TMI Blog2011 (4) TMI 1333X X X X Extracts X X X X X X X X Extracts X X X X ..... d against the assessee. Para 13 of the above said order is as under: - 13. We find under identical facts the Special Bench of the Tribunal in the case of Mukund Ltd., (supra) after considering various decisions including the decision of the Hon'ble Bombay High Court in the case of CIT Vs. Khimline Pumps Ltd. (supra) and the various other decisions cited by both the sides has held in that case that the consideration of ₹ 2.04 crores paid by the assessee for obtaining leasehold land from Maharashtra Industrial Development Corporation in its favour for a period of 99 years was capital in nature and accordingly, it was held that the same was not allowable as deduction. We find the Tribunal at para 26 of the order has observed as under:- 26. We find that the facts of the case before us are similar to the facts of the case in the case of Khimline Pumps Ltd. (supra). We are not impressed by the argument of the learned counsel for the assessee that the ratio of decision of Hon ble Bombay High Court in Khimline Pumps Ltd. case (supra) is distinguishable since in Khimline Pumps Ltd. case (supra) the assessee was not the original lessee. This distinction pointed out by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Revenue in favour of the Revenue and the ground of appeal No. 10 of the Revenue is allowed and the issue referred to the Special Bench by the President, Tribunal is answered in the negative and in favour of the Revenue. In view of this finding in the earlier year, the ground is rejected. 4. Ground No. 2 pertains to the issue of prior period expenses on account of professional fees of ₹ 82,000/-, hire charges of ₹ 43,418/-, travelling expenses of ₹ 8,272/-, meetings and conference expenses of ₹ 8,521/- and software expenses of ₹ 73,510/-. Each of the issue is decided as under: - 3.1 Professional fees: It was submitted that the bills for professional fees dated 13.02.1997 and 16.01.1997 for ₹ 10,500/- and ₹ 3,500/- respectively were received after 31st March, 1997 from M/s. Labour Laws and Managerial Services for advise on ESI/PPF matters. The bill dated 06.12.1996 of M/s. B.P.Rao Co. for ₹ 30,000/- was received by the compliance department of the company on 12.05.1997 and forwarded to accounts department on 10.06.1997. Another bill dated 31.03.1997 of M/. Ghosh Khanna Co. for ₹ 30,000/- was received on 19.05.1997 b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for allowance. Therefore, the claim cannot be allowed in this year. The observations made with reference to prior period expenditure in para 26 of the order for A.Y. 1995-96 by the ITAT in earlier year are still valid. Accordingly this expenditure cannot be allowed as prior period expenditure. 3.4 Travelling Expenses of ₹ 8,272/-: This expenditure is reimbursement of travelling expenditure ₹ 8,272/- received subsequent to finalisation of accounts. The expenditure was accounted and paid on 17.06.1997 relevant for assessment year under consideration. The CIT(A) did not allow the same stating that the bills were dated 01.07.1996. Eventhough the originals were dated 01.07.1996, the claim was made by the concerned person vide letter dated 22.05.1997 which pertains to the year under consideration. Therefore, it can be considered that the liability hss crystallised during the year. Accordingly the A.O. is directed to allow the amount. 3.5 Meeting Conference Expenses of ₹ 8,5321/-: This expenditure pertaining to meeting held of trading members at Bangalore. It was the submission that the bill dated 01.07.1996 was not received from the party and copies of the bill ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade thereunder. 8. Assessee raised the additional ground being a legal issue for claim of expenditure disallowed in A.Y. 1999-2000 for necessary allowance in this year. This being a legal ground the same is admitted. The issue in this ground is with reference to the claim of prior period expenditure made in A.Y. 1999-2000 but disallowed by the A.O. not pertaining to that year. Assessee claimed the same in this year as the appeal was pending. However, it is noticed that the appeal for A.Y. 1999-2000 was adjourned, consequently the question of prior period expenditure allowance/disallowance could not be decided. Therefore, this issue is restored to the file of the A.O. to consider the expenditure, after the decision for A.Y. 1999-2000 is rendered by the ITAT for that year. In case the expenditure has already crystallised and allowed in that year, there is no question of allowing the same in this year. Otherwise the expenditure can be considered as allowable subject to satisfying other conditions as per law. With this direction the issue is restored to the file of the A.O. 9. Appeal is partly allowed. ITA No. 4022/Mum/2004 10. Revenue has raised 3 grounds on three i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AT equipment and connectivity between the Exchange and its members provided by DOT though its satellites. The VSAT shifting in question did not entail either any dislocation of change of equipment or any change in connectivity or of service provider. The appellant merely had a right to connectivity to be provided by DOT. There was no improvement in this right consequent to the shifting in question. The profit earning apparatus, therefore, remained the same as before. Only the medium of connectivity was a different satellite. It is common knowledge that every satellite has a limited useful life span. As such, every time and satellite providing connectivity nears the end of its useful life or develops an intractable snag or DOT so requires for any other reason, the appellant will have to switch over to another satellite to be able to continue its operations. As brought out by the appellant above, it was required to switch over from one satellite to another in quick succession. This is living proof that shifting from one satellite to another is not once and for all and does not bestow any benefit or advantage of enduring nature . 4.2 The AO has likened the switch over f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT 49 ITR 160 which according to him clearly applies. He also relied on the jurisdictional High Court judgment in the case of Hardiallia Chemicals Ltd. vs. CIT 218 ITR 598 to submit that this expenditure is capital in nature. He also submitted that the Hon'ble Delhi High Court in the case of International Airports Authority of India vs. CIT 254 ITR 657 considered the development of an alternative site as capital expenditure and the principles established therein will equally apply. 13. The learned counsel, however, submitted that the assessee has not got any enduring benefit and since the existing satellite was only required shifting of transponders to a new satellite, assessee had to synchronise most of the transponders alone to the new satellite. It is also submitted that the assessee had to shift another satellite as the satellite failed within six months, therefore there is no enduring nature of the expenditure as rightly pointed out by the CIT(A). 14. We have considered the issue. We are of the opinion that the expenditure is Revenue in nature as the assessee has to realign the existing network which is synchronised with earlier satellite to a new satellite which d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rred that the amount of interest prior to the period of first use of the asset is to be included as actual cost of the asset for the purpose of depreciation. For these reasons the amounts of ₹ 21,87,105/- and ₹ 1,01,998/- were treated as capital expenditure and added back to assessee s income. On the submission made by the assessee the CIT(A) held that the expenditure is revenue in nature. The CIT(A), following his findings in A.Y. 1995-96 and relying on the Third Member decision in the case of Core Health Care Ltd. vs. DCIT 78 ITD 1 and other legal principles allowed the claim as revenue expenditure. 16. This issue was already considered by the ITAT in assessee s own case in ITA 7436/Mum/2007 for A.Y. 1994-95 which was followed in A.Y. 1995- 96. The findings of the ITAT in para 17 in order dated 22.12.2008 are as under: - 17. After hearing both the sides, we find that the Tribunal in the assessee s own case in ITA No. 7436/Mum/07 vide order dated 27th March, 2007 for the assessment year 1994-95 has directed the Assessing Officer to allow the various expenses and depreciation for the year under consideration holding that the business of the assessee has been set ..... X X X X Extracts X X X X X X X X Extracts X X X X
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