TMI Blog2019 (3) TMI 1205X X X X Extracts X X X X X X X X Extracts X X X X ..... en as a permissive user. We are not required to consider the alternative scenario presented before us by the learned Counsel for the assessee, as to what will be the position if the title in the asset had passed on to the assessee. Even then, one would briefly comment on such hypothetical situation. In this case, in order to claim depreciation, the assessee must establish basic facts. Any such claim is necessarily based on facts and law. Whether the original owner in the meantime claimed depreciation, when was the asset installed, when was the asset put to use are some of the factual aspects needed to be gathered before the claim of depreciation could have been granted. Such a claim is raised for the first time before us. The assessee cannot raise such a contention for the first time before the High Court, when no factual foundation was laid before the authorities below. Whether the sum retained or forfeited by the seller can be treated as lease rental? - The question has to be answered in the negative. Clause (10) of the agreement provides that in case of any failure to pay the agreed amount within the agreed time on the part of the assessee, the seller would withdraw or can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellant ? 2. Whether on the facts and circumstances of the case and in law, the Hon'ble Tribunal erred in holding that it was capital expenditure without appreciating the legal position that when assessee incurs a liability under a contract (Abandoned project) or in pursuance of contract, no amount is receivable the assessee is entitled to claim said amount incurred as expeditious in implementing contract S. 37(1) r.w.s 28(1) ? 2. Brief facts are as under; The Appellant is an individual. The Appellant had filed the return of income for the year 2009-2010, in which the assessee had claimed deduction of a sum of ₹ 90,00,000/. This claim arises in following background; 3. The assessee had entered into an agreement titled as Memorandum of Understanding dated 27/08/2008 with one Sunshine Enterprises for purchase of Suzlon made Windmill along with land on which the same was situated. This entire asset i.e. the land along with installed windmill thereon, was referred in the said MOU as the 'project'. We shall take note on various terms of this MOU at a later stage. For the time being sufficient to record that the total sale consideration agreed between the pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt in question is seen as one under which the title has not passed to the assessee, the amount of ₹ 90,00,000/must be treated as rental charges, clearly a revenue expenditure. 6. In this context, the learned Counsel relied on following judgments: (i) In the case of Commissioner of Income-Tax Vs. Anjani Kumar Co. Ltd., reported in [2003] 259 ITR 114 (Raj.), in which Division Bench of Rajasthan High Court had examined a case where the assessee had written off a sum of ₹ 52,489/on account of advance made to agriculturist for purchase of land. The intention of the assessee was to acquire the land to set up a boilder factory. This however did not materialize and the agriculturist refused to return the amount. When the assessee claimed such amount by writing it off in the books of accounts, the Assessing Officer rejected the claim, the Tribunal allowed the claim of the assessee on the ground that since a new project had never matured, the expenditure was in the nature of revenue expenditure. The High Court confirmed the view of tribunal. (ii) In case of I. B. M. World Trace Corporation Vs. Commissioner of Income-Tax, reported in [1990] 186 ITR 412 (Bom. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll be refunded to the party of SECOND PART within one month of withdrawal / cancellation of the contract, with no interest / other costs. The party of the FIRST PART may condone any delay in the payments made by the party of the SECOND PART and in that case, the party of the SECOND PART shall pay to the party of the FIRST PART interest @ 14 % p.a. on the amount paid after the due date for the period for which the payment is delayed. 8. Other relevant terms of the said agreement are as follows; 14. The party of the SECOND PART will bear the stamp duty expenses as well as all other expenses related to the transfer of the project. 15. The party of the FIRST PART shall sign all the documents required to transfer The Project in the name of the party of the SECOND PART on receipt of the initial payment of 30 Lacs as mentioned above. 16. The party of the FIRST PART shall hand over all the original documents in his possession related to The Project to the party of the SECOND PART on receipt of the full and final payment. 17. The party of the FIRST PART shall, on receipt of the final payment, put the party of the SECOND PART in possession of The Project and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on to the assessee under the MOU, the question to be answered is whether the sum of ₹ 90,00,000/retained or forfeited by the seller can be treated as lease rental. The question has to be answered in the negative. Clause (10) of the agreement provides that in case of any failure to pay the agreed amount within the agreed time on the part of the assessee, the seller would withdraw or cancel the contract and in such event, the seller would be entitled to forfeit an amount of ₹ 90,00,000/and return the balance out of the sum already paid. The salient feature of this clause is that the sum of ₹ 90,00,000/to be retained by the seller is fixed irrespective of which installment the assessee failed to pay, for how long the possession and use of the asset is retained by the assessee and under what circumstances the payment could not be made. Linking of sum of ₹ 90,00,000/to be retained by seller on account of default of payment by the assessee, to the lease rental charges, would be opposed to the forfeiture clause having no relation to the period for which such asset was put to use by the assessee. In a given case, the asset may remain with the assessee for only o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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