GST Helpdesk   Subscription   Demo   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
What's New Case Laws Highlights Articles News Forum Short Notes Statutory TMI SMS More ...
Extracts
Home List
← Previous Next →

2016 (6) TMI 254 - ITAT PANAJI

2016 (6) TMI 254 - ITAT PANAJI - TMI - Cancellation of the lease and the payments of the consideration - revenue v/s capital expenditure - Held that:- A perusal of the resolution passed by the Board of Directors of the assessee company in respect of authorization for cancellation of the lease, also talks as compensation and for loss of business. A perusal of the agreement entered into by the assessee shows the relinquishment of the lessees lease rights and interest in the leased premises. It is .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

eld 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 ORDER Per George Mathan, Judicial Member This is an appeal filed by the Revenue against .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

owards Compensatory Lease Cancellation as revenue expenditure as against the action of the Assessing Officer in holding the same as capital expenditure. It was the submission that in 1975 or thereabouts, one Shri Chan Chin Shing and M/s. Sirsat Jewellers had taken on lease shops admeasuring 119 sq.mts. on the ground floor of a building on Odlem Culagor in respect of Shri Chan Chin Shing and 19 sq.mts. on the ground floor of the said building by M/s. Sirsat Jewellers. Subsequently, the said land .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

came 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 co .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the Hon ble Full Bench of Delhi High Court in the case of Airport Authority of India reported in (2012) 340 ITR 407 (Delhi)(FB). It was the submission that the assessee having acquired the land and building, through amalgamation, and the assessee being the owner of the property, had no business reason to make the payment for surrender of lease of such property, especially when the assessee could have very well have evicted the tenants through due process of law. It was the submission that there .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ated as capital expenditure, but was only a payment out of capital. It was the submission that the order of the Commissioner of Income Tax (Appeals) was 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 sub .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

s also staff cafeteria. It was the submission that that the assessee was getting a rent of about ₹ 3,000/- p.m. from the said leases, and if the assessee had to take on lease the similar area, the market rent would be much higher. It was the submission that on this count, the assessee had requested the tenants to vacate. It was the submission that the said two tenants being Shri Chan Chin Shing who was running a restaurant under the name and style of Nanking Restaurant and M/s.Sirsat Jewel .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Shriram Buildcon Ltd. reported in 306 ITR 328 to submit that the amounts paid as compensation to the tenants for vacating the premises, was liable to be allowed as revenue expenditure. He also placed reliance upon the decision of the Hon ble Calcutta High Court in the case of Auto Distributors Ltd. reported in 210 ITR 222, as also the decision of the Hon ble Kerala High Court in the case of Bombay Burmah Trading Corporation Ltd. reported in 131 ITR 154 (Ker.) to support his contention that the c .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

tle. 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 assessee and in the possession of the assessee by evicting the said two persons by payment of the compensation. The assessee did not gain any capital asset insofar as the physical size of the structure did not improve. It was the submission that the order of the Commissioner of Income Tax (Appeals) was liable to the confirmed. 5. We have considered th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e of Auto Distributors Ltd. (supra) shows that the decision that was a case of unauthorized tenant more in the nature of his squatter. In respect of the decision of the Hon ble Kerala High Court in the case of Bombay Burmah Trading Corporation Ltd. (supra), it was a case of expenditure incurred for protection of land from being encroached upon by strangers and the expenditure incurred for eviction of tenant from building, within estate for the purpose of protecting the estate and peaceful collec .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d 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 made for acquiring or bringing into existence an asset or advantage for the enduring benefit of th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the income of the concern or whether the payment was made once and for all or was made periodically. The aim and object of the expenditure would determine the character of the expenditure whether it is a capital expenditure or a revenue expenditure." When these principles are applied to the facts of the assessee s case, the following emerge:- 1) The lease agreement clearly shows that they are liable for termination after a period of 03 months notice and the lease agreement have not been re .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

s 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, wh .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 

Latest Notifications:

    Dated      Category

20-7-2017 Cus (NT)

20-7-2017 GST CESS Rate

19-7-2017 IT

19-7-2017 IT

18-7-2017 IT

18-7-2017 CE (NT)

18-7-2017 CE

18-7-2017 GST CESS Rate

15-7-2017 Kerala SGST

14-7-2017 Andhra Pradesh SGST

14-7-2017 Cus (NT)

14-7-2017 Cus

13-7-2017 Co. Law

13-7-2017 Co. Law

13-7-2017 ADD

13-7-2017 ADD

12-7-2017 Jammu & Kashmir SGST

12-7-2017 Gujarat SGST

12-7-2017 Gujarat SGST

12-7-2017 CGST Rate

More Notifications


Latest Circulars:

19-7-2017 Goods and Services Tax

19-7-2017 Income Tax

18-7-2017 Customs

17-7-2017 Customs

14-7-2017 Income Tax

13-7-2017 Central Excise

13-7-2017 Customs

13-7-2017 Central Excise

13-7-2017 Customs

7-7-2017 Income Tax

More Circulars



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version