R. Systems International Ltd Vs ACIT (ITAT Delhi)
The issue under consideration is whether A.O. is correct in disallowing claim of stamp duty and registration charges by considering it as capital expenditure?
The assessee stated that the amount was incurred towards stamp duty and registration charges for execution of lease deed. Assessee is of the opinion that these expenses should be allowed u/s 37(1).
The impugned expenditure did not involve any element of premium in the amount claimed as expenditure. It was incurred only to draw up and get registered an effective and proper lease deed and would have remained the same irrespective of the period of lease as long as it was more than one year. Further, the period of lease itself could not be decisive of the question whether the asset was of enduring nature. On these facts, the impugned expenditure was revenue in nature.
Hence, ITAT state that the legal expenses have to be allowed u/s 37(1) of the Act. Accordingly, appeal is allowed.
FULL TEXT OF THE ITAT JUDGEMENT
This appeal by the assessee is preferred against the order of the Commissioner of Income Tax [Appeals] – 44, New Delhi dated 05.08.2016 pertaining to assessment year 2011-12.
2. The grievance of the assessee is two-fold – firstly, not assessing the bank interest on short term export surplus deposits as ‘Business income’, and secondly, the assessee is aggrieved by the disallowance of legal and professional fee of Rs. 1,93,250 and foreign taxes of Rs 51,384/-.
3. Briefly stated, the facts of the case are that the assessee company is engaged into the business of software development and IT enables services, primarily export sales.
4. During the year under consideration, the assessee has declared total interest of Rs. 5,20,16,070/- as under:
