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Issues involved: Whether payments of Rs. 15,500 as brokerage and Rs. 750 as stamp duty in connection with acquiring office premises at New Delhi are allowable deductions while computing the total income of the assessee for the assessment year 1964-65.
Summary: The High Court of Bombay delivered a judgment on the issue of whether certain payments made by the assessee in connection with acquiring office premises were allowable deductions for income tax purposes. The Tribunal had found that the expenditure claimed by the assessee was a revenue expenditure and thus allowable, but the revenue contested this decision. The revenue argued that the lease was for a period of five years, making the expenditure for an asset of an enduring character. However, the court disagreed, stating that a five-year lease did not create an enduring advantage. The payments made for brokerage and stamp duty were necessary to secure the premises for business activities and were considered allowable revenue expenditure. The court referenced a Supreme Court decision to support the view that such expenses were deductible if they facilitated profit-making activities. Therefore, the court ruled in favor of the assessee, directing the revenue to pay the costs. In conclusion, the court held that the payments made for brokerage and stamp duty in acquiring office premises were allowable deductions as revenue expenditure, as they were essential for conducting business activities and did not result in the acquisition of an enduring asset. The court's decision was based on the principle that expenses facilitating profit-making activities are deductible for income tax purposes.
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