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2014 (4) TMI 117 - HC - Income TaxRejection of revision petition u/s 264 of the Act – Claim of expenses disallowed by the AO – Held that:- The owners of the property are the partners in their individual capacity and as such the enduring benefit of conversion from residential to commercial enures to the owners – the advantage and benefit that the property has acquired by payment of conversion charges will continue to enure to the individual partners irrespective of the assessee discontinuing to do the business of guest house from the said property - Since the advantage of enduring nature is attached to the property, the benefit of the same will enure to the owners of the property - The expenditure for acquiring the advantage is an expenditure incurred purely for the individual partners - There is no justification and reason, why the assessee firm made the payment and on what terms/ basis payment was made - The expenditure cannot be treated as running business expenditure and cannot be claimed as a deduction u/s 37 of the Act by the assessee. Individual owners and the partnership firm are two distinct tax entities for the purpose of the Act and are liable to pay income tax on their income after reducing revenue expenditure - the nature of expenditure is clearly capital and incurred on account of the individual partners and is neither a capital nor revenue expenditure of the partnership firm respondent assessee – thus, there is no infirmity in the order rejecting the application of the assessee u/s 264 of the Act – Decided against Assessee.
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