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2021 (8) TMI 604 - AT - Income TaxNature of expenditure - Construction cost incurred on building constructed on leasehold land - revenue or capital expenditure - CIT-A opined that the AO has erred in treating expenditure incurred for construction of building on leasehold land as capital in nature and accordingly, deleted additions - HELD THAT:- In this case, CIT(A), after considering the fact that case of the assessee is squarely covered by the decision of the Hon'ble Supreme Court in the case of M/s. Madras Auto Service (P) Ltd. [1998 (8) TMI 1 - SUPREME COURT] has held that when the assessee constructs building on leasehold land without ownership, then cost incurred for construction of building is revenue expenditure which deductible. The said findings of the learned CIT(A) is supported by the decision of the Hon'ble Supreme Court in the case of M/s. Madras Auto Service (P) Ltd. (supra) and the decision of Hon'ble High Court of Madras in the case of TVS Lean Logistics Ltd. [2007 (6) TMI 44 - HIGH COURT, MADRAS] CIT(A) has also recorded categorical finding of fact that the assessee has derived clear advantage of saving in rent by incurring expenditure on construction of building in lieu of rent. Further, there is clear commercial advantage in terms of saving in rent payments as narrated by the ld. CIT(A) in her order. Therefore, we are of the considered view that there is no error in the findings recorded by the learned CIT(A) in deleting additions made by the Assessing Officer towards disallowance of cost of construction on leasehold land. We are of the considered view that there is no error in the findings recorded by the learned CIT(A) to delete additions made by the Assessing Officer towards cost of construction incurred on leasehold land, hence, we are inclined to uphold order of the learned CIT(A) and reject grounds taken by the Revenue.
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