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TMI Blog2019 (8) TMI 569X X X X Extracts X X X X X X X X Extracts X X X X ..... yment of future years rent had been paid to avail some concession for advance payment of rent or for some other business consideration. It is clear from our perusal of terms of leases between assessee and its lessors, such terms are not there between them. We are unable to appreciate that fact of rent being depressed rent can only be appreciated as such if there is recital about it in the lease rent. That substantial amount of money was paid as premium, claimed and shown by assessee to be advance rents and where rents reserved are as above, it follows there was no contention raised before the Tribunal regarding the rents reserved corresponding to market rate of rent. We have no hesitation to infer that rents reserved are depressed rents. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned advocate appears on behalf of appellant. He submits, judgment of the Tribunal has given rise to question formulated for answer. Advance rent paid by his client-assessee and thereafter amortized each year, has been disallowed. This was done in relying on Special Bench judgment of Tribunal in JCIT versus Mukund Ltd . reported in (2007) 106 ITD 231 (MUM)(SB) . It is noticed from extract of Special Bench judgment in impugned judgment that Special Bench, on facts, found, inter alia, as follows:- . . . . . . but also considering the terms of the agreement dated 5-3- 1992 as a whole it was clear that the amount of ₹ 2.04 crore was paid as premium for acquisition of leasehold rights in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 13. All these cases have looked upon expenditure which did bring about some kind of an enduring benefit to the company as a revenue expenditure when the expenditure did not bring into existence any capital asset for the company. The asset which was created belonged to somebody else and the company derived an enduring business advantage by expending the amount. In all these cases, the expense has been looked upon as having been made for the purpose of conducting the business of the assessee more profitably or more successfully. In the present case also, since the asset created by spending the said amounts did not belong to the assessee but the assessee got the business advantage of using modern premises at a low rent, thus, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome Tax reported in (2013) 350 ITR 24 (Delhi) . He submits, the Division Bench considered Madras Auto Service (P.) Ltd . (supra) and found therein assessee s case to be distinguishable from it. He relies on paragraph 18 in the judgment, which is set out below: In the present case, what is apparent is that the lessee (assessee) paid a substantial amount (₹ 2.53 crores) in 1989 at the time of entering into the transaction. It was a precondition for securing possession; the amount was one-time consideration in terms of the lease condition. In addition, the lessee has to pay 2.5 per cent. Of the said amount as annual rent, which is subject to increase periodically. No doubt, the assessee argues that the annu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ased on this judgment, the Tribunal said as follows: . . . . . it seems to us that use of the term premium in the agreement in respect of advance rent paid does not render the payment anything more than rent paid in advance instead of paying the same in future periodically. There is absolutely no indication in the agreement with the amount paid by the assessee as a consideration paid by it for being let into possession of the premises while reserving a separate or economic rate of rent to be paid periodically. . . . . It appears, pursuant to this finding the Tribunal said what it did in paragraph 7 of impugned order, following judgment of Special Bench of the Tribunal. Relevant passage in paragrap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of money was paid as premium, claimed and shown by assessee to be advance rents and where rents reserved are as above, it follows there was no contention raised before the Tribunal regarding the rents reserved corresponding to market rate of rent. We have no hesitation to infer that rents reserved are depressed rents. Finding by the Tribunal that assessee s agreements are exactly similar with the agreements before Special Bench, considered and dealt with in Mukund Ltd . (supra) is perverse as based on no material or contrary to material before it. For reasons aforesaid we answer the question in the affirmative and in favour of assessee. The appeal is disposed of. - - TaxTMI - TMITax - Income T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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