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| The Tax Publishers2020 TaxPub(DT) 0120 (Del-Trib) INCOME TAX ACT, 1961,
Section 37(1)
Though payment made on account of Annual lease rent was on revenue account and could not be considered as capital expenditure relating to land, therefore, the assessee rightly claimed lease hold rent expenses as revenue expenditure.
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Capital or revenue expenditure - Leasehold rent - Nature of expense -
Assessee claimed leasehold rent as revenue expenditure. AO disallowed the same on the ground that it was a capital expenditure relating to land, which was confirmed by CIT(A). Held: Payment made on account of Annual lease rent was on revenue account and could not be considered as capital expenditure relating to land. The expenses had been looked upon as having been made for purpose of conducting the business of the assessee. The one-time payment of the annual rent as per the lease deed was rightly claimed by the assessee as revenue expenditure. The AO was not right in holding that the payment during the year relates to land which was capital in nature. Thus, the order of the CIT(A) was set aside.
REFERRED : Rajesh Projects India Pvt. Ltd. v. CIT (2017) 392 ITR 483 (Del) : 2017 TaxPub(DT) 0693 (Del-HC); New Okhla Industrial Development Authority v. CIT (2018) 406 ITR 209 (SC) : 2018 TaxPub(DT) 4124 (SC); Commissioner of Income-tax v. Madras Auto Service (P.) Ltd. (1998) 233 ITR 468 (SC) : 1998 TaxPub(DT) 1407 (SC)
FAVOUR : In assessee's favour
A.Y. : 2012-13
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