2001 (2) TMI 262 - AT - Income Tax

Summary

Issues: Disallowance of registration fees claimed by the assessee under the head 'registration fees' for the assessment year 1991-92.

The only issue involved in this case is the disallowance of Rs.1,02,650 claimed by the assessee under the head 'registration fees'. The assessee explained that this expenditure was related to stamp, registration, and other charges for enhancing the lease period and rent payable to another party. The Assessing Officer disallowed the enhanced rent paid, but the CIT(A) allowed it as a revenue expenditure due to inflation and the non-related parties involved. However, the CIT(A) disallowed the registration fees, considering it as capital expenditure due to an enduring advantage gained by the assessee. The assessee argued that the fees were revenue expenditure as it improved the existing asset's life, not acquiring a new asset. The DR supported the previous decisions, stating the expenditure was for an enduring advantage and should be treated as capital in nature.

After reviewing the submissions and evidence, the Tribunal found no reason to interfere with the CIT(A)'s decision. The CIT(A) based his decision on the proper understanding of the case facts and referred to several judgments like Gobind Sugar Mills Ltd. v. CIT, East India Commercial Co. (P.) Ltd. v. CIT, CIT v. Bengal Assam Investors Ltd, and Hotel Rajmahal v. CIT to support his conclusion. The Tribunal agreed with the revenue authorities that the expenditure on the lease deed was capital in nature, providing an enduring advantage to the assessee in the form of property interest for an extended period. As the expenditure extended beyond the relevant assessment year and resulted in a long-term benefit, the Tribunal upheld the CIT(A)'s decision to disallow the registration fees. Consequently, the appeal filed by the assessee was dismissed.