TaxTMI 
TaxTMI 
1991 (9) TMI 103
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....tenancy of certain shops. 4. S.L.N. Charities constructed certain shops. They called for tenders for the tenancy of the shops. In the tender notification given in the newspaper, it was stated: "TWELVE Shops measuring 10'.9" x 20'.9" Plinth area 223 sq. ft. are under construction in the S.L.N. Charities premises facing Vanivilas Institute Road, Bangalore and they are expected to be ready for occupation by the end of June, 1978. The management have proposed to lease these shops on rental basis. Tenders are invited from the interest parties in the prescribed fror to be obtained from Charities office on any working day between 9 a.m. and 1 p.m. The Charities will be at liberty to reject any or every offer by way of tender without assigning any reason. The accepted tenders will be liable for execution of necessary rental deeds with the Charities as per existing rules of the management. The sealed tenders may be addressed to Secretary, S.L.N. Charities, Fort, Bangalore 560 002 on or before 20th May, 1978." In the tender form, the applicant was required to mention as to how much rent he was willing to offer and also as to how much amount he was willing to pay by way of cont....
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.... "A premium paid by the lessee for the grant of renewal of a lease is normally capital expenditure, whether it is payable in a lump sum or in instalments over the whole period of the lease along with rent." The Madras High Court considered this issue in the case of Ramakrishna & Co. vs. CIT (1973) 88 ITR 406 (Mad). In that case, one cinema theatre building had been taken on lease by one K. Viswanathan. The unexpressed portion of the lease deed was 10 years and 8 months. The assessee obtained on lease from K. Viswanathan his right, title and interest in the cinema building and had to pay Rs. 1 lakh by way of consideration in addition to payment of monthly rents payable by K. Viswanathan. The assessee claimed deduction for a sum of Rs. 9,375 being the proportion of the total consideration of Rs. 1 lakh, for the year under consideration in addition to the monthly rents as a deduction under s. 10(2)(xv) of the Indian IT Act 1922, in computing its total income. The High Court held that the amount having been paid by the assessee for the acquisition of a capital asset constituted capital expenditure and the Department was justified in denying deduction for it. 6. Attention is als....
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....ents of premium paid by it. It was held by the Bombay High Court that the payment represented capital expenditure and was not deductible. 9. The above mentioned cases establish that the expenditure on the payment of premium is capital expenditure and a deduction for it cannot be allowed. The payment under consideration, though called by the name contribution, is in fact, only premium for the acquisition of tenancy and the Department was justified in holding that the expenditure on the payment of premium being capital expenditure cannot be allowed as a deduction. 10. The learned authorised representative of the assessee had relied on the decision of the Bombay High Court in the case of CIT vs. Cinceita (P) Ltd. (1982) 28 CTR (Bom) 250 : (1982) 137 ITR 652 (Bom). In the case, the assessee took on lease for an initial period of 20 years a building on a monthly rent of rs. 3,500 with an option for renewal of the lease at a higher rent, to be used as the business premises of the assessee. For the relevant assessment year, the assessee claimed as deduction an expenditure of Rs. 10,700 towards registration fees, stamp duty and solicitors' fee in connection with the drawing up of the....
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....f Empire Jute Co. Ltd. vs. CIT (1980) 17 CTR (SC) 113 : (1980) 124 ITR 1 (SC). The Supreme Court had held that: "the allotment of loom hours, under the working time agreement to different mills constituted not a right conferred but merely a contractual restriction on the right of every mill to work its loom to their full capacity, and purchase of loom hours by a mill had, therefore, the effect of relaxing the restriction on the operation of loom to the extent of the number of working hours per week transferred to it, so that the transferee-mill could work its looms for longer hours than permitted under the working time agreement and increase its profitability. The expenditure incurred by the appellant for the purpose of removing a restriction on the number of working hours for which it could operate its looms with a view to increasing its profits was revenue in nature and allowable as a deduction under s. 10(2)(xv). By the purchase of looms hours no new assets was created and there was no addition to or expansion of the profit-making apparatus of the appellant. The acquisition of additional looms hours did not add to the fixed capital of the appellant; the permanent structure of....
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....exceeding six years from the date the interest vests in the assessee." The submission of the assessee was that the interest of the assessee under the tenancy could not be regarded as an "asset", as the said interest could not be regarded as an interest available to the assessee for a period exceeding six years from the date the interest vested in the assessee. The Supreme Court accepted the contention of the assessee. Relying on this decision of the Supreme Court, it has been sought to be argued on behalf of the assessee in the present case that the tenancy being only for a period of 11 months, it could not be said to constitute an asset and the expenditure in question could not, hence, be regarded as being capital expenditure. 16. The above mentioned case decided by the Supreme Court, on which the assessee has relied, does not establish that the tenancy for a period less than six years would not normally constitute an asset. Under the provisions of the WT Act, the definition of the term "asset" specifically excluded interest in property which was for a period less than six years. But for this specific exclusion, it is understood that the interest in property, though to last for....