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2019 (1) TMI 1141 - HC - Income TaxClaim of revenue expenditure - spreading over of the amounts, paid as license fees for the purpose of managing a berth in the Port - deferred liability for the twenty years, fully paid in that assessment year - Held that:- The spreading over of the amounts, paid as license fees for the purpose of managing a berth in the Port, was perfectly justified, especially looking at the fact that the liability incurred was for the purpose of retaining such rights over a period of 20 years. In the subject year, the assessee had a reasonable expectation of continuing the right obtained for a period of 20 years and hence the spreading over of the liability incurred in that year, to the 20 years in which the right would have been retained by the assessee was proper and is a revenue expenditure. Herein though there was an extinguishment of right there was no such extinguishment of a right created in a capital asset. In fact, the earlier year also when the assessee had acquired rights for 20 years and the liability for the entire years was met by the assessee in that particular year, we found the assessee entitled to claim the same as revenue expenditure. There was no acquisition of a capital asset or a right of a permanent character. There was found justification in the spreading over of the liability in the 20 years in which the right to operate in favour of the assessee was available. Having found that there was no acquisition of capital asset there would also be no transfer or extinguishment of such right created in a capital asset. We hence uphold the order of the Tribunal for the assessment year 2001-02 answering the question of law in favour of the assessee and against the Revenue.
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