TMI Blog2004 (7) TMI 290X X X X Extracts X X X X X X X X Extracts X X X X ..... s found that the assessee-company had purchased a boiler and turbine for Rs. 8 crores from M/s ITC Classic Financial Company. In addition to lease rent, the company agreed to pay a fee @ 1 per cent of Rs. 8 crores as management fee. The AO observed that the amount of Rs. 8 crores paid was relatable to the entire lease period of 60 months and as such the deduction was to be spread over a period of 5 years. He accordingly allowed a deduction of Rs. 20,000 and disallowed the remaining amount of Rs. 7.80 lakhs. 3. Before the CIT(A), it was submitted that there was no justification for making the impugned disallowance as the expenditure was incurred in connection with the lease of the machinery and without the payment of this fee, it would no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tative also filed a copy of the agreement entered into by the assessee with the lessor and submitted that such payment was to be held to be revenue in nature and not capital, as held by various Courts. He placed reliance on the following decisions: (i) Plantation Corporation of Kerala Ltd. vs. Commr. of Agrl. IT (1994) 117 CTR (Ker) 174 (ii) CIT vs. Cinceita (P) Ltd. (1982) 28 CTR (Bom) 250 : (1982) 137 ITR 652 (Bom) (iii) CIT vs. Bombay Cycle Motor Agency Ltd. (1979) 12 CTR (Bom) 243 : (1979) 118 ITR 42 (Bom) (iv) CIT vs. Hoechest Pharmaceuticals Ltd. 1978 CTR (Bom) 523 : (1978) 113 ITR 877 (Bom) and (v) India Cement Ltd. vs. CIT (1966) 60 ITR 52 (SC) It was, therefore, argued by the learned Authorised Representative th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the rest front-end fee may be claimed in the year of termination of lease. We have also considered the case law relied upon by the assessee but these are not applicable to the facts of the case as in these case law one time registration fee is allowable as revenue expenditure and not on one time management fee as claimed in the present case. We are, therefore, of the opinion that the tax authorities have rightly spread over non-refundable fee over 60 months. We have also considered the submission of the assessee that such spread over of front-end fee should be Rs. 26,660 per month against Rs. 20,000 calculated by the tax authorities. We, therefore, based on our above observations and looking to the facts of the case, are of the opinion tha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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