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2020 (12) TMI 520 - AT - Income TaxDisallowance of lease rent - nature of expenditure - assessee was engaged in the business of manufacturing and sale of “Katha” and “Cutch” as taken factory on lease from “Mehta Charitable Prajnalaya Trust” - assessee treated entire lease rental per month as revenue expenditure whereas the Revenue treated part of the enhanced lease rental as capital expenditure - HELD THAT:- As decided in own case [2005 (6) TMI 549 - ITAT DELHI] direct the Assessing Officer to treat part of the lease rent fee for surrendering the right to purchase @15% of average purchases of khair wood. Both the parties have been unable to give annual rate prevailing in the market, however, on the facts and circumstances of the case and looking to the fact that assessee is paying percentage - wise more rent to the government undertaking on a similar lease of commercial property, therefore, we hold that 10% of annual escalation would be reasonable from Assessment Year 1992-93 onwards. The dispute in the year under consideration of whether the sum of ₹ 55,41, 611/-out of total lease expenditure of ₹ 1,14,86,544/- is capital expenditure or not is squarely covered by the above decision of the Tribunal. Thus, respectfully following the same, we direct the learned Assessing Officer to work out the net disallowable expenditure in view of the direction of the Tribunal (supra) in assessment year 1992-93 to 2010-11.
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