TMI Blog2016 (6) TMI 254X X X X Extracts X X X X X X X X Extracts X X X X ..... iable to be treated as capital expenditure. A perusal of the assessment order shows that the Assessing Officer not only treated the same as capital expenditure also, but an expenditure out of the capital, but in the grounds of appeal, the issue of capital expenditure has been raised by the Assessing Officer. As we have held that the said expenditure is a capital expenditure, the Assessing Officer is directed to grant the assessee depreciation, on the same, as applicable. - Decided in favour of revenue - ITA No. 55/PAN/2015 - - - Dated:- 12-5-2016 - Shri N. S. Saini, Hon ble Accountant Member And Shri George Mathan, Hon ble Judicial Member For the Assessee : Shri R. Muralidhar Adv For the Department : Shri R.N. Siddappaji - DR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay at Panaji. As a consequence of the amalgamation, M/s. Hotel La Paz Gardens Pvt. Ltd. (HLPG) became the owner of the property, which had been partly leased to Shri Chan Chin Shing and M/s. Sirsat Jewellers. In October, 2006 and March, 2007, the assessee-HLPG entered into an agreement for surrender of lease with both, Shri Chan Chin Shing and M/s. Sirsat Jewellers and had paid ₹ 35 Lac to Shri Chan Chin Shing and ₹ 5,50,000/- to M/s. Sirsat Jewellers. The assessee had claimed consideration paid for surrender of the lease, as revenue expenditure. The Assessing Officer, in the course of assessment, held the same to be capital expenditure. It was the submission that the Assessing Officer had also held that the assessee had taken b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liable to be reversed. 4. In reply, the Assessing Officer submitted that since the lease commenced in the year 1975 and continued without break till 2006, there was a possibility of indirect claim for perpetual lease and the tenants could create legal problems and it required the property for its own use, which was very essential. It was the submission that the assessee was running a hotel at the said building and it had 64 rooms with 03 food beverage outlets and one bar. As the business of the assessee was growing by leaps and bounds, and the ground floor of the said building was mostly occupied, the assessee was compelled to cancel the lease and take back the shop on the ground floor. It was the submission that after getting back the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mah Trading Corporation Ltd. reported in 131 ITR 154 (Ker.) to support his contention that the compensation paid for eviction of tenants from a shop building, was revenue expenditure. It was the submission that the decision of the Hon ble Delhi High Court in the case of Airport Authority of India (supra) was also applicable. It was the submission that the Revenue relying upon the decision in the case of V. Jaganmohan Rao reported in 75 ITR 373 (SC), had no application insofar as in the said case, the expenditure was incurred for perfection of a title and for getting rid of defect in the title. It was the submission that in the assessee s case, there was no defect in the title, the property in its physical form was available with the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve in the case of V. Jaganmohan Rao (supra) also clearly shows that the expenditure was in respect of perfection of title more so, for getting rid of defect in the title, which are not the facts in the assessee s case. However, a perusal of the decision of the Hon ble Delhi High Court in the case of Airport Authority of India shows that in the said decision, the Hon ble Delhi High Court has also taken into consideration the very primary decision of the Hon ble Supreme Court in the case of Assam Bengal Cement Co. Ltd. reported in (1995) 25 ITR 34, wherein the basic criteria for the purpose of deciding the issue whether an expenditure is in the revenue field or in the capital field, has been elaborated as follows:- if the expenditure is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be a claim of a perpetual lease being raised, what has to be understood is that the ownership of a property is a bundle of rights. From this bundle, the assessee had granted the lease rights to the tenants. This is on account of pre-amalgamation tenancy. What the assessee after the amalgamation has done is in effect purchased back the tenancy rights which had been given by the predecessors. The assessee has also substantially benefited from the said transaction insofar as it has been able to cut off a competition in the form of the restaurant running under the name style of Nanking Restaurant, which was, in effect a competition for the restaurants running in the hotel of the assessee. Thus, by cancellation of the lease and the payments ..... X X X X Extracts X X X X X X X X Extracts X X X X
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