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2021 (1) TMI 15 - AT - Income TaxNature of expenditure - expenses towards fees to HUDA - revenue or capital expenditure - HELD THAT:- It’s not the case of the Revenue that the one-time payment made to HUDA would in any way increase the value of the land, but on the other hand it is only for the purpose of improvements effected on the land. CIT(A) also found that the fee paid to HUDA is to secure permission to lease a part of the area for a food court, a pharmacy and parking area, which clearly indicates that the government’s permission is required as the hospital is on a leasehold land and the assessee does not have the right to alienate, which is the ultimate test for ownership. CIT(A) further found that this expenditure is directly related to the day-to-day running of the business of the assessee in connection with the running of the hospital because the patients and doctors as well as the paramedical and administrative staff from the vertex around which the activities/business of the hospital operates. In Arvind Mills Ltd [1992 (7) TMI 2 - SUPREME COURT] as rightly culled out by the Ld. CIT(A), in deciding whether an expenditure is a capital are Revenue expenditure, the question of voluntary and/or involuntary payment becomes immaterial and it is only the nature of expenditure that determines the issue, and in such case the owner got the advantage of betterment of land in question and there was no manner of doubt that the valuation of the land had increased because of the improvements effected on the land, but such payments had no direct nexus with the day-to-day running of the business. Insofar as the case on hand are concerned, there is no dispute as to the facts recorded by the Ld. CIT(A) that it is only to lease out a part of the area in which the hospital is run, for running a food court, a pharmacy and parking area the fees paid and such payment is directly related to the day-to-day running of the business of hospital by the assessee. Inasmuch as the assessee is not the owner of the land, the question of assessee getting the benefit of enhancement of value of the property does not arise - We, therefore, uphold the findings of the Ld. CIT(A) and dismiss the grounds of appeal of the Revenue.
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