TMI Blog2015 (8) TMI 1215X X X X Extracts X X X X X X X X Extracts X X X X ..... Profit and Loss Account has to be ignored as it is not real income. It is an amount which is completely notional and brought into the books only for complying with accounting standards and has no relevance to determine the amount of net income chargeable to tax. In that view of the matter, the respondent-assessee was completely justified in reducing the amount of ₹ 2.06 crores credited to the Profit and Loss Account as lease equalization fund for the purposes of determining the income chargeable to tax. - Decided against revenue. Expenditure incurred on stamp duty paid for acquisition of leasehold land for 30 years - ITAT allowed as revenue expenditure - Held that:- Tribunal by the impugned order to state that the period of lease for which the property has been taken, cannot be regarded as a decisive test to determine the nature of the expenditure. In any case, it is not disputed before us that the stamp duty amount has been paid on the lease deed for the purposes of carrying on assessee's business. Once the aforesaid position is accepted then the amount of stamp duty paid for has to be allowed as revenue nature. - Decided against revenue. - Income Tax Appeal No. 3611 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of lease equalization fund as per the Guidance Note on Accounting for Leases issued by Institute of Chartered Accountants of India is not acceptable as the same is not mandatory. It is further recorded in the order that the lease rent received is being credited in the books as per the lease agreement. This further credit of the lease acquisition fund according to the Assessing Officer could not be allowed to be deducted while computing the income subject to tax. (b) In appeal, the CIT(A) after considering the submissions interalia records that the Assessing Officer has misunderstood the claim of the respondent with regard to the lease equalization fund. It records that the lease equalization fund is merely a book adjustment entry. It also reiterate that lease rent received by the respondent-assessee has been credited to the Profit and Loss Account and offered to tax. The further credit of the lease equalization fund in the Profit and Loss Account in accordance with the accounting guidelines prescribed by the Institute of Chartered Accountants of India was only for the purposes of meeting with requirements of accounting standards and reflected the value of the assets in the book ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Central Government for under Section 145(2) of the Act and thus cannot be accepted yet what follows is that the amount credited as a lease equalization fund to Profit and Loss Account has to be ignored as it is not real income. It is an amount which is completely notional and brought into the books only for complying with accounting standards and has no relevance to determine the amount of net income chargeable to tax. In that view of the matter, the respondent-assessee was completely justified in reducing the amount of ₹ 2.06 crores credited to the Profit and Loss Account as lease equalization fund for the purposes of determining the income chargeable to tax. In these circumstances, we find that Question (B) does not give rise to any substantial question of law for our consideration. Hence no admitted. 5. Regarding Question (C): (a) The respondent-assessee has taken a land on lease for a period of 30 years. An amount of ₹ 23.31 lacs was paid as stamp duty in respect of the deed of lease executed by the respondent with its lessor viz. JNPT. The respondent-assessee treated the same as revenue expenditure as according to it this expenditure was incurred for the pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e decisions of this Court, particularly in Cincita Pvt. Ltd. wherein it has been observed that the period of lease for which the property has been taken, cannot be regarded as a decisive test to determine the nature of the expenditure. In any case, it is not disputed before us that the stamp duty amount has been paid on the lease deed for the purposes of carrying on assessee's business. Once the aforesaid position is accepted then the amount of stamp duty paid for has to be allowed as revenue nature. (f) Before closing, we may point out that Mr. Malhotra, the learned Counsel appearing for revenue emphatically urged that the amount of ₹ 23.42 lacs incurred on stamp duty for acquisition of leasehold land is to be allowed as differed revenue expenditure as held by the Assessing Officer. This on the ground that the benefit of leasehold land would be enjoyed by respondent-assessee for a period of 30 years. We do not accept the aforesaid submission for reasons more than one. Firstly the CIT(A) has very categorically taken a view that the Assessing Officer was incorrect in holding that the expenditure of ₹ 23.42 lacs on stamp duty is to be allowed as differed revenue ex ..... X X X X Extracts X X X X X X X X Extracts X X X X
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