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2016 (5) TMI 352 - AT - Income TaxAddition of store relocation expenses - revenue v/s capital expenditure - Held that - AO in the assessment year 2003-04 has already allowed the expenses by treating the same as revenue in nature. However, we are of the view that Revenue should not have filed this ground of appeal before the Tribunal, because the same expenses has already been admitted by the AO in his order dated 25.3.2015 relevant for the assessment year 2003-04. Following the consistent view adopted by the Revenue in the assessment year 2003-04 in assessee s own case, we dismiss the ground raised by the revenue. - Decided against revenue Addition being debentures restructuring - revenue v/s capital expenditure - Held that - Restructuring fees paid by the appellant to renegotiate the rate of interest on debentures represented the present value of differential rate of interest which should be allowed as revenue expenditure. See CIT vs. Gujarat Guardian Ltd 2009 (1) TMI 13 - HIGH COURT DELHI - Decided against revenue
Issues Involved:
1. Deletion of addition of ?12,44,678/- being store relocation expenses by treating the same as revenue expenditure. 2. Deletion of addition of ?84,80,000/- being debentures restructuring by treating the same as revenue expenditure. Detailed Analysis: Issue 1: Deletion of Addition of ?12,44,678/- as Store Relocation Expenses The Revenue contested the deletion of ?12,44,678/- added as store relocation expenses by the Ld. Commissioner of Income Tax (Appeals) [CIT(A)], arguing it should not be treated as revenue expenditure. The assessee, a company engaged in the manufacture and sale of pizzas, had its case reopened for assessment under section 147 of the Income Tax Act. The Assessing Officer (AO) disallowed the store relocation expenses, treating them as capital expenditure. The CIT(A) allowed the expenses by examining various documents and determining that the expenses were in the nature of rent, security, transportation, and other routine charges, which are revenue in nature. The CIT(A) followed the precedent set in the assessee's own case for the assessment year 2003-04, where similar expenses were allowed. The Tribunal upheld the CIT(A)'s decision, noting that the AO had already allowed similar expenses in the assessment year 2003-04. The Tribunal found no reason to differ from the CIT(A)'s well-reasoned order and dismissed the Revenue's ground of appeal. Issue 2: Deletion of Addition of ?84,80,000/- as Debentures Restructuring Expenses The Revenue also contested the deletion of ?84,80,000/- added as debentures restructuring expenses, arguing it should not be treated as revenue expenditure. The CIT(A) allowed the expenses by following the jurisdictional High Court's decision in CIT vs. Gujarat Guardian Ltd., which held that restructuring fees paid to renegotiate the rate of interest on debentures should be allowed as revenue expenditure. The Tribunal upheld the CIT(A)'s decision, referencing its own earlier order for the assessment years 2003-04 to 2005-06, where it had dismissed the Revenue's appeal on similar grounds. The Tribunal noted that the Hon'ble High Court of Delhi had also dismissed the Revenue's appeal in the assessee's own case, confirming that the payment for restructuring debentures was in the nature of debt servicing and not a capital payment. The Tribunal found that the CIT(A) had passed a well-reasoned order and dismissed the Revenue's ground of appeal. Conclusion: The appeal filed by the Revenue was dismissed in its entirety. The Tribunal upheld the CIT(A)'s decisions on both issues, confirming that the store relocation expenses and debentures restructuring expenses were correctly treated as revenue expenditures. The Tribunal relied on precedents set in the assessee's own case and the jurisdictional High Court's rulings to support its conclusions.
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