Case Law Details
Brace Iron & Steel Pvt. Ltd. Vs Addl. CIT (ITAT Delhi)
A.O. disallowed the payment of up-front fee of Rs.1,10,82,175/-on the ground that the assessee was required to pay the same as a lump sum one time non-refundable fee for processing of the loan prior to the execution of the Loan Agreement, therefore, it is a capital expenditure. We find the Ld. CIT(A) upheld the action of the A.O. on the ground that the assessee has neither carried-out any business operation nor utilised the machinery for any business purposes. According to him the claim itself is under question rather than the nature of the claim. He, therefore, held that the payment of up-front fee does not qualify as business expenditure. In the preceding paragraphs while adjudicating the ground of disallowance of depreciation, we have already held the transaction being genuine and not a sham or paper transaction in the light of the decision of the Hon’ble Jurisdictional Delhi High Court in the case of assessee’s dispute with Tata Steel BSL Ltd., who acquired M/s. BSL. Therefore, the up-front fee of Rs.1,10,82,175/- debited in the P & L A/c on account of term loan taken by the assessee during the relevant year for acquiring the fixed asset as “Plant” is an allowable business expenditure. Accordingly, the Order of the Ld. CIT(A) on this issue is set aside and the Ground of Appeal No.7 raised by the assessee is allowed.
FULL TEXT OF THE ORDER OF ITAT DELHI
This appeal filed by the Assessee is directed against the Order Dated 13.09.2019 of the Ld. CIT(A)-2, New Delhi, relating to A.Y. 2015-2016.
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