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2015 (9) TMI 894 - AT - Income TaxExpenditure incurred on improvement/additions to leasehold property - treated as capital or revenue expenditure - Held that:- In the present case the assessee has incurred expenditure on construction of sheds etc. on leasehold land for advancement of its business. The lease period in the present case is 3 years which is further extendable for the period of 3 years. Thus, the total period of lease is 6 years only. The assessee has not received any advantage of enduring nature, no new asset has come into existence for the assessee. The Hon'ble Gujarat High Court in the case of DCIT Vs. Sun Pharmaceuticals Ind. Ltd.(2009 (3) TMI 587 - Gujarat High Court) while dealing with similar controversy held that lease rental paid on 99 years lease is allowable as Revenue expenditure. In the said case, the assessee had made payment of lease charges to GIDC and claimed the same as revenue expenditure. The Assessing Officer disallowed the same on the ground that the assessee had acquired a benefit of enduring nature in the form of use of land for a period of 99 years, the land has been transferred through a registered deed involving transfer of immovable property, thus, the assessee has acquired fixed asset. CIT(Appeals) upheld the order of Assessing Officer. The Tribunal reversed the findings of the CIT(Appeals). In appeal by the Department, the Hon'ble High Court upheld that the findings of the Tribunal, that the land in question was not acquired by the assessee. That merely because the deed was registered the transaction in question would not assume a different character. The lease rent was very nominal. By obtaining the land on lease the capital structure of the assessee did not undergo any change. The assessee only acquired a facility to carry on business profitably by paying nominal lease rent. Thus, from the analysis of the above judgment of the Hon'ble Gujarat High Court it can be safely concluded that the Special Bench decision in the case of JCIT Vs. Mukund Ltd. (2007 (2) TMI 358 - ITAT MUMBAI) cannot be applied in the facts of the present case. The expenditure incurred by the assessee on construction of storage structure etc. has to be allowed as revenue expenditure. - Decided in favour of assessee.
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