Case Law Details
A.R.A.P. Enterprises Pvt. Ltd. Vs ACIT (OSD) (ITAT Chennai)
ITAT Chennai held that permit charges paid to Government to operate buses in the state is revenue expenditure. Accordingly, Pondicherry permit charges paid to Government of Pondicherry to operate buses in the state of jurisdiction of Pondicherry is allowable revenue expenditure.
Facts- The assessee’s appeal is relating to disallowance of rates & taxes amounting to Rs.8,20,602/-. AO has disallowed payments made to Members Secretary, Pondicherry Planning Authority amounting to Rs.6,40,709/- and payment made to Mr.R.Viswanathan towards ROC fees amounting to Rs.13,100/- and payment of property taxes to Pondicherry Panchayat amounting to Rs.1,66,793/-, all totaling to Rs.8,20,602/-debited under the head ‘rates & taxes’ on the ground that they are in the nature of capital expenditure.
Further, the assessee’s appeal is ‘Pondicherry Permit Expense’ amounting to Rs.13,20,600/-. The assessee is engaged in the business of plying motor buses has taken transport permission for a particular state and as and when the vehicles entered into different state which has to pay road taxes for other state. The assessee claimed to have paid road taxes for Pondicherry state permit amounting to Rs.13,20,600/-. The AO disallowed said expenditure on the ground that it is capital in nature.
Conclusion- Held that amount paid to Member Secretary, Pondicherry Planning Authority, amounting to Rs.6,40,709/- is for taking permission to let out the premises to tenant for different purpose other than the purpose for which the planning permission has been taken from the local authority and said expenditure will definitely in the nature of Revenue in nature and therefore, we direct the AO to delete the additions made towards amount paid to Member Secretary. Pondicherry Planning Authority amounting to Rs.6,40,709/-.
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