Case Law Details
ACIT Vs Balmer Lawrie & Co. Ltd. (ITAT Kolkata)
The issue under consideration is whether the Lease payment in advance for the period varied from 15 to 99 years considered as Capital Expenditure or Revenue Expenditure?
In the present case, the assessee has been claiming amortization of lease premium payments since earlier years and till AY 2002-03 no dispute arose between the parties. In the assessment for the AY 2003-04 the AO however disallowed the assessee’s amortization claim holding it to be capital in nature.
ITAT states that, the lease premium paid did not constitute Capital expenditure but it was a revenue expenditure because by incurring such expenditure the assessees did not acquire any asset but only facilitated carrying on the business more profitably by paying token rent. Once the any recurring payment towards lease rent is reckoned or classified as revenue expenditure, then even the lump-sum payment or one-time payment for the same purpose has to be given the similar treatment as it partakes the same character. There could not be two different classification of same nature of expenditure. That apart, such onetime payment cannot be classified as creating any capital asset or any kind of profit making apparatus or giving any enduring advantage of a benefit of a trade. Therefore, ITAT find that on the analogous facts where the assessee had paid upfront lease premium for obtaining 30 years lease, the Tribunal held the payment to be revenue in nature and negated the Revenue’s contention that the expenditure was capital in nature and hence not permissible in computing business income.
FULL TEXT OF THE ITAT JUDGEMENT
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