Case Law Details
ACIT Vs Britannia Industries (ITAT Kolkata)
ITAT Kolkata held that upfront lease premium on lease-hold land is nothing but advance payment of rent and the same is not a capital expenditure and as such the deduction should be allowed u/s 37(1) of the Income Tax Act.
Facts- The assessee is a public limited company and is engaged in the business of manufacturing and trading bakery and dairy products. AO noticed that the assessee has entered into certain international and specific domestic transactions. Accordingly, the case was referred to TPO.
AO made upward adjustment towards corporate guarantee fee at Rs. 4,34,42,803/- and royalty income at Rs.3,09,32,411/-. AO also denied the claim of capital receipt of VAT subsidy at Rs.23,88,62,511/- observing that the assessee had himself stated it to be a revenue receipt and thereafter has claimed the same as a capital receipt during the course of assessment proceedings, however, the same is to be treated as the revenue receipts as there is a direct nexus of the VAT subsidy with the revenue generated and, thus made the addition thereto. AO also made disallowance u/s 14A of the Act applying Rule 8D of the Income Tax Rules, 1962. AO further noticed that during the year assessee has shown short term capital gain of Rs. 9,21,75,000/- and while examining the capital gain it was observed that the assessee has paid taxes treating it to be long term capital asset and paid concessional tax rate as provided u/s 112 of the Act. Income assessed at Rs.519,61,39,830/-.
CIT(A) granted partial relief. Being aggrieved, revenue has preferred the present appeal.
Please become a Premium member. If you are already a Premium member, login here to access the full content.
Author Bio
