TMI Blog2000 (1) TMI 996X X X X Extracts X X X X X X X X Extracts X X X X ..... e is at Dahanu, i.e., at a distance of 100 miles from Bombay, and so the assessee had to incur this expenditure on its employees. It is also claimed that the CIT(A) erred in not granting the basic deduction under section 37(2A). It is made out that if the basic deduction is not allowed, it means that the disallowance out of entertainment expenditure is of the order of ₹ 15,000 out of the total expenses claimed of ₹ 25,000. 4. We are of the view that in the circumstances of the case, the assessee may be allowed the statutory deduction under section 37(2A) of ₹ 5,000. The ground is allowed to this extent. 5. The next ground is that the CIT(A) erred in confirming the disallowance of ₹ 1,32,020, being the expenditu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the acquisition of a capital asset have to be capitalised. 7. Before us, the learned counsel for the assessee mentioned that the decision of the Apex Court in the case of Challapalli Sugars Ltd. (supra) is distinguishable as it related only to interest liability during the construction period on funds borrowed for the acquisition of a capital asset. He stated that the Hon ble Bombay High Court has held in a series of decisions that where an asset is obtained on lease, the expenses incurred are allowable as a revenue deduction. In this context, he has relied on the following decisions :- (1) CIT v. Bombay Cycle Motor Agency Ltd. [1979] 118 ITR 42 (Bom.) (2) CIT v. Hoechst Pharmaceuticals Ltd. [1978] 113 ITR 877 (Bom.) (3) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ning Ores (P.) Ltd. (supra), which dealt with a case of an asset acquired on a lease of 98 years, the jurisdictional High Court was considering the allowability of the expenditure incurred by the lessor and not the lessee. The jurisdictional High Court held that no new asset or source of income came into existence by the lease in the hands of the lessor. We do not see how the ratio of this decision is applicable to the assessee who stands in the position of a lessee. The other decisions considered by the jurisdictional High Court do not deal with long term leases of the order of 35 years. They all deal with leases of lesser durations. The decision of the Hon ble Supreme Court in the case of Empire Jute Co. Ltd. ( supra) is also distinguis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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