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TMI Blog2020 (1) TMI 80X X X X Extracts X X X X X X X X Extracts X X X X ..... expenditure for several years, such expenditure should be looked upon as revenue expenditure. In the present assessee s case as well, the expenses have been looked upon as having been made for the purpose of conducting the business of the assessee. The onetime payment of the annual rent as per the lease deed is rightly claimed by the assessee as revenue expenditure. AO was not right in holding that the payment during the year relates to land which is capital in nature. In fact, the assessee is running the mall and hotel constructed on the lease land of Jaipur Development Authority which was given to Vishnu Apartments Private Ltd. In fact, the mall and hotel was constructed by the Vishnu Apartments Private Ltd. The CIT(A) also ignored th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The appellant prays that he may be allowed to add, amend, alter or forego any of the above grounds of appeal as the circumstances may warrant. 3. The assessee company is primarily engaged in the business of operating hotels. Return declaring total loss of ₹ 6,81,14,200/- was e-filed by the assessee company on 28.09.2012. The return was processed u/s 143(1) of the Act. As the case was selected for scrutiny under CASS, notice u/s 143(2) dated 07.08.2013 and 142(1) dated 13.07.2014 along with detailed questionnaire were issued and served upon the assessee to complete necessary details. In response thereto, CA AR of the assessee company attended the proceedings from time to time and furnished a requisite de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1,495/- as rent paid by the assessee. The Assessing Officer disallowed the same on the ground that it is a capital expenditure relating to land. The CIT(A) confirmed the action of the Assessing Officer, however, held that the depreciation on capitalized value is allowable. The Ld. AR submitted that the hotel is constructed on Plot -1, 2 3 and the lease premium and annual lease rent were described in the purchase deeds in respect of these 3 plots. The Ld. AR further submitted that Annual Lease Rent payable per annum is in the vicinity of 1% to 1.25% and such payment, if paid annually is to be deductible as revenue expenditure. However, up to 2011, since it was unpaid, it was paid as annual rate being in arrear which is a sum of ₹ 12, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar relates to land which is capital in nature and which should have been capitalized by the assessee. The assessee is an owner of the said land as per the terms of the lease deed and, therefore, the assessee s claim in its P L Account of lease rent is not allowable. The Ld. DR further submitted that the amount has been paid to the party from which the property was acquired and based on the nature of expenses it can be seen that the assessee has acquired the property from the said party and had assumed the future liability towards the same property. Thus, the Ld. DR relied upon the assessment order as well as of the order of CIT(A). 7. We have heard both the parties and perused all the relevant materials available on record. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... existence any capital asset for the company are expenditure of the said company. The asset which was created belonged to somebody else and the company derived an enduring business advantage by expending the amount. The expenses have been looked upon as having been made for the purpose of conducting the business of the assessee more profitably or more successfully. Since the asset created by spending the amounts did not belong to the assessee but the assessee got the business advantage of using modern premises at a low rent, thus saving considerable revenue expenditure for several years, such expenditure should be looked upon as revenue expenditure. In the present assessee s case as well, the expenses have been looked upon as having been ma ..... X X X X Extracts X X X X X X X X Extracts X X X X
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