Law:

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Section 37(1) of the Income-tax Act, 1961 - Business Expenditure - Allowability of RENT Where assessee had taken certain equipments on lease for which a sum was paid as deposit, which was to be adjusted against lease rental and it was also paying rentals payable to owner of equipments, as assessee was not owner of equipment it was entitled to deduction of lease rent [Assessment year 1992-93] [In favour of assessee] Banashankari Medical & Oncology Research Centre Ltd. v. Jt. CIT [2009] 316 ITR 407 (Kar.) The assessee had taken certain equipments on lease for which a sum was paid as deposit, which was to be adjusted against lease rental and it was also paying rentals payable to the owner of the equipments. The Assessing Officer, considering that the amount paid as deposit and the rentals paid by the assessee, were in the nature of acquiring the capital, did not allow the deduction under the head 'Revenue expenditure'. Held that the equipments were not owned by the assessee. These were hired by the assessee. When the assessee was only a lessee and had paid lease charges, such expenses could not be treated as capital in nature. It was no doubt true that the assessee had paid the deposit of Rs. 10 lakhs which had to be adjusted towards the rentals. Therefore, the assessee was entitled to the deduction of the rental paid. S. Parthasarathi for the Appellant. M. V. Seshachala for the Respondent. JUDGMENT K.L. Manjunath, J.- This appeal is by the assessee challenging the divergent findings of the Commissioner (Appeals) and the Income-tax Appellate Tribunal, Bangalore Bench in I.T.A. No. 458/Bang/ 2000 dated October 29, 2001, raising the following substantial question of law: "Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the payment to the Bangalore Cancer Research Foundation of Rs. 3 lakhs in the year of account was for purchase of the equipment and not for the user of the same?" 2. The facts of this case are as hereunder: 3. The appellant-assessee has taken certain equipments on lease for which a sum of Rs. 10,00,000 is paid as deposit and it is also paying rentals pay able to the owner of the equipments. The…

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