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| The Tax Publishers2019 TaxPub(DT) 5493 (Kol-Trib) INCOME TAX ACT, 1961
Section 37(1)
Lease premium paid did not constitute capital expenditure but it was a revenue expenditure because by incurring such expenditure assessee did not acquire any asset but only facilitated carrying on the business more profitably by paying token rent, accordingly, assessee's claim for amortization of lease premium over the effective period of lease was granted.
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Capital or revenue expenditure - Lease premium - Assessee claiming amortization over effective period of lease -
Assessee-company claimed proportionate write off of lease premium paid to lessors in respect of different lands taken on lease for the purpose of business. AO disallowed deduction holding the same to be capital expenditure.Held: Lease premium paid did not constitute capital expenditure but it was a revenue expenditure because by incurring such expenditure assessee did not acquire any asset but only facilitated carrying on the business more profitably by paying token rent. Accordingly, assessee's claim for amortization of lease premium over the effective period of lease was granted.
Followed:CIT v. Hindustan Aluminium Corporation Ltd. (1982) 30 CTR (Cal) 363 : (1983) 144 ITR 474 (Cal) : 1983 TaxPub(DT) 661 (Cal-HC).
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2009-10
INCOME TAX ACT, 1961
Section 80-IA
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