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2014 (10) TMI 1016 - HC - Income TaxNature of expenditure - rent paid to the landlord and registration expenses of Chennai unit - revenue or capital expenditure - HELD THAT:- 5th unit at Chennai was set up in a rented premises. After taking the premises on rent for two months, they were involved in making interior infrastructure. It is only after two months, they were able to commence the unit. The rent paid subsequent to the period is allowed as revenue expenditure. Rent of two months prior to the commencement of the unit is disallowed, on the ground that it constitute the capital expenditure and ₹ 2,500/- is disallowed on the ground that the same being registration fees. If the assessee has taken the premises on rent, merely because the date on which the premises is taken on rent, is unable to carry on the business, would in law, make no difference and the rent paid would not become the capital expenditure if two months is taken to commence the business of the unit. The finding recorded by the three authorities that two months prior to the commencement of the unit constitutes the capital expenditure is unsustainable. Similarly, the payment of registration fees constitutes capital expenditure is unsustainable and therefore,the findings recorded by the three authorities are hereby set aside and the 1st substantial question of law is answered in favour of the assessee and against the revenue. Telecommunication expenses inclusion - excluded from the export turnover when such expenses were not part of negotiated price and hence did not originally form part of negotiated price and hence did not originally form part of export turnover? - HELD THAT:- As relying on M/s.Sasken Communication Techonologies Ltd. [2014 (9) TMI 1210 - KARNATAKA HIGH COURT] had remanded the matter to the Tribunal to record the findings on merits as well as on the alternative grounds. Following the said judgment, the findings recorded on the 2nd substantial question of law by the authorities, are hereby set aside and the matter is remitted back to the Tribunal for fresh consideration and in accordance with law Benefit of tax holiday under Section 10-A - interest income although the same formed part of business income of the appellant - HELD THAT:- As relying on M/S MOTOROLA INDIA ELECTRONICS PVT LTD [2014 (1) TMI 1235 - KARNATAKA HIGH COURT] the benefit of tax holiday under Section 10-A of the Act is available even in respect of interest on income. Accordingly, the 3rd substantial question of law is answered in favour of the assessee and against the revenue.
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