TMI Blog2014 (1) TMI 1848X X X X Extracts X X X X X X X X Extracts X X X X ..... o the financial consultants. This was for the purpose of business and the same was held to be allowable under Section 37(1) - decided against revenue Expenditure on replacement of core engine of captive power plant - Held that:- Tribunal, it held that the leased property cannot be held as a property belonging to the assessee, and therefore, expenditure incurred on the property is in the nature of the revenue expenditure. While so doing, it had followed Commissioner of Income-Tax vs. Madras Auto Services (P) Ltd. [1998 (8) TMI 1 - SUPREME COURT] noting the fact that this was a lease asset and the Tribunal having rightly approached the issue treating the same as revenue expenditure, we see no reason to interfere in this question as well. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penses in question in full in one year, even while stating that legal aspect of the ground goes in favour of A.O? (ii) Whether on facts and in circumstances of the case, Tribunal was right in law in holding that the expenditure incurred of ₹ 4,16,93,695/- on replacement of core engine of Captive Power Plant is revenue in nature and not capital, even when pronouncing a finding that the benefit derived was an enduring one? (iii) Whether on facts and in circumstances of the case, Tribunal was right in law in reversing decision of the CIT(A), in allowing the lease rent paid to GNFC of ₹ 7,48,28,546/-, even when the fact was that, the same was a finance lease, which was towards cost of asset and the interest thereon, since the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 35DDA of IT Act. Otherwise an expenditure is allowable in the year expended wholly and exclusively for the purpose of business. With this legal background, we have noted that for AY 2002-03 the tribunal has also commented that the assessee-company had not deferred the payment rather the entire payment was made in that year. Due to this reason, we hereby hold that by reducing the liability of interest as claimed by the assessee on account of restructuring of debt the assessee has gained the commercial benefit, therefore the incurring of the expenditure in question can be said to be expended wholly and exclusively for the purpose of the business. The same is allowable under section 37(1) of the I.T. Act. The assessee has to establish the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y and exclusively for the purpose of business, it can be allowed in its entirety in the year in which it is incurred. However, considering the the decision in the case of Madras Industrial Investment Corporation Ltd. (supra) , when the spreading is done for over a period of six years and as the assessee-respondent has no objection to such revenue expenditure being spread out, though it could have insisted for this amount allowed in the year under consideration, with no such objection having been raised, the Revenue would not succeed in this issue as the expenditure is held to be revenue in nature. Thus, the second question also does not merit any consideration. 7. This question, therefore, does not require any further consideration. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeals) also had concurred with findings of the Assessing Officer. The Tribunal noted that GNFC Limited had shown lease rent as income under the head Business income and in case of the lessor, the issue had been consistently decided that the assets were owned by the GNFC, and therefore, the lease rent received by the assessee was to be assessed as business income. We notice that in case of Deputy Commissioner of Income Tax, Bharuch Circle vs. Gujarat Narmada Valley Fertilizers Co.Ltd decided in Tax Appeal No.516 of 2012, this aspect has been already considered by this Court as under:- 7. With respect to questions-VI and VII, we notice that the issues pertain to disallowance of depreciation claimed by the assessee on the groun ..... X X X X Extracts X X X X X X X X Extracts X X X X
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