Law:

Section:

Section 37(1) of the Income-tax Act, 1961-Capital or revenue expenditure-Assessee-company took certain property on lease for 20 years-Whether expenditure incurred by way of registration fee, stamp duty and solicitors' fees to draw up lease deed was revenue expenditure-Held, on facts, yes Facts The assessee-company in May 1967, executed a lease deed to hire a certain property for 20 years at a monthly rent of Rs. 3,500. During the assessment year 1968-69, it incurred an expenditure of Rs. 10,700 by way of registration fee, stamp duty and solicitors' fees in connection with the drawing up of the lease deed. It claimed deduction of this amount as revenue expenditure but the ITO disallowed the claim, holding that it was a capital expenditure. The AAC and the Tribunal confirmed the ITO's order in successive appeals. On reference : Held The impugned expenditure did not involve any element of premium on the leasehold. 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 by itself could not be decisive of the question whether the asset or advantage secured was of an enduring nature. On the facts of the instant case, the impugned expenditure was a revenue nature. Case review CIT v. Hoechst Pharmaceuticals Ltd. [1978] 113 ITR 877 (Bom.) and CIT v. Bombay Cycle & Motor Agency Ltd. [1979]118 ITR 42 (Bom.) followed. Cases referred to CIT v. Bombay Cycle & Motor Agency Ltd. [1979] 118 ITR 42 (Bom.) and CIT v. Hoechst Pharmaceuticals Ltd. [1978] 113 ITR 877(Bom.). JUDGMENT Kania J.-This is a reference under section 256(1) of the Income-tax Act, 1961 (referred to hereinafter as "the said Act"). The relevant assessment year is 1968-69 for which the corresponding previous year was the year ending 30th June, 1967. The assessee took on lease the entire third floor of a building known as "Apte property Trust Building" at a monthly rent of Rs. 3,500. The agreement to lease was executed on 23rd June, 1964, whereas the deed of lease was executed on 2nd May, 1967. The lease was for an initial period of 20 years…

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492