9911796707
TMI Blog1996 (7) TMI 115X X X X Extracts X X X X X X X X Extracts X X X X ..... count of building tax paid under the Kerala Building Tax Act, 1975. However, the Income-tax Officer rejected the deduction claimed by the assessee and treated it as a revenue expenditure (sic). On appeal, the Appellate Assistant Commissioner held that the expenditure laid out was an expenditure incurred for the purpose of business and was an admissible deduction under section 37 of the Income-tax Act, 1961 (hereinafter referred to as " the Act "). As against the said order, the Revenue filed an appeal before the Income-tax Appellate Tribunal. In the appeal, the Tribunal held that it was not an expenditure incurred wholly or exclusively for the purpose of business of the assessee and accordingly the claim for deduction was disallowed. It was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng in the nature of capital expenditure or personal expenses of the assessee), laid out or expended wholly and exclusively for the purposes of the business or profession shall be allowed in computing the income chargeable under the head ' Profits and gains of business or profession '." What is discernible from the above provision is the fundamental and foundational difference between capital expenditure and revenue expenditure which must be borne in mind at the time of computing the income chargeable under the head " Profits and gains of business or profession ". If the expenditure is claimed as revenue expenditure it must be exclusively for the purpose of business or profession. In the case of payment of tax under the Kerala Building T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is no advantage of enduring benefit to a trade. The tax paid in respect of the building is not for the benefit of the trade or business. However, the law laid down by the Supreme Court in the above case will apply in the facts of the present case. The Tribunal found in unequivocal terms : " In fact, the tax is a charge on the building newly constructed. It is clear that the tax is not paid by the assessee either in the character of a trader or in the character of a trader-cum-owner. It is paid purely in the character of an owner. Hence, it must be held that this is not a business expenditure, that is to say, an expenditure incurred wholly and exclusively for the purpose of the business of the assessee." The above finding of the Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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