protect the business, the same is revenue expenditure. In the present facts, since assessee has no interest in the ownership of the asset but he is in possession of the asset for conducting its business, the litigation expenditure incurred is only to protect his business and, therefore, the same is revenue expenditure. Accordingly, the litigation expenditure incurred by the assessee is revenue expenditure and not capital expenditure. Hence we allow the expenditure incurred as revenue expenditure. Ground No. 2 relates to directing the AO to calculate interest on refund as per section 244A of the Act without adjudicating assessee's specific ground and lesser payment of interest for 7 months. 6. We have heard the rival contentions and gone through the material available on record. The assessee filed its return of income claiming refund of Rs. 5,63,13,820/-. The ld. A/R of the assessee submitted that the assessee received an intimation under section 143(1) of ....