Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2022 (5) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (5) TMI 934 - ITAT PANAJINature of expenditure - Expenditure on prepayment for leased line - whether one-time prepayment for leased line of enduring benefit for a term of three years, can be treated as revenue in nature or deferred revenue or qualifies for depreciation u/s. 32 being a capital in nature? - HELD THAT:- As held by the Hon'ble Supreme Court, in the case of "Kedarnath Jute Manufacturing Co. Ltd. Vs CIT [1971 (8) TMI 10 - SUPREME COURT] the allowability of a particular deduction depends on the provisions of law relating thereto and not on the basis of entries made in the books of account, which are not decisive or conclusive in this regard. Expenditure in the nature of subscription of lease line on onetime payment for three year is of revenue in nature and allowable fully in the year in which it was incurred. Concededly, there is no advantage which has accrued to the assessee in the capital field, au contraire, the expenditure was incurred to facilitate the assessee's operations and no fixed tangible asset vis-à-vis intangible assets is created by this expenditure. We may also add here that in the Income Tax laws, there is no concept of deferred revenue expenditure, therefore once the assessee claims the deduction for whole amount of such expenditure, even in the year in which it is incurred, and expenditure if fulfils the test laid down u/s. 37 of the Act, it has to be allowed. The only in exceptional cases, the nature mentioned in Madras Industrial Corporation [1997 (4) TMI 5 - SUPREME COURT] the expenditure can be allowed to be spread over, that too, when the assessee chooses to do so. Ergo, we hold that both the tax authorities below erred in disallowing the revenue expenditure incurred by the appellant, and is hereby overturned the same for the aforestated reasons. - Decided in favour of assessee.
|