TMI Blog2019 (6) TMI 587X X X X Extracts X X X X X X X X Extracts X X X X ..... been claiming the sum proportionately over the period of lease. This has been allowed in earlier two years. In absence of any change in facts and circumstances in our considered opinion there was no reason for the AO to take a different stand. - Decided against revenue. - ITA No.713/Mum/2018 - - - Dated:- 9-5-2019 - Shri Shamim Yahya, Accountant Member And Shri Amarjit Singh, Judicial Member For the Assessee : Shri Niraj Shah For the Revenue : Shri R.Manjunatha Swamy ORDER PER SHAMIM YAHYA (ACCOUNTANT MEMBER) This appeal by Revenue is directed against order of the Ld. CIT(A)-1, Mumbai, dated 20/11/2017 and pertains to Assessment Year 2014-15. The ground of appeal raised by the Revenue is as under:- 2. The grounds of appeal read as under:- 1. On the facts and in the circumstances of the case and in law, the Ld. CIT (A) has erred in deleting disallowance u/s 14A of the Act without appreciating the fact that as per CBDT Circular No.5 of 2014,it was directed that disallowance u/s.14A should be made even if the assessee did not earn any exempt income during ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we find that the ground is misplaced it is as much as learned CIT(A) has granted the relief to the assessee excluding the amount offered by the assessee itself. 9. Apropos ground no.3. Brief, facts on this issue are as under:- During the year the assessee has paid premium of ₹ 2,50,00,000/-on lease rent. Out of which assessee claimed ₹ 50 lakhs to Brandon Company Pvt. Ltd. (BCPL) as premium on leave and license, represent amortized amount paid to the previous tenant. The said consideration was paid to BCPL as compensation for procuring the surrender of tenancy rights for assessee to take possession of the premises for its commercial use. The assessee was asked by the AO to justify the claim. In response, the assessee furnished its reply. The submission made by the assessee was considered but not found to be acceptable by the AO due to the following reason:- 1. The tenancy right is a capital asset as per Income Tax Act. 2. The assessee has not produced any registered document/supporting evidences as per Maharashtra Rent control Act, 1991 which can substantiate claim of purcha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubmitted during the last hearing, whether the payment is a capital expenditure or revenue expenditure, is to be examined from the payer's perspective and based on the factors related to the transaction. The tax treatment in the hands of the recipient cannot be a determinative factor for evaluating deductibility of such payment in the hands of the payer. 5. It is a settled law that the tax treatment provided for a particular item in the hands of one party to the transaction cannot be considered as a conclusive factor to determine taxability/ deductibility in the hands ,of the other party to the transaction. In this regard, the Appellant places strong reliance on the decision of Honourable Supreme Court in case of Empire Jute Co. Ltd. v/s. C/T [(1980) 124 ITR 1] wherein the Honourable Supreme Court has held as under (relevant extract reproduced): In the first place, it/s not a universally true proposition that what may be a capital receipt in the hands of the payee must necessarily he capital expenditure in relation to the payer. The fact that a certain payment constitutes income or capital receipt in the hands of the recipient is not material i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assessee and material available on record. It is the submission of the appellant that it had paid compensation amounting to INR 25,000,000 to Brandon Company Private Limited ('Brandon') for vacating the premises occupied by them and availing the said premises on leave and license basis for a period of 60 months on the same terms at which the said premises was given by Ewart Investments Ltd ('Ewart) to Brandon. The Appellant claimed one fifth of the said amount as revenue expenditure during the captioned assessment year, which the AO disallowed treating it as capital expenditure. Though the Brandon has offered the said compensation of INR 25,000,000 as income under the head 'Capital Gains' and have paid long term capital gains tax on the same in the assessment year 2012-13, but it is the contention of the Appellant that it has neither acquired any capital asset nor acquired any enduring right! benefit. In absence of bringing into existence any capital asset in the hands of the Appellant, the compensation paid out of business exigency, Which has not resulted into advantage of enduring nature, would allowable as a revenue expenditure . In t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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