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TMI Blog2000 (2) TMI 187X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the business of the appellant by getting rid of a hurdle created by Mr. P.S. Sehgal in carrying on the appellant's business. It is the appellant's case that the payment was made to obtain the use of the premises by removing the obstacles created by Mr. Sehgal. The appellant's further case is that the Commissioner of Income-tax (Appeals) has erred in considering the basic structure of the business making apparatus was affected and also in not following the decision of the Supreme Court in Empire Jute Co. Ltd. v. CIT [1980] 124 ITR 1. 3. I have heard the learned Advocate Shri. S. Parthasarathi and learned Departmental Representative, Shri Shaji P. Jacob. Their arguments are taken into consideration. 4. Shri S. Parthasarathi, Advocate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business of TN Ceramics Ltd. He was also running a show room of TN Ceramics Ltd. Mr. Surendra filed a suit for eviction of M/s. TN Ceramics Ltd. on the ground of requiring the business bona fidely under the provisions of Karnataka Rent Control Act. Mr. Sehgal also filed a suit against Mr. V.K Surendra and obtained an injunction restraining from evicting M/s. T.N. Ceramics Ltd. On 8-12-1989 Mr. V.K Surendra and Mr. Sehgal constituted themselves into a partnership in the name and style of M/s. KS. Enterprises to carry on business. According to Mr. V.K Surendra, Mr. Sehgal handed over the vacant possession of the MG Road premises to him on 30-11-1989 under a written receipt and acknowledgment. Mr. Sehgal disputed that he handed over the posse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to Mr. P.S. Sehgal. M/s. K Centre has to do nothing with the said payment which has been constituted only on 3-3-1990 after dissolution of M/s. KS. Enterprises on 8-12-1989. Therefore, it would be incorrect to say that any protection money is paid by M/s. K Centre with the appellant. If any money is paid to Mr. P.S. Sehgal it is Mr. V.K. Surendra who has paid the money. 9. Mr. S. Parthasarathi, Advocate for the assessee relied on the decision of the Supreme Court in the case of CIT v. Ashok Leyland Ltd [1972] 86 ITR 549. In that case the question was whether the compensation paid to the Managing Agents was capital or revenue expenditure. The managing agents had undertaken business of assembly of motor cars. A scheme for dropping assembly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lding any agrl. income. The expenditure incurred for protection of the land from being encroached by the stranger was held as allowable deduction. The facts of that case before the Kerala High Court are also distinguishable on the facts of the instant appeal. The expenditure incurred in protecting the non-yielding agrl. lands from encroachment is definitely a revenue expenditure. He has also relied on the decision of the Calcutta High Court in the case of CIT v. Auto Distributors Ltd [1994] 210 ITR 222. In that case the assessee was engaged in taking properties on lease and letting them out on rent for profit. Certain premises were taken on lease and let out to a tenant in terms of an agreement between the lessee and the tenant. A right was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e instant appeal. 13. According to the Id. DR Shri Shaji P. Jacob the assessee itself did not give anything to Mr. P.S. Sehgal for getting vacated the premises rented out to him. He has submitted that the assessee is a new partnership firm constituted by Mr. V.K. Surendra. He is not entitled to claim any deduction regarding the payment made to Mr. P.S. Sehgal. Mr. V.K. Surendra himself is a land-lord and the assessee has not incurred any expenditure for the purpose of its business as alleged. He has justified that the CIT(A) rightly did not follow the decision of the Supreme Court in the case of Empire Jute Co. Ltd. 14. The learned DR relied on the decision of Lahore High Court in the case of Ramji Das Jaini Co., In re. [1945] 13 ITR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filment of the assessee's export obligation was business expenditure incur-red wholly and exclusively for the purpose of the assessee's business. It was deductible under section 37(1) of the Income-tax Act, 1961. The Gujarat High Court also held that when the assessee made the payment which represented the acquiring of tenancy rights, the assessee in fact acquired a right to possession which was of an enduring nature and therefore, expenditure for the acquisition of such a right was capital in nature. 16. He has also relied on the decision of the Madhya Pradesh High Court in the case of CIT v. Lucky Bharat Garage [1988] 174 ITR 526. The High Court held in that case that the finding of the Commissioner (Appeals) that the expenditure repres ..... X X X X Extracts X X X X X X X X Extracts X X X X
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