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TMI Blog2018 (11) TMI 377X X X X Extracts X X X X X X X X Extracts X X X X ..... claimed by the assessee as a revenue expenditure and capitalizing the same. The assessee owns the rice mill and also carrying on the business of retail outlet of petrol bunk. During the year under consideration, the assessee claimed a sum of Rs. 3,00,000/- towards licence fee which was disallowed by the Assessing Officer (AO) and held the expenditure as capital expenditure. It is observed by the AO from the details that the assessee has got a letter of intent for Retail outlet(RO) of Reliance petrol vide letter dated 27.07.2004 which was agreed, accepted and signed by the assessee on 13.08.2004 and paid the sum of Rs. 3,00,000/- towards signing fee on 07.08.2004 and claimed the same as licence fee in the Profit and loss account for the imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 25.01.2005 and argued that since the agreement was signed on 25.01.2005 and the signing fee was paid to meet the expenses as per the agreement such as training of dealers and his staff and supervision and coordination of the construction of the said retail outlet, the same is allowable as revenue expenditure in the year under consideration. The assessee also relied on the decision of Knight Riders Sports Private Limited Vs. ACIT, Central Circle-29, Mumbai in ITA No.1307/Mum/2013 for the assessment year 2009-10 dated 29.12.2017. 5. On the other hand, Ld.DR argued that the expenditure was neither incurred nor accrued during the year under consideration. The income has to be computed and assessed each year independently. In this case, the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wed to participate in IPL. Therefore, the Ld.DR argued that the payment of franchisee fee is annual payment to acquire the right to manage and operate the team. Whereas in the case of the assessee, the payment is one time payment incurred towards training of the dealers, its staff and supervision and coordination of the construction of the said retail outlet, while the franchisee fee was annual expenditure. Whereas, in the case of the assessee, the expenditure was one time payment for setting up of the retail outlet. Thus, the facts of the case of the assessee are clearly distinguishable and have no application in the assessee's case, hence argued that the case law relied upon by the assessee has no application in the case of the assessee. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refore, we are unable to accept the contention of the assessee that the expenditure be treated as revenue expenditure for the year under consideration. Since the expenditure was incurred before the commencement of business, the expenditure required to be capitalized in respect of relevant asset and allow the depreciation or the same should be amortized as per section 35D of the Act. The Ld.AR relied on the decision of Hon'ble ITAT Mumbai, 'A' Bench in Knight Riders Sports Private Ltd. (supra). The facts of the case are distinguishable as argued by the Ld.DR and has no application in this case. Therefore, we hold that the AO has rightly treated the expenditure as capital expenditure and allowed the depreciation and we do not find any reason ..... X X X X Extracts X X X X X X X X Extracts X X X X
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