Balmer Lawrie & Co. Ltd., Kolkata V. DCIT, Circle - 5, Kolkata, Kolkata

CO 18/KOL/2011

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 5198 (ITAT-KOLKATA)
• Duration Of Justice: 8 year(s) 5 month(s) 9 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 23-08-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2007-2008
• Appeal Filed On: 14-03-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RANU BISWAS
• Assessee Lawyers: D S DAMLE
• Keywords: Capital asset; Business income; Depreciation; Business expenditure; Earning of tax free income; Question of law; Revenue expenditure; Capital expenditure; Rule 8D
• Section: 14A; 80IB; 37(1); 80IA; 32

Judgement Text

1 ITA NO. 227/KOL/2011 & C.O. NO. 18/KOL/2011 & ITA N O. 1021/KOL/2012 M/S. BALMER LAWRIE & CO. LTD., AY 2007-08 & 2009-10 , B , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: KOL KATA ( ) . . , . ' # $% % , '( ) [BEFORE SHRI A. T. VARKEY, JM & DR. A.L. SAINI, AM ] I.T.A. NO. 227/KOL/2011 ASSESSMENT YEAR: 2007-08 DCIT, CIRCLE - 5, KOLKATA VS. M/S. BALMER LAWRIE & CO. LTD. [PAN: AABCB 0984 E] APPELLANT RESPONDENT C.O. NO. 18/KOL/2011 (ARISING OUT OF ITA NO. 227/KOL/2011) ASSESSMENT YEAR: 2007-08 M/S. BALMER LAWRIE & CO. LTD. [PAN: AABCB 0984 E] VS. DCIT, CIRCLE - 5, KOLKATA CROSS-OBJECTOR RESPONDENT I.T.A. NO. 1021/KOL/2012 ASSESSMENT YEAR: 2009-10 M/S. BALMER LAWRIE & CO. LTD. [PAN: AABCB 0984 E] VS. DCIT, CIRCLE - 5, KOLKATA CROSS-OBJECTOR RESPONDENT DATE OF HEARING 06.08.2019 DATE OF PRONOUNCEMENT 23.08.2019 FOR THE ASSESSEE SHRI D.S. DAMLE, FCA FOR THE REVENUE SMT. RANU BISWAS, ADDL. CIT ORDER PER SHRI A.T.VARKEY, JM THIS APPEAL PREFERRED BY THE REVENUE AND CO BY ASSE SSEE ARE AGAINST THE ORDER OF LD. CIT(A) - VI, KOLKATA DATED 30.11.2010 FOR AY 2007-0 8. THE APPEAL PREFERRED BY THE ASSESSEE IS AGAINST THE ORDER OF LD. CIT(A) VI, K OLKATA DATED 30.05.2012 FOR AY 2009-10. 2 ITA NO. 227/KOL/2011 & C.O. NO. 18/KOL/2011 & ITA N O. 1021/KOL/2012 M/S. BALMER LAWRIE & CO. LTD., AY 2007-08 & 2009-10 SINCE GROUNDS ARE IDENTICAL AND FACTS ARE COMMON. W E DISPOSE OF BOTH THESE APPEALS BY THE CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 2. WE FIRST TAKE UP THE APPEAL IN ITA NO.227/KOL/20 11 FOR AY 2007-08. GROUND NO. 1 OF THE REVENUES APPEAL IS WHETHER THE LD. CIT(A) W AS JUSTIFIED IN DELETING THE DISALLOWANCE OF PROPORTIONATE WRITE OFF OF LEASE PR EMIUM PAID TO THE LESSORS IN RESPECT OF DIFFERENT LANDS TAKEN ON LEASE FOR THE PURPOSE OF B USINESS AMOUNTING TO RS.26,39,692/-. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT IN IT S PROFIT& LOSS ACCOUNT THE ASSESSEE, BY WAY OF AMORTIZATION DEBITED A SUM OF RS.26,39,692/- BEI NG PRO-RATA AMOUNT OF LEASE PREMIUM WHICH THE APPELLANT HAD PAID IN RESPECT OF SEVERAL PLOTS OF LAND OBTAINED FOR SETTING UP INDUSTRIAL / INFRASTRUCTURE UNDERTAKINGS. THE LEASE PERIOD VARIED FROM 15 TO 99 YEARS AND THE PROPORTIONATE AMOUNT OF LEASE PREMIUM, SPREAD OVER THE LEASE PERIOD, WAS CLAIMED AS DEDUCTION IN ARRIVING ATITS BUSINESS INCOME ON THE PLEA THAT THE LEASE PREMIUM PAID WAS NOTHING BUT UPFRONT PAYMENT OF LEASE RENT. IN THE A SSESSMENT ORDER, THE AO FOLLOWING THE IDENTICAL REASONING GIVEN BY HIS PREDECESSORS IN TH E ASSESSMENT ORDERS FOR AYS 2003-04 TO 2006-07, HELD THAT THE AMOUNT CLAIMED AS AMORTIZATI ON OF LEASE PREMIUM WAS CAPITAL EXPENDITURE AND THEREFORE NOT ALLOWABLE AS DEDUCTIO N IN COMPUTATION OF BUSINESS INCOME. ON APPEAL THE LD. CIT(A) DELETED THE DISALLOWANCE F OLLOWING THE ORDER OF THE COORDINATE BENCH OF THIS TRIBUNAL IN ASSESSEE'S OWN CASE FOR A Y 2003-04 IN ITA NO.348/KOL/2007 DATED 11.04.2008. BEING AGGRIEVED BY THE SAID ORDER , THE REVENUE IS NOW IN APPEAL BEFORE US. 3. AT THE TIME OF HEARING OF THE APPEAL, THE LD. DR SUBMITTED THAT ALTHOUGH THE COORDINATE BENCH OF THE TRIBUNAL DECIDED THE APPEAL OF THE ASSESSEE FOR AY 2003-04 IN ASSESSEE'S FAVOR BY THE ORDER DATED 11.04.2008; HOW EVER LATER ON THE 'B' BENCH, KOLKATA OF THIS TRIBUNAL IN ASSESSEE'S OWN CASE FOR AY 2008-09 IN ITA NO. 1481/KOL/2011 DATED 30.04.2012 TAKING NOTE OF THE DECISION OF THE SPECI AL BENCH, MUMBAI IN THE CASE OF JT.CIT VS MUKUND LTD (106 ITD 291) DECLINED TO FOLLOW EARL IER DECISION IN ASSESSEE'S FAVOR FOR THE AY 2003-04. RELYING ON THE LATER DECISION OF THIS T RIBUNAL IN ASSESSEE'S OWN CASE FOR AY 2008-09, THE LD. DR URGED THAT THE ORDER OF THE AO BE UPHELD. 3 ITA NO. 227/KOL/2011 & C.O. NO. 18/KOL/2011 & ITA N O. 1021/KOL/2012 M/S. BALMER LAWRIE & CO. LTD., AY 2007-08 & 2009-10 4. PER CONTRA, THE LD. AR OF THE APPELLANT BROUGHT TO OUR ATTENTION THAT THE ORDER OF THIS TRIBUNAL IN ASSESSEE'S OWN CASE FOR AY 2008-09 WAS REVERSED BY THE HONBLE CALCUTTA HIGH COURT VIDE THEIR JUDGMENT DATED 01.08.2019 IN ITA N O.117 OF 2012 AND THE DISALLOWANCE OF AMORTIZED LEASE PREMIUM WAS DELETED BY THE HONBLE HIGH COURT. HE FURTHER INVITED OUR ATTENTION TO THE ORDER OF THIS TRIBUNAL RENDERED IN ASSESSEES OWN CASE FOR AY 2014-15 WHEREIN THIS TRIBUNAL AFTER CONSIDERING THE ORDERS PASSED FOR THE AYS 2003-04 & 2008-09 AND OTHER JUDICIAL PRECEDENTS AVAILABLE ON THE SUBJ ECT, UPHELD THE ASSESSEES CLAIM OF DEDUCTION FOR THE AMORTIZED LEASE PREMIUM IN ARRIVI NG AT BUSINESS INCOME. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ECORDS. WE NOTE THAT THE ISSUE UNDER DISPUTE NOW STANDS DECIDED BY THE HONBLE CALCUTTA HIGH COURT IN ASSESSEE'S OWN CASE IN ITA NO.117 OF 2012 DATED 01.08.2019 FOR AY 2008-09 WHEREIN ON IDENTICAL FACTS AND CIRCUMSTANCES THE HONBLE HIGH COURT HELD AS UNDER THE APPEAL WAS ADMITTED ON 3RD SEPTEMBER, 2012 WHE N FOLLOWING SUBSTANTIAL QUESTION OF LAW WAS FRAMED FOR ANSWER: WHETHER THE LEARNED TRIBUNAL HAS COMMITTED ERROR IN NOT FOLLOWING ITS EARLIER ORDER DATED 11TH APRIL, 2008 PASSED IN ASSESSEE COMPANYS OWN CASE IN ITA 348/KOL/2007 WHILE INTERPRETING THE FIVEYEARS LEASE DEEDS TO HOL D THAT PROPORTIONATE PREMIUM ON LEASE HOLD 2 LANDS WAS NOTHING BUT ADVANCE PAYMENT OF RENT AND THE SAME WAS NOT A CAPITAL EXPENDITURE AND AS SUCH, THE BUSINESS DEDUC TION SHOULD BE ALLOWED UNDER SECTION 37(1) OF THE INCOME TAX ACT, 1961. . MR. JHUNJHUNWALA ALSO RELIES ON A DIVISION BENCH JU DGMENT OF HIGH COURT OF KARNATAKA IN CIT VERSUS H.M.T. LTD., REPORTED IN (1 993) 67 TAXMAN 506 (KARNATAKA), PARAGRAPHS 6 AND 7. ON QUERY FROM COURT HE DEMONSTR ATES FROM PAGE 34 IN THE PAPER BOOK THAT AGGREGATE ANNUAL RENT UNDER SIX LEASES IS RS.106/-. THE LEASES ARE FOR PERIODS BETWEEN 60 AND 95 YEARS. MAXIMUM RENT UNDER ONE LEASE IS RS.100/- PER ANNUM WHILE FIVE OTHERS HAVE RS.1/- OR RS.2/- PER A NNUM AS RENT RESERVED. ON FURTHER QUERY FROM COURT HE DRAWS ATTENTION TO SUB-CLAUSE ( N) IN CLAUSE 3 AND CLAUSE 5 OF ONE OF THE LEASES, ON SUBMISSION THAT TERMS IN ALL ARE IDENTICAL. SUBCLAUSE (N) PROVIDES FOR DELIVERY OF POSSESSION AFTER EXPIRATION WHEREUNDER LESSEE IS, SUBJECT TO PROVISIONS THEREIN, ENTITLED TO REMOVE AND APPROPRIATE ALL BUI LDINGS ERECTIONS AND STRUCTURES AND MATERIALS FORMING PART OF THE DEMISE PREMISES. REEN TRY CLAUSE 5 IN THE LEASE PROVIDES 4 ITA NO. 227/KOL/2011 & C.O. NO. 18/KOL/2011 & ITA N O. 1021/KOL/2012 M/S. BALMER LAWRIE & CO. LTD., AY 2007-08 & 2009-10 FOR REENTRY ON DEFAULT OF PAYMENT OF RENT RESERVED, UPON GRANTING OPPORTUNITY TO LESSEE TO MAKE GOOD THE DEFAULT. . SPECIAL BENCH OF THE TRIBUNAL GAVE ITS VIEW REGARDI NG ADVANCE PAYMENT OF RENT TO BE CAPITAL EXPENDITURE ON FINDINGS, INTER ALIA, THAT T HERE WAS TERMINATION CLAUSE, BY WHICH PREMATURE TERMINATION DID NOT PROVIDE FOR REFUND OF PREMIUM, CLAIMED TO BE ADVANCED RENT, THERE WAS NO CLAUSE IN THE AGREEMENT TO SHOW THAT THE AMOUNT OF RS.2.04 CRORE WAS PAID BY THE ASSESSEE AS ADVANCE RENT FOR ALL FU TURE YEARS AND THE LUMP SUM PAYMENT OF FUTURE YEARS RENT HAD BEEN PAID TO AVAIL SOME CONCESSION FOR ADVANCE PAYMENT OF RENT OR FOR SOME OTHER BUSINESS CONSIDER ATION. 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 SH OWN BY ASSESSEE TO BE ADVANCE RENTS AND WHERE RENTS RESERVED ARE AS ABOVE, IT FOL LOWS THERE WAS NO CONTENTION RAISED BEFORE THE TRIBUNAL REGARDING THE RENTS RESERVED CO RRESPONDING TO MARKET RATE OF RENT. WE HAVE NO HESITATION TO INFER THAT RENTS RESERVED ARE DEPRESSED RENTS. FINDING BY THE TRIBUNAL THAT ASSESSEES AGREEMENTS ARE EXACTLY SIM ILAR 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. 8 FOR REASONS AFORESAID WE ANSWER THE QUESTION IN THE AFFIRMATIVE AND IN FAVOUR OF AS SESSEE. THE APPEAL IS DISPOSED OF. 6. THIS TRIBUNAL HAD ALSO EXPRESSED THE SAME VIEW I N ASSESSEES OWN CASE FOR AY 2014- 15 IN ITA NO.2264 & 2483/KOL/2017 DATED 01.07.2019, THE RELEVANT EXTRACTS OF THE DECISION IS REPRODUCED BELOW: 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED VARIO US JUDICIAL DECISIONS RELIED UPON AS WELL AS THE APPLICABLE LEGAL PROVISIONS. FROM TH E FACTS NARRATED BEFORE US, WE FIND THAT THE ASSESSEE HAS BEEN CLAIMING AMORTIZATION OF LEASE PREMIUM PAYMENTS SINCE EARLIER YEARS AND ITA NOS. 2264 & 2483/KOL/2017 BAL MER LAWRIE & CO. LTD., AYS- 2014-15 TILL AY 2002-03 NO DISPUTE AROSE BETWEEN TH E PARTIES. IN THE ASSESSMENT FOR THE AY 2003-04 THE AO HOWEVER DISALLOWED THE ASSESS EE'S AMORTIZATION CLAIM HOLDING IT TO BE CAPITAL IN NATURE AND IN SUPPORT OF THIS C ONCLUSION, HE RELIED ON THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF ADITYA MIN ERALS PVT LTD VS CIT (239 ITR 817). THE AO'S ORDER WAS UPHELD BY THE LD. CIT(A) B UT ON FURTHER APPEAL THE 'B' BENCH OF THIS TRIBUNAL IN ITA NO.348/KOL/2007 DATED 11.04 .2008 UPHELD THE ASSESSEE'S CLAIM. IN ARRIVING AT ITS DECISION THE TRIBUNAL HAD CONSID ERED THE JUDGMENT OF THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS HMT LTD (203 ITR 803) WHICH IN TURN 5 ITA NO. 227/KOL/2011 & C.O. NO. 18/KOL/2011 & ITA N O. 1021/KOL/2012 M/S. BALMER LAWRIE & CO. LTD., AY 2007-08 & 2009-10 WAS BASED ON THE DECISION OF THE HON'BLE SUPREME CO URT IN THE CASE OF CIT VS PANBARI TEA CO. LTD (57 ITR 422). IN THE SAID JUDGMENT THE HON'BLE SUPREME COURT HAD OBSERVED THAT THE USE OF THE WORD 'PREMIUM' IN RESP ECT OF ADVANCE RENT DID NOT RENDER THE PAYMENT ANYTHING MORE THAN RENT PAID IN ADVANCE , INSTEAD OF PAYING THE SAME IN FUTURE PERIODICALLY. THE COORDINATE BENCH OF THIS T RIBUNAL ALSO TOOK NOTE OF THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE O F CIT VS ASSOCIATED CEMENT CO LTD (172 ITR 257) WHEREIN IT WAS HELD THAT ENTIRE P REMIUM PAID IN LUMPSUM WAS DEDUCTIBLE AS BUSINESS EXPENDITURE IN THE VERY FIRS T YEAR BECAUSE SUCH PAYMENT OBVIATED THE NEED OF MAKING PERIODICAL PAYMENTS OF HIGHER RENT. THE TRIBUNAL ALSO NOTED THAT THE HON'BLE SUPREME COURT IN THE CASE OF MADRAS INDUSTRIAL INVESTMENT CORPORATION LTD VS CIT (SUPRA) HAD HELD THAT THE FA CTS OF THE CASE MAY JUSTIFY AN ASSESSEE TO SPREAD AND CLAIM THE EXPENDITURE INCURR ED IN A PARTICULAR YEAR OVER A PERIOD OF ENSUING YEARS IF ALLOWING THE ENTIRE EXPE NDITURE IN ONE YEAR GIVES DISTORTED PICTURE OF PROFITS OF THAT PARTICULAR YEAR. KEEPING IN MIND THESE DECISIONS, THE COORDINATE BENCH OF THIS TRIBUNAL ALLOWED THE ASSES SEE'S CLAIM FOR AMORTIZATION OF LUMP-SUM LEASE PREMIUM PAID. IT IS TRUE THAT IN A L ATER DECISION DATED 30.04.2012 IN ITA NO. 1481/KOL/2011 FOR AY 2008-09 THE 'B' BENCH OF THIS TRIBUNAL DECLINED TO FOLLOW THE RATIO LAID DOWN IN THE APPELLATE ORDER P ASSED IN ASSESSEE'S OWN CASE FOR AY 2003-04. ON PERUSAL OF THE SAID ORDER WE HOWEVER FI ND THAT DECISION OF THE TRIBUNAL IN AY 2008-09 WAS INFLUENCED MORE BY THE FACT THAT WHI LE DECIDING THE APPEAL FOR AY 2003-04 ON 11.04.2008 THE BENCH HAD NOT CONSIDERED THE DECISION OF THE SPECIAL BENCH, MUMBAI IN THE CASE OF MUKUND LIMITED (SUPRA) WHICH WAS PRONOUNCED ON 15.02.2007 AND WAS BINDING ON THE DIVISION BENCH. I N THE CONSIDERED VIEW OF THE TRIBUNAL THEREFORE THE ORDER OF THE COORDINATE BENC H FOR AY 2003-04 WAS PER IN CURIUM BECAUSE THE DECISION OF ITA NOS. 2264 & 2483 /KOL/2017 BALMER LAWRIE & CO. LTD., AYS- 2014-15 THE SPECIAL BENCH WAS NOT CONSID ERED EVEN THOUGH THE FACTS OF THE ASSESSEE'S CASE AND THE FACTS INVOLVED IN THE CASE OF MUKUND LIMITED (SUPRA) WERE IDENTICAL. WE THEREFORE FIND THAT THE DECISION OF T HE COORDINATE BENCH IN THE ASSESSEE'S CASE FOR AY 2008-09 WAS RENDERED SOLELY ON THE BASI S OF THE DECISION OF THE SPECIAL BENCH, MUMBAI RENDERED IN THE CASE OF MUKUND LIMITE D (SUPRA). 7. ON PERUSAL OF THE DECISION IN THE CASE OF MUKUND LIMITED (SUPRA), WE NOTE THAT IN ARRIVING AT ITS FINDING THE SPECIAL BENCH OF THIS T RIBUNAL HAD RELIED ON VARIOUS DECISIONS INTER ALIA INCLUDING THE DECISION OF THE KHIMLINE PUMPSPVT LTD VS CIT (258 ITR 429) WHEREIN THE HON'BLE BOMBAY HIGH COURT HAD HELD THAT EXPENDITURE ON ACCOUNT OF LEASE PREMIUM WAS CAPITAL IN NATURE AND THEREFORE NO DEDUCTION WAS PERMISSIBLE IN RESPECT OF SUCH EXPENDITURE EITHER I N ONE LUMP-SUM OR BY AMORTIZATION OVER THE TENURE OF THE LEASE. SINCE THE SPECIAL BEN CH WAS CONSTITUTED AT MUMBAI, THE JUDGMENT OF THE HON'BLE BOMBAY HIGH COURT WAS BINDI NG BEING THE DECISION OF THE JURISDICTIONAL HIGH COURT. WE HOWEVER FIND THAT ON THE IDENTICAL FACTS THE HON'BLE 6 ITA NO. 227/KOL/2011 & C.O. NO. 18/KOL/2011 & ITA N O. 1021/KOL/2012 M/S. BALMER LAWRIE & CO. LTD., AY 2007-08 & 2009-10 GUJARAT HIGH COURT IN ITS LATER JUDGMENT DATED 23.0 3.2009 IN THE CASE OF DY. CIT VS SUN PHARMACEUTICALS INDUSTRIES LTD (SUPRA) TOOK THE VIEW, WHICH WAS CONTRARY TO THE VIEW TAKEN BY THE HON'BLE BOMBAY HIGH COURT. IN THE DECIDED CASE THE HON'BLE GUJARAT HIGH COURT NOTED THAT THE LEASE RENT PAID A NNUALLY WAS VERY NOMINALLY AND BY OBTAINING BY WAY OF LEASE THE CAPITAL STRUCTURE OF THE ASSESSEE HAD NOT CHANGED. IT WAS THEREFORE NOTED THAT, BY MAKING SUCH PAYMENT, THE A SSETS OF THE ASSESSEE COMPANY HAD NOT INCREASED BECAUSE THE LAND CONTINUED TO BELONG TO GIDC. THE HON'BLE HIGH COURT NOTED THAT THE ONLY BENEFIT, WHICH THE ASSESSEE GOT , WAS THE ADVANTAGE OF CARRYING ON THE BUSINESS MORE PROFITABLY BY PAYING NOMINAL RENT ON LAND. THE HON'BLE HIGH COURT THEREFORE DID NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE TRIBUNAL WHEREIN THE TRIBUNAL HAD ALLOWED THE DEDUCTION FOR UPFRONT LEASE PREMIUM OF RS.42,02,616/- PAID TO GIDC HOLDING IT TO BE REVENUE EXPENDITURE. WE THEREFORE FIND THAT IN THE DECISION RENDERED IN MARCH 2009 THE HON'BLE GUJARAT HIGH COURT CONCURRED WITH THE VIEW EXPRESSED BY THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS HMT LTD (SUPRA). IN BOTH THESE DECISIONS THE HON'BLE HIGH C OURTS HAD HELD THAT THE LEASE PREMIUM PAID DID NOT CONSTITUTE CAPITAL EXPENDITURE BUT IT WAS A REVENUE EXPENDITURE BECAUSE BY INCURRING SUCH EXPENDITURE THE ASSESSEES DID NOT ACQUIRE ANY ASSET BUT ONLY FACILITATED CARRYING ON THE BUSINESS MORE PROFITABL Y BY PAYING ITA NOS. 2264 & 2483/KOL/2017 BALMER LAWRIE & CO. LTD., AYS- 2014-1 5 TOKEN RENT. IN ARRIVING AT SUCH CONCLUSION THE HON'BLE GUJARAT HIGH COURT HAD RELIED ON THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT VSMADRAS A UTO SERVICE (233 ITR 468). WE NOTE THAT ALTHOUGH THE JUDGMENT OF THE HON'BLE GUJA RAT HIGH COURT WAS RENDERED ON 23.03.2009, THE COORDINATE BENCH OF THIS TRIBUNAL W HILE DECIDING THE REVENUE'S APPEAL IN THE ASSESSEE'S CASE FOR AY 2008-09 HAD NOT TAKEN NOTE OF THE SAME AND WENT ON TO HOLD THE EXPENDITURE CLAIMED TO BE CAPITAL IN NATUR E. WE HOWEVER FIND THAT IN THE DECISION THE HON'BLE GUJARAT HIGH COURT RENDERED SU BSEQUENT TO THE DECISION OF THE SPECIAL BENCH IN MUKUND LTD (SUPRA), IT HAS BEEN SP ECIFICALLY HELD THAT THE NATURE OF LEASE PREMIUM PAID WAS REVENUE IN NATURE AND THEREF ORE ALLOWABLE IN COMPUTING BUSINESS INCOME. IN LIGHT OF THE FOREGOING AND THE LATER DECISION OF THE COORDINATE BENCH OF THIS TRIBUNAL AT DELHI IN THE CASE OF ACIT VS DELHI INTERNATIONAL AIRPORT PVT LTD (SUPRA) FOR REASONS DISCUSSED IN DETAIL (INFRA) , AND ALSO THE CBDT CIRCULAR NO. 9/2014 DATED 23.04.2014 (INFRA), WE ARE INCLINED TO FOLLOW THE LATER JUDGMENT OF HON'BLE GUJARAT HIGH COURT IN THE CASE OF DY. CIT V S SUN PHARMACEUTICALS INDUSTRIES LTD (SUPRA). 8. WE ALSO NOTE THAT SIMILAR ISSUE WAS CONSIDERED B Y THE COORDINATE BENCH OF THIS TRIBUNAL AT DELHI IN THE CASE OF ACIT VS DELHI INTE RNATIONAL AIRPORT PVT LTD (SUPRA). IN THAT CASE THE ASSESSEE, INCORPORATED AS A SPECIA L PURPOSE VEHICLE, OBTAINED RIGHT TO OPERATE AND MAINTAIN AN INTERNATIONAL AIRPORT AT NE W DELHI FROM AIRPORT AUTHORITY OF INDIA. THE ASSESSEE WAS GRANTED AIRPORT CONCESSIONA IRE'S RIGHT IN CONSIDERATION OF THE 7 ITA NO. 227/KOL/2011 & C.O. NO. 18/KOL/2011 & ITA N O. 1021/KOL/2012 M/S. BALMER LAWRIE & CO. LTD., AY 2007-08 & 2009-10 ASSESSEE MAKING PAYMENT OF NON-REFUNDABLE UPFRONT F EES OF RS.150 CRORES. UPON MAKING SUCH PAYMENT THE ASSESSEE BECAME ENTITLED TO USE AND OCCUPY THE AIRPORT PROPERTY FOR A PERIOD OF 30 YEARS AND AFTER THE EXP IRY OF LEASE THE AIRPORT SITE WAS TO THE HANDED OVER BACK TO THE AIRPORT AUTHORITY OF IN DIA. IN THE ASSESSEE'S BOOKS IT HAD CAPITALIZED THE UPFRONT FEES OF RS.150 CRORES PAID. IN THE COMPUTATION OF TOTAL INCOME THE ASSESSEE HOWEVER CLAIMED THE DEDUCTION FOR THE ENTIRE UPFRONT LEASE PREMIUM PAID ON THE PLEA THAT IT WAS REVENUE IN NATURE AND SINCE BY MAKING PAYMENT ASSESSEE DID NOT ACQUIRE ANY ASSET, THE DEDUCTION WAS PERMISSIBL E FOR THE UPFRONT PAYMENT IN SUCH YEAR ITSELF. THE ASSESSEE'S PLEA WAS REJECTED BY TH E AO ON THE GROUND THAT THE PAYMENT OF RS.150 CRORES PERMITTED THE ASSESSEE RIGHT TO US E THE AIRPORT PREMISES FOR A PERIOD OF THIRTY YEARS AND THEREFORE APPLYING THE RATIO LA ID DOWN IN THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF MADRAS INDUSTR IAL INVESTMENT CORPORATION LTD VS ITA NOS. 2264 & 2483/KOL/2017 BALMER LAWRIE & CO . LTD., AYS- 2014-15 CIT (SUPRA) THE AO HELD THAT THE ASSESSEE WAS ENTITLED TO CLAIM THE EXPENDITURE ON PRORATE BASIS I.E.1/30TH OF THE PREMIUM AMOUNT IN EACH YEAR DURING THE TENURE OF THE LEASE. ON APPEAL THE LD. CIT(A) AGREED WITH ASSESSEE'S CONTEN TION AND ALLOWED THE DEDUCTION FOR ENTIRE UPFRONT FEE OF RS.150 CRORES PAID TO AIRPORT AUTHORITY OF INDIA IN THE INITIAL YEAR. ON APPEAL THE REVENUE RELYING ON THE DECISION OF TH E SPECIAL BENCH OF THIS TRIBUNAL AT MUMBAI IN THE CASE OF JT.CIT VS MUKUND LTD (SUPRA) AND DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF ENTERPRISING ENTERPRIS ES VS DCIT (293 ITR 437) CLAIMED THAT SUCH EXPENDITURE WAS CAPITAL IN NATURE AND THEREFORE NOT PERMISSIBLE. RATHER IT WAS CANVASSED BY THE REVENUE THAT IN TERM S OF THE JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE OF MADRAS INDUSTRIAL INVE STMENT CORPORATION LTD VS CIT (SUPRA), THE ORDER OF THE AO BE UPHELD. AFTER CONSI DERING THE SUBMISSIONS OF THE PARTIES AND THE JUDICIAL DECISIONS RELIED UPON, THE TRIBUNAL IN PARAS 30-31 OF ITS ORDER HELD AS FOLLOWS: '30. THUS, HEREIN THIS CASE THE TEST OF ENDURING BE NEFIT IN ACQUISITION OF CAPITAL ASSET AS PROPAGATED BY THE REVENUE WOULD FAIL FOR THE REASON THAT, FOR THE LEASE OF AIRPORT SITE WHICH WAS FOR 30 YEARS, THE PAYMENT OF RS. 150 CROR ES WAS A ONETIME PAYMENT SO THAT THE ANNUAL LEASE RENT WAS CHARGEABLE AT A VERY NOMI NAL RATE OF RS.100/- FOR A HUGE AIRPORT AREA OF MORE THAN 4609 ACRES. SUCH A MINISC ULE ANNUAL RENT OF HUGE AREA AND FACILITY (ENTIRE AIRPORT SITE) DEFINITELY WOULD DEF Y ALL COMMERCIAL PARLANCES. ONCE THE ANY RECURRING PAYMENT TOWARDS LEASE RENT IS RECKONE D OR CLASSIFIED AS REVENUE EXPENDITURE, THEN EVEN THE LUMP-SUM PAYMENT OR ONE- TIME PAYMENT FOR THE SAME PURPOSE HAS TO BE GIVEN THE SIMILAR TREATMENT AS IT PARTAKES THE SAME CHARACTER. THERE COULD NOT BE TWO DIFFERENT CLASSIFICATION OF SAME N ATURE OF EXPENDITURE. THAT APART, SUCH ONETIME PAYMENT CANNOT BE CLASSIFIED AS CREATI NG ANY CAPITAL ASSET OR ANY KIND OF PROFIT MAKING APPARATUS OR GIVING ANY ENDURING ADVA NTAGE OF A BENEFIT OF A TRADE. AT THE MOST THE SAID PAYMENT CAN BE RECKONED AS LEASE PREMIUM OR LICENCE FEE FOR THE 8 ITA NO. 227/KOL/2011 & C.O. NO. 18/KOL/2011 & ITA N O. 1021/KOL/2012 M/S. BALMER LAWRIE & CO. LTD., AY 2007-08 & 2009-10 AIRPORT SITE TAKEN ON LEASE FOR A PERIOD OF 30 YEAR S. IN THIS CASE, SUCH A PAYMENT CANNOT BE RECKONED FOR THE PURPOSE OF ACQUISITION O F BUSINESS ALSO, BECAUSE BOTH THE PARTIES HAVE AGREED TO TRANSFER THE RIGHT OF OPERAT ING, DEVELOPMENT AND MAINTENANCE OF THE AIRPORT ON REVENUE SHARING BASIS WHICH HAS B EEN TERMED AN 'ANNUAL FEE' WHICH IS RECURRING IN NATURE. NOW IF SUCH A LUMP SUM PAYMENT FOR THE LEASE OF THE AIRPORT SITE FOR A PERIOD OF 30 YEARS CAN BE RECKONED AS REVENUE OR NOT, APPEARS TO BE QUITE SETTLED PROPOSITION IN WAKE OF THE FOLLOWING JUDGEMENTS WHI CH HAS BEEN HIGHLIGHTED AND STRESSED UPON BY THE LD. SR. COUNSEL FOR THE ASSESS EE BEFORE US:- I. DCIT VS. SUN PHARMACEUTICAL IND. LTD. - 329 ITR 479 (GUJ HC) - IN THIS CASE, THE ASSESSEE WAS THE LESSEE OF LAND. THE PERIOD OF LEAS E WAS 99 YEARS. IN ADDITION TO AN ANNUAL LEASE RENT OF RS.40 PER ANNUM, THE ASSESSEE PAID RS.48 LAKH TO GIDC AS ADVANCE RENT. THE AO DISALLOWED THE CLAIM FOR THE R EASON THAT THE ASSESSEE OBTAINED AN ENDURING BENEFIT FOR AITA NOS. 2264 & 2483/KOL/2 017 BALMER LAWRIE & CO. LTD., AYS- 2014-15 PERIOD OF 99 YEARS IN THE FORM OF USE OF THE LAND AND THEREFORE HE HELD THAT THE PAYMENT WAS CAPITAL IN NATURE. THE HIGH CO URT UPHELD THE FINDING OF THE TRIBUNAL THAT THE LAND IN QUESTION WAS NOT ACQUIRED BY THE ASSESSEE AND THAT THE LEASE RENT WAS VERY NOMINAL AND THE SUM OF RS.48 LAKH WAS IN THE NATURE OF RENT AND THE ASSESSEE ONLY ACQUIRED A FACILITY TO CARRY ON BUSIN ESS PROFITABLY BY PAYING A NOMINAL LEASE RENT TOGETHER WITH LUMP SUM AMOUNT OF RS.48 L AKH. THE FACT THAT THE LEASE DEED WAS REGISTERED WAS IRRELEVANT. THEREFORE, IT WAS HE LD THAT THE PAYMENT WAS REVENUE IN NATURE. II. CIT VS. H.M.T LTD - 203 ITR 820 (KAR HC) - A LE ASE AGREEMENT WAS ENTERED INTO WITH MIDC FOR THE LEASE OF THE PLOT ON WHICH THE AS SESSEE WAS MANDATORILY TO CONSTRUCT A BUILDING WITHIN A PERIOD OF 2 YEARS FOR THE USE OF THE ASSESSEE. AFTER THE CONSTRUCTION, THE ASSESSEE WAS ENTITLED TO USE BOTH THE LAND AND BUILDING FOR 95 YEARS. UNDER THE AGREEMENT, THE ASSESSEE PAID A PREMIUM OF RS.12,09,200 FOR ACQUIRING LEASEHOLD RIGHTS. THE ANNUAL RENT WAS FIXED AT A NO MINAL SUM OF RE.1 PER ANNUM. THE ASSESSEE MADE A CLAIM FOR DEDUCTION OF THE PREMIUM PAID FOR THE REASON THAT IT WAS ACTUALLY RENT PAID IN ADVANCE AND, THEREFORE, WAS T O BE CONSIDERED AS REVENUE EXPENDITURE. IT WAS HELD BY THE KARNATAKA HIGH COURT THAT WHAT W AS TERMED AS PREMIUM AND PAID IN A LUMP-SUM TO MIDC WAS FUTURE RENT PAYABLE BY IT AND THAT IS EVIDENT FROM THE FACT THAT THE ASSESSEE WAS PAYING ONLY RE. 1 PER ANNUM W HICH IS FOR THE PURPOSE OF EVIDENCING THE CHARACTER OF THE TRANSFER OF PROPERT Y AS A LESSEE AND NOT FOR, ANY OTHER PURPOSE. APART FROM THAT CERTAIN OTHER JUDGMENTS WERE ALSO R EFERRED AND RELIED UPON WHICH HAS ALSO HAS BEEN TAKEN NOTE BY THE LD. CIT (APPEALS) I N THE IMPUGNED ORDER. THUS, THE 9 ITA NO. 227/KOL/2011 & C.O. NO. 18/KOL/2011 & ITA N O. 1021/KOL/2012 M/S. BALMER LAWRIE & CO. LTD., AY 2007-08 & 2009-10 AMOUNT OF RS. 150 CRORES PAID AS ONETIME PAYMENT FO R TAKING THE AIRPORT SITE FOR 30 YEARS ON THE FACTS OF THE PRESENT CASE HAS TO BE TR EATED AS REVENUE EXPENDITURE. 31. HERE ONE VERY IMPORTANT FACT WHICH IS NOT IN DI SPUTE IS THAT AO HIMSELF HAS TREATED THE PAYMENT OF 'UPFRONT FEES' AS REVENUE EXPENDITUR E, IN THE SENSE THAT HE HAS ALLOWED PART OF THE EXPENDITURE IN THIS YEAR AND IT IS NOT THE CASE OF AO THAT IT IS CAPITAL EXPENDITURE IN WHICH CASE NO PART COULD BE ALLOWED IN TERMS OF SECTION 37(1) OF THE ACT. THIS ACTION OF THE AO ITSELF EXONERATES THE CA SE OF THE ASSESSEE.' 9. FROM THE FOREGOING FINDINGS OF THE COORDINATE BE NCH WE FIND THAT ON THE ANALOGOUS FACTS WHERE THE ASSESSEE HAD PAID UPFRONT LEASE PRE MIUM FOR OBTAINING 30 YEARS LEASE, THE TRIBUNAL HELD THE PAYMENT TO BE REVENUE IN NATU RE AND NEGATED THE REVENUE'S CONTENTION THAT THE EXPENDITURE WAS CAPITAL IN NATU RE AND HENCE NOT PERMISSIBLE IN COMPUTING BUSINESS INCOME. IN ARRIVING AT THIS CONC LUSION THE COORDINATE BENCH HAD TAKEN NOTE OF THE DECISION OF SPECIAL BENCH OF THIS TRIBUNAL AT MUMBAI IN THE CASE OF JT. CIT VS MUKUND LTD (SUPRA) AS ALSO THE JUDGMENTS OF THE HON'BLE GUJARAT & KARNATAKA HIGH COURTS EXPRESSING CONTRARY ITA NOS. 2264 & 2483/KOL/2017 BALMER LAWRIE & CO. LTD., AYS- 2014-15 VIEW. WE FIND THAT ON THE ANALOGOUS FACTS THE TRIBUNAL HELD THAT THE LEASE PREMIUM PAID WAS NOTHI NG BUT IN THE NATURE OF LEASE RENT PAID ON LUMP SUM BASIS AND NO CAPITAL ASSET WAS ACQ UIRED BY THE ASSESSEE BY MAKING SUCH PAYMENT SO AS TO JUSTIFY ITS CHARACTERIZATION AS CAPITAL EXPENDITURE. ONCE THE NATURE OF THE EXPENDITURE IN QUESTION IS HELD TO BE IN THE REVENUE FIELD THEN THE QUESTION WHICH NEEDS TO ANSWERED IN THE PRESENT APPEAL IS WH ETHER THE ASSESSEE'S PLEA FOR AMORTIZATION OF THE LEASE PREMIUM OVER THE TENURE O F THE LEASE CAN BE ALLOWED PARTICULARLY WHEN IN THE CASE DECIDED BY THE COORDI NATE BENCH AT DELHI, IT WAS HELD THAT WHOLE OF THE EXPENDITURE WAS ELIGIBLE FOR DEDU CTION IN THE YEAR IN WHICH THE UPFRONT LEASE PREMIUM WAS PAID. IN THIS REGARD WE F IND THAT BEFORE THE DELHI BENCH OF THIS TRIBUNAL THE REVENUE ITSELF HAD CANVASSED THE PROPOSITION THAT PAYMENT OF UPFRONT FEE WAS REVENUE EXPENDITURE BUT THE DEDUCTION THERE FORE WAS REQUIRED TO BE ALLOWED ON PRO-RATA BASIS BY FOLLOWING THE RATIO LAID DOWN IN THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF MADRAS INDUSTRIAL INVE STMENT CORPORATION LTD (SUPRA). WE FIND THAT IN THE GROUNDS OF APPEAL TAKEN BEFORE US THE AO HAS STATED THAT THE CLAIM OF THE ASSESSEE WAS FOR PROPORTIONATE WRITE OFF FOR ADVANCE RENT TO THE LESSORS IN RESPECT OF DIFFERENT LANDS TAKEN ON LEASE FOR THE P URPOSES OF BUSINESS. WE THEREFORE FIND THAT IN PRINCIPLE THE AO DID NOT DISPUTE THE ASSESS EE'S CONTENTION THAT THE AMOUNT PAID BY THE ASSESSEE AT THE TIME OF OBTAINING LEASE WAS IN THE NATURE OF LEASE RENT PAID IN ADVANCE AND BY MAKING SUCH PAYMENT THE ASSESSEE HAD OBTAINED RIGHT TO USE SUCH LAND FOR CARRYING ON ITS BUSINESS. IN THE CIRCUMSTANCES ONCE THE NATURE OF PAYMENT IS FOUND TO BE FOR THE PURPOSE OF CARRYING ON BUSINESS AND N OT TO ACQUIRE CAPITAL ASSET THEN SUCH EXPENDITURE HAS TO BE CONSIDERED TO BE IN THE REVEN UE FIELD AND THEREFORE ALLOWABLE AS PER THE METHOD OF ACCOUNTING FOLLOWED BY THE ASSESS EE. 10 ITA NO. 227/KOL/2011 & C.O. NO. 18/KOL/2011 & ITA N O. 1021/KOL/2012 M/S. BALMER LAWRIE & CO. LTD., AY 2007-08 & 2009-10 10. IT IS NO DOUBT TRUE THAT IN THE CASE OF ACIT VS DELHI INTERNATIONAL AIRPORT PVT LTD (SUPRA) THE COORDINATE BENCH ALLOWED THE DEDUCTION FOR THE ENTIRE UPFRONT FEE PAID FOR OBTAINING LEASE IN THE YEAR OF PAYMENT ITSELF EVEN THOUGH THE LEASE PERIOD WAS 30 YEARS. SIMILARLY THEHON'BLE KARNATAKA HIGH COURT IN THE CASE OF HMT LTD (SUPRA) AND HON'BLE GUJARAT HIGH COURT IN THE CASE OF SUN PHARM ACEUTICALS INDUSTRIES LTD (SUPRA) ALLOWED THE DEDUCTION FOR ENTIRE UPFRONT LEASE PREM IUM IN THE YEAR OF PAYMENT ITSELF THOUGH THE LEASE PERIODS WERE MORE THAN 90 YEARS. I N THE PRESENT CASE HOWEVER THE ASSESSEE HAS NOT MADE ITA NOS. 2264 & 2483/KOL/2017 BALMER LAWRIE & CO. LTD., AYS- 2014-15 CLAIM FOR THE DEDUCTION IN THE YEAR OF PAYMENT OF UPFRONT FEES BUT HAS SOUGHT SPREAD OVER OF SUCH LEASE PREMIUM OVER THE E FFECTIVE LIFE OF THE LEASE. THE ASSESSEE'S CLAIM FOR AMORTIZATION OVER THE LEASE PE RIOD IS SUPPORTED BY THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF MADRAS IND USTRIAL INVESTMENT CORPORATION LTD (SUPRA). THE FOLLOWING OBSERVATIONS IN THAT JUD GMENT SUPPORT THE ASSESSEE'S METHODOLOGY OF CLAIMING PRO-RATA DEDUCTION FOR THE UPFRONT LEASE PREMIUM OVER THE LEASE PERIOD. '15. THE TRIBUNAL, HOWEVER, HELD THAT SINCE THE ENT IRE LIABILITY TO PAY THE DISCOUNT HAD BEEN INCURRED IN THE ACCOUNTING YEAR IN QUESTION, T HE ASSESSEE WAS ENTITLED TO DEDUCT THE ENTIRE AMOUNT OF RS.3,00,000 IN THAT ACCOUNTING YEAR. THIS CONCLUSION DOES NOT APPEAR TO BE JUSTIFIED LOOKING TO THE NATURE OF THE LIABILITY. IT IS TRUE THAT THE LIABILITY HAS BEEN INCURRED IN THE ACCOUNTING YEAR. BUT THE L IABILITY IS A CONTINUING LIABILITY WHICH STRETCHES OVER A PERIOD OF 12 YEARS. IT IS, T HEREFORE, A LIABILITY SPREAD OVER A PERIOD OF 12 YEARS. ORDINARILY, REVENUE EXPENDITURE WHICH IS INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS MUST BE ALL OWED IN ITS ENTIRETY IN THE YEAR IN WHICH IT IS INCURRED. IT CANNOT BE SPREAD OVER A NU MBER OF YEARS EVEN IF THE ASSESSEE HAS WRITTEN IT OFF IN HIS BOOKS OVER A PERIOD OF YE ARS. HOWEVER, THE FACTS MAY JUSTIFY AN ASSESSEE WHO HAS INCURRED EXPENDITURE IN A PARTICUL AR YEAR TO SPREAD AND CLAIM IT OVER A PERIOD OF ENSUING YEARS. IN FACT, ALLOWING THE EN TIRE EXPENDITURE IN ONE YEAR MIGHT GIVE A VERY DISTORTED PICTURE OF THE PROFITS OF A P ARTICULAR YEAR. THUS IN THE CASE OF HINDUSTAN ALUMINIUM CORPORATION LTD. VS. CIT, ( 1982) 30 CTR (CAL) 363: (]983) 144 ITR 474 (CAL) THE CALCUTTA HIGH COURT UPHELD TH E CLAIM OF THE ASSESSEE TO SPREAD OUT A LUMP SUM PAYMENT TO SECURE TECHNICAL ASSISTAN CE AND TRAINING OVER A NUMBER OF YEARS AND ALLOWED A PROPORTIONATE DEDUCTION IN THE ACCOUNTING YEAR IN QUESTION. 16. ISSUING DEBENTURES AT A DISCOUNT IS ANOTHER SUC H INSTANCE WHERE, ALTHOUGH THE ASSESSEE HAS INCURRED THE LIABILITY TO PAY THE DISC OUNT IN THE YEAR OF ISSUE OF DEBENTURES, THE PAYMENT IS TO SECURE A BENEFIT OVER A NUMBER OF YEARS. THERE IS A CONTINUING BENEFIT TO THE BUSINESS OF THE COMPANY O VER THE ENTIRE PERIOD. THE LIABILITY SHOULD, THEREFORE, BE SPREAD OVER THE PERIOD OF THE DEBENTURES.' 11 ITA NO. 227/KOL/2011 & C.O. NO. 18/KOL/2011 & ITA N O. 1021/KOL/2012 M/S. BALMER LAWRIE & CO. LTD., AY 2007-08 & 2009-10 11. WE MAY ALSO GAINFULLY REFER TO THE OBSERVATIONS OF THE HON'BLE SUPREME COURT MADE IN THE CASE OF TAPARIA TOOLS LTD VS JT. CIT (3 72 ITR 605) WHICH ARE AS FOLLOWS: '17. THUS, THE FIRST THING WHICH IS TO BE NOTICED I S THAT THOUGH THE ENTIRE EXPENDITURE WAS INCURRED IN THAT YEAR, IT WAS THE ASSESSEE WHO WANTED THE SPREAD OVER. THE COURT WAS CONSCIOUS OF THE PRINCIPLE THAT NORMALLY REVENU E EXPENDITURE IS TO BE ALLOWED IN THE SAME YEAR IN WHICH IT IS INCURRED, BUT AT THE I NSTANCE OF THE ASSESSEE, WHO WANTED SPREADING OVER, THE ITA NOS. 2264 & 2483/KOL/2017 B ALMER LAWRIE & CO. LTD., AYS- 2014-15 COURT AGREED TO ALLOW THE ASSESSEE THAT BEN EFIT WHEN IT WAS FOUND THAT THERE WAS A CONTINUING BENEFIT TO THE BUSINESS OF THE COM PANY OVER THE ENTIRE PERIOD. 18. WHAT FOLLOWS FROM THE ABOVE IS THAT NORMALLY TH E ORDINARY RULE IS TO BE APPLIED, NAMELY, REVENUE EXPENDITURE INCURRED IN A PARTICULA R YEAR IS TO BE ALLOWED IN THAT YEAR. THUS, IF THE ASSESSEE CLAIMS THAT EXPENDITURE IN THAT YEAR, THE IT DEPARTMENT CANNOT DENY THE SAME. HOWEVER, IN THOSE CASES WHERE THE ASSESSEE HIMSELF WANTS TO SPREAD THE EXPENDITURE OVER A PERIOD OF ENSUING YEA RS, IT CAN BE ALLOWED ONLY IF THE PRINCIPLE OF 'MATCHING CONCEPT' IS SATISFIED, WHICH UPTO NOW HAS BEEN RESTRICTED TO THE CASES OF DEBENTURES.' 12. FROM THE FOREGOING OBSERVATIONS IT IS EVIDENT T HAT IN THE OPINION OF THE HON'BLE SUPREME COURT IN CERTAIN CASES WHERE THE ASSESSEES THEMSELVES OPT TO SPREAD THE EXPENDITURE OVER A PERIOD OF ENSUING YEARS THEN SUC H A CLAIM OF THE ASSESSEE CAN BE ALLOWED ONLY IF THE PRINCIPLE OF MATCHING CONCEPT I S SATISFIED. IN THE PRESENT ADMITTEDLY THE ASSESSEE HAS OBTAINED LEASES FROM GOVERNMENTAL AUTONOMOUS BODIES SUCH AS CIDCO, KPT ETC. FOR THE PURPOSE OF CARRYING ON ASSE SSEE'S BUSINESS AND USED THESE LEASE HOLD LANDS FOR SETTING UP INDUSTRIAL UNDERTAK INGS/INFRASTRUCTURE FACILITIES THEREON. AS SUCH THE BENEFIT OF THE LEASE IS BEING ENJOYED B Y THE ASSESSEE OVER THE LEASE PERIOD. THE ASSESSEE THEREFORE IS ASSURED OF DERIVING REVEN UE FROM THE BUSINESS CARRIED FROM THESE LEASED PREMISES OVER THE TENURE OF LEASE AND THEREFORE THE CORRESPONDING COST IN THE FORM OF PRO-RATA LEASE PREMIUM IS REQUIRED TO B E NETTED OFF AGAINST REVENUES GENERATED FROM THE BUSINESS, APPLYING THE PRINCIPLE OF MATCHING OF COST WITH REVENUE SO AS TO DISCLOSE TRUE & FAIR AMOUNT OF OPERATING P ROFITS OF EACH YEAR. WE THEREFORE FIND THAT SINCE IN THE PRESENT CASE THE ASSESSEE HA S SATISFIED THE MATCHING CONCEPT TEST, AS PRESCRIBED BY THE HON'BLE SUPREME COURT, THE ASS ESSEE'S CLAIM FOR AMORTIZATION OF LEASE PREMIUM IS ALLOWABLE. 13. WE ALSO NOTE THAT THE ASSESSEE'S CLAIM FOR AMOR TIZATION OF LEASE PREMIUM PRINCIPALLY RELATED TO LEASES OF FOUR PLOTS OF LAND AT MUMBAI & KOLKATA WHICH ARE USED FOR SETTING UP CONTAINER FREIGHT STATIONS (CFS), CO NSIDERED AS 'INFRASTRUCTURE FACILITY' FOR THE PURPOSES OF SECTION 80IA OF THE ACT. WITH T HE PERMISSIONS OBTAINED FROM THE MINISTRY OF FINANCE, DEPT. OF REVENUE, THE ASSESSEE HAS SET UP DEVEL CFSS ON THE 12 ITA NO. 227/KOL/2011 & C.O. NO. 18/KOL/2011 & ITA N O. 1021/KOL/2012 M/S. BALMER LAWRIE & CO. LTD., AY 2007-08 & 2009-10 LEASED PREMISES. THE ISSUE OF ALLOWABILITY OF AMORT IZATION OF LEASE PREMIUM PAID IN RESPECT OF LEASED LAND ON WHICH CFS WAS SET UP, WAS CONSIDERED BY THE COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF DY.CIT ITA NO S. 2264 & 2483/KOL/2017 BALMER LAWRIE & CO. LTD., AYS- 2014-15 VS CENTURY PLYBOARD S INDIA LTD (SUPRA). IN THAT CASE ALSO THE ASSESSEE HAD PAID LEASE PREMIUM OF RS.156 LACS FOR OBTAINING LEASE OF LAND FROM KOLKATA PORT TRUST FOR A PERIOD OF 15 YEARS. I N ITS BOOKS AS WELL AS IN THE RETURN OF INCOME THE ASSESSEE CLAIMED AMORTIZATION OF THE LEASE PREMIUM OVER THE PERIOD OF 15 YEARS. THIS CLAIM WAS REJECTED BY THE AO. ON APP EAL THE LD. CIT(A) ALLOWED THE DEDUCTION BY FOLLOWING THE CBDT CIRCULAR NO. 9/2014 DATED 23.04.2014. ON APPEAL RELYING ON THE JUDGMENT OF THE HON'BLE SUPREME COUR T IN THE CASE OF ENTERPRISING ENTERPRISES VS CIT (SUPRA) THE REVENUE CLAIMED THAT SUCH EXPENDITURE BEING CAPITAL IN NATURE WAS NOT ALLOWABLE IN COMPUTING BUSINESS INCO ME OF THE ASSESSEE. THE TRIBUNAL HOWEVER NOTED THAT THE JUDGMENT OF THE HON'BLE SUPR EME COURT WAS RENDERED ON 04.12.2006 BUT THEREAFTER THE CBDT ISSUED THE CIRCU LAR ON 23.04.2014 WHEREIN EXPENDITURE OF SUCH NATURE WAS PERMITTED TO BE SPRE AD OVER THE LEASE PERIOD AFTER THE COMMENCEMENT OF BUSINESS. THE RELEVANT FINDINGS OF THE COORDINATE BENCH OF THIS TRIBUNAL WAS AS FOLLOWS: 16. WE HAVE HEARD RIVAL CONTENTIONS OF BOTH THE PAR TIES AND PERUSED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD; INCLUDING THE JU DICIAL PRONOUNCEMENTS CITED AND PLACED RELIANCE UPON. THE ISSUE IN THE INSTANT CASE REVOLVES TO THE AMOUNT OF THE LEASE PREMIUM AMORTIZED BY THE ASSESSEE OVER A LEASE PERI OD AS DISCUSSED ABOVE. THE ASSESSEE AFTER THE COMMENCEMENT OF THE BUSINESS HAS CLAIMED THE PROPORTIONATE DEDUCTION OF THE AFORESAID EXPENDITURE PERTAINING T O THE YEAR UNDER CONSIDERATION. UNDISPUTEDLY THE PROPORTIONATE DEDUCTION WAS CLAIME D BY ASSESSEE U/S 37(1) OF THE ACT AFTER THE COMMENCEMENT OF ITS BUSINESS. 16.1. INDEED, CASE LAW RELIED ON BY LD DR AS DISCUS SED ABOVE IS AGAINST THE ASSESSEE WHEREIN IT HAS BEEN HELD BY THE HON'BLE MADRAS HIGH COURT IN THE CASE OF ENTERPRISING ENTERPRISE (SUPRA) AND AFORESAID JUDGE MENT WAS DELIVERED BY THE HON'BLE MADRAS HIGH COURT VIDE ORDER DATED 01.04.2004 WHICH WAS SUBSEQUENTLY AFFIRMED BY HON'BLE SUPREME COURT VIDE ORDER DATED 04.12.2006. HOWEVER, SUBSEQUENT TO THE AFORESAID JUDGMENT, WE FIND THAT THE CBDT HAS ISSUE D A CIRCULAR 9/2014 DATED 23.04.2014 WHEREIN THE IMPUGNED EXPENDITURE WAS ALL OWED OVER THE LEASE PERIOD AFTER THE COMMENCEMENT OF BUSINESS AND RELEVANT EXTRACT O F THE CIRCULAR IS REPRODUCED BELOW:- 2. IN SUCH PROJECT, THE DEVELOPER (HEREINAFTER REFE RRED TO AS 'ASSESSEE'), IN TERMS OF CONCESSIONAIRE AGREEMENT WITH GOVERNMENT OR ITS AGE NCIES IS REQUIRED TO CONSTRUCT, DEVELOP AND MAINTAIN THE INFRASTRUCTURAL FACILITY O F ROADS/HIGHWAYS WHICH, INTER-ALIA, INCLUDES LAYING OF ROADS, BRIDGES, HIGHWAYS, APPROA CH ROADS, CULVERTS, PUBLIC 13 ITA NO. 227/KOL/2011 & C.O. NO. 18/KOL/2011 & ITA N O. 1021/KOL/2012 M/S. BALMER LAWRIE & CO. LTD., AY 2007-08 & 2009-10 AMENITIES ETC. AT ITS OWN COST AND ITS UTILIZATION THEREOF FOR A SPECIFIED PERIOD. IN LIEU OF CONSIDERATION OF THE EXPENDITURE INCURRED ON CONSTR UCTION, OPERATION AND MAINTENANCE OF THE INFRASTRUCTURE FACILITY COVERED BY ITA NOS. 2264 & 2483/KOL/2017 BALMER LAWRIE & CO. LTD., AYS- 2014-15 THE PERIOD OF THE A GREEMENT, THE ASSESSEE IS ACCORDED A RIGHT TO COLLECT TOLL FROM USERS OF SUCH FACILITY . THE EXPENDITURE INCURRED BY SUCH ASSESSEE ON DEVELOPMENT AND CONSTRUCTION OF SUCH IN FRASTRUCTURAL FACILITY ARE CAPITALIZED IN THE ACCOUNTS. IT IS SEEN THAT IN RET URNS-OF-INCOME, ASSESSEE ARE GENERALLY CLAIMING DEPRECIATION ON SUCH CAPITALIZED EXPENDITU RE TREATING IT AS AN 'INTANGIBLE ASSET' IN TERMS OF SECTION 32(1)(II) OF THE ACT WHI LE IN ASSESSMENTS, SUCH CLAIMS ARE BEING DISALLOWED BY THE ASSESSING OFFICER ON THE GR OUNDS THAT SUCH INFRASTRUCTURAL FACILITY IS NOT OWNED, WHOLLY OR PARTLY, BY THE TAX PAYER WHICH IS AN ESSENTIAL CONDITION FOR CLAIMING DEPRECIATION AND FURTHER RIGHT TO COLL ECT TOLL DOES NOT FALL IN AN OF THE CATEGORIES OF 'INTANGIBLE ASSETS' SPECIFIED IN SUB- CLAUSE (II)OF SUB-SECTION (1) OF SECTION 32 OF THE ACT. 3. IN BOT ARRANGEMENTS FOR DEVELOPMENT OF ROADS/HIG HWAYS, AS A MATTER OF GENERAL PRACTICE, POSSESSION OF LAND IS HANDED OVER TO THE ASSESSEE BY THE GOVERNMENT/NOTIFIED AUTHORITYFOR THE PURPOSES OF CONSTRUCTION OF THE PR OJECT WITHOUT ANY ACTUAL TRANSFER OF OWNERSHIP AND SUCH ASSESSEE HAS ONLY A RIGHT TO DEV ELOP AND MAINTAIN SUCH ASSET. IT ALSO ENJOYS THE BENEFITS ARISING FROM USE OF ASSET THROUGH COLLECTION OF TOLL FOR A SPECIFIED PERIOD WITHOUT HAVING ACTUAL OWNERSHIP OV ER SUCH ASSET. THEREFORE, THE RIGHTS IN THE LAND REMAIN VESTED WITH THE GOVERNMEN T OR ITS AGENCIES. THUS, AS ASSESSEE DOES NOT HOLD ANY RIGHTS IN THE PROJECT EXCEPT RECO VERY OF TOLL FEE TO RECOUP THE EXPENDITURE INCURRED, IT CANNOT THEREFORE BE TREATE D AS AN OWNER OF THE PROPERTY, EITHER WHOLLY OR PARTLY, FOR PURPOSES OF ALLOWABILITY OF D EPRECIATION UNDER SECTION 32(1)(II) OF THE ACT. THUS, PRESENT PROVISIONS OF THE ACT DO NOT ALLOW CLAIM OF DEPRECIATION ON TOLL WAYS DUE TO NON FULFILMENT OF OWNERSHIP CRITERIA IN SUCH CASES. 4. THERE IS NO DOUBT THAT WHERE THE ASSESSEE INCURS EXPENDITURE ON A PROJECT FOR DEVELOPMENT OF ROADS/HIGHWAYS, HE IS ENTITLED TO RE COVER COST INCURRED BY HIM TOWARDS DEVELOPMENT OF SUCH FACILITY (COMPRISING OF CONSTRU CTION COST AND OTHER PRE-OPERATIVE EXPENSES) DURING THE CONSTRUCTIONS COST AND OTHER P RE-OPERATIVE EXPENSES) DURING THE CONSTRUCTION PERIOD. FURTHER, EXPENDITURE INCURRED BY THE ASSESSEE ON SUCH BOT PROJECTS BRINGS TO IT AN ENDURING BENEFIT IN THE FO RM OF RIGHT TO COLLECT THE TOLL DURING THE PERIOD OF THE AGREEMENT. HON'BLE SUPREME COURT IN THE CASE OF MADRAS INDUSTRIAL INVESTMENT CORPORATION LTD. VS. CIT IN 225 ITR 802= 2002-TIOL-290-SC-IT-LB ALLOWED SPREADING OVER OF LIABILITY OVER A NUMBER O F YEARS ON THE GROUND THAT THERE WAS CONTINUING BENEFIT TO THE COMPANY OVER A PERIOD . THEREFORE, ANALOGOUSLY, EXPENDITURE INCURRED ON AN INFRASTRUCTURE PROJECT F OR DEVELOPMENT OF ROADS/HIGHWAYS UNDER BOT AGREEMENT MAY BE TREATED AS HAVING BEEN M ADE/INCURRED FOR THE PURPOSES 14 ITA NO. 227/KOL/2011 & C.O. NO. 18/KOL/2011 & ITA N O. 1021/KOL/2012 M/S. BALMER LAWRIE & CO. LTD., AY 2007-08 & 2009-10 OF BUSINESS OR PROFESSION OF THE ASSESSEE AND SAME MAY BE ALLOWED TO BE SPREAD DURING THE TENURE OF CONCESSIONAIRE AGREEMENT. 5. IN VIEW OF ABOVE, CENTRAL BOARD OF DIRECT TAXES, IN EXERCISE OF THE POWERS CONFERRED UNDER SECTION 119 OF THE ACT HEREBY CLARIFIES THAT THE COST OF CONSTRUCTION ON DEVELOPMENT OF INFRASTRUCTURE FACILITY OF ROADS/HIG HWAYS UNDER BOT PROJECTS MAY BE AMORTIZED AND CLAIMED AS ALLOWABLE BUSINESS EXPENDI TURE UNDER THE ACT. 6. THE AMORTIZATION ALLOWABLE MAY BE COMPUTED AT TH E RATE WHICH ENSURES THAT THE WHOLE OF THE COST INCURRED IN CREATION OF INFRASTRU CTURAL FACILITY OF ROAD/HIGHWAY IS AMORTIZED EVENLY ITA NOS. 2264 & 2483/KOL/2017 BALM ER LAWRIE & CO. LTD., AYS- 2014-15 OVER THE PERIOD OF CONCESSIONAIRE AGREEMENT AFTER EXCLUDING THE TIME TAKE FOR CREATION OF SUCH FACILITY. 7. IN THE CASE WHERE AN ASSESSEE HAS CLAIMED ANY DE DUCTION OUT OF INITIAL COST OF DEVELOPMENT OF INFRASTRUCTURE FACILITY OF ROADS/HIG HWAYS UNDER BOT PROJECTS IN EARLIER YEAR, THE TOTAL DEDUCTION SO CLAIMED FOR THE ASSESS MENT YEARS PRIOR TO THE ASSESSMENT YEAR UNDER CONSIDERATION MAY BE DEDUCTED FROM THE I NITIAL COST OF INFRASTRUCTURE FACILITY OF ROADS/HIGHWAYS AND THE COST 'SO REDUCED ' SHALL BE AMORTIZED EQUALLY OVER THE REMAINING PERIOD OF TOLL CONCESSIONAIRE AGREEMENT. 8. IT IS HEREBY CLARIFIED THAT THIS CIRCULAR IS APP LICABLE ONLY TO THOSE INFRASTRUCTURE PROJECTS FOR DEVELOPMENT OF ROAD/HIGHWAYS ON BOT BA SIS WHERE OWNERSHIP IS NOT VESTED WITH THE ASSESSEE UNDER THE CONCESSIONAIRE A GREEMENT. 9. THIS, MAY BE BROUGHT TO THE NOTICE OF ALL CONCER NED. THE AFORESAID CIRCULAR WAS ISSUED ON 23.04.2014 AND SUBSEQUENT TO THE JUDGMENT OF HON'BLE MADRAS HIGH COURT AS WELL AS HON'BLE SUPREM E COURT. THE CIRCULAR BEING BENEFICIAL TO THE ASSESSEE IS BINDING ON THE LOWER AUTHORITIES. IN OUR CONSIDERED VIEW, THE AO BEFORE MAKING ANY DISALLOWANCE SHOULD HAVE R EFERRED TO THE AFORESAID CIRCULAR. IN THE BACKGROUND OF THE ABOVE DISCUSSION AND PRECEDENT OF THE CASES WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LD. CIT(A) A ND ACCORDINGLY WE UPHOLD THE SAME. THIS GROUND OF REVENUE IS DISMISSED. 14. WE THUS FIND THAT THE ON IDENTICAL FACTS THE CO ORDINATE BENCH OF THIS TRIBUNAL BY APPLYING THE CBDT CIRCULAR NO. 9/2014 DATED 23.04.2 014 GRANTED THE ASSESSEE'S CLAIM FOR AMORTIZATION OF LEASE PREMIUM OVER THE EF FECTIVE LIFE OF LEASE. FOR THE REASONS DISCUSSED IN THE FOREGOING THEREFORE WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) GRANTING AMORTIZATION OF LEASE PR EMIUM OF RS.79,68,169/- IN COMPUTING BUSINESS INCOME OF THE ASSESSEE. IN THE R ESULT, THE APPEAL OF THE REVENUE FAILS. 15 ITA NO. 227/KOL/2011 & C.O. NO. 18/KOL/2011 & ITA N O. 1021/KOL/2012 M/S. BALMER LAWRIE & CO. LTD., AY 2007-08 & 2009-10 7. THE FACTS IN THE YEAR UNDER DISPUTE ARE ANALOGOU S TO THAT INVOLVED IN THE DECISIONS (SUPRA) AND SINCE NO CHANGE IN LAW OR FACTS WAS POI NTED OUT BY THE REVENUE SO RESPECTFULLY FOLLOWING THE BINDING JUDGMENT OF THE HONBLE CALCU TTA HIGH COURT AND THIS TRIBUNAL AS WELL, WE FIND NO INFIRMITY IN THE IMPUGNED ORDER OF LD. CIT(A), IN THIS REGARD. ACCORDINGLY GROUND NO. 1 RAISED BY THE REVENUE IS DISMISSED. 8. GROUND NO. 2 OF THE REVENUES APPEAL IS AGAINST THE LD. CIT(A)S ACTION OF DELETING THE DEDUCTION DISALLOWED BY THE AO U/S 80IA TO THE EXTENT OF RS.45,10,547/-. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT THE ASSESSEE HAD DEV ELOPED, MAINTAINED AND OPERATED CONTAINER FREIGHT STATION (CFS), PROFITS OF WHICH WAS CLAIMED BY WAY OF DEDUCTION U/S 80IA OF THE ACT. THERE IS NO QUARREL WITH REGARD TO THE FACT TH AT THE CFS ACTIVITY IS AN INFRASTRUCTURE FACILITY AND IS ENTITLED FOR DEDUCTION U/S 80IA OF THE ACT. BEFORE THE AO, THE ASSESSEE FILED THE BREAK-UP OF THE VARIOUS STREAMS OF INCOME DERIV ED BY CFS. FROM THE SAID BREAK-UP, THE AO NOTED THAT THERE WERE CERTAIN ITEMS LIKE INTERES T ON DELAYED PAYMENT BY CUSTOMERS, CHARGES TOWARDS WAREHOUSING OF CARGO, PROFIT ON DIS POSAL OF FIXED ASSETS, SALE OF TENDER DOCUMENTS, SALE OF SCRAP ETC. ACCORDING TO AO THE S AID RECEIPTS DID NOT HAVE FIRST DEGREE NEXUS WITH THE CFS ACTIVITY OF THE ELIGIBLE INDUSTR IAL UNDERTAKING OF CFS ACTIVITY AND THEREFORE THE DEDUCTION U/S 80IA OF THE ACT TO THE EXTENT OF RS.45,10,547/- WAS DENIED. ON APPEAL THE LD. CIT(A) DELETED THE DISALLOWANCE ON T HE GROUND THAT THE IMPUGNED RECEIPTS WERE DERIVED FROM THE OPERATION OF CFS AND THEREFOR E ELIGIBLE FOR DEDUCTION U/S 80IA OF THE ACT. BEING AGGRIEVED BY THE SAID ORDER, THE REVENUE IS NOW IN APPEAL BEFORE US. 9. THE LD. AR BROUGHT TO OUR ATTENTION THAT THE ASS ESSEE HAD SIMILARLY CLAIMED DEDUCTION U/S 80IB IN RESPECT OF PROFITS OF ELIGIBL E UNDERTAKINGS. HE POINTED OUT THAT SIMILAR ITEMS OF OTHER INCOME WERE CREDITED TO THE RESPEC TIVE STAND-ALONE ACCOUNTS OF SUCH ELIGIBLE UNITS. HE SUBMITTED THAT THE LD. CIT(A) IN THE IMPU GNED APPELLATE ORDER, ON SIMILAR REASONING, HAD DELETED THE DISALLOWANCE AND ALLOWED THE CLAIM OF U/S 80IB IN RESPECT OF OTHER INCOME, AGAINST WHICH NO APPEAL WAS PREFERR ED BY THE REVENUE. THE LD. AR ALSO POINTED OUT THAT IN RESPECT OF SIMILAR RECEIPTS REC EIVED IN THE EARLIER YEARS THE AO HAD DENIED THE DEDUCTION U/S 80IB ON THE GROUND THAT THESE REC EIPTS CREDITED UNDER THE HEAD OTHER INCOME. ON APPEAL THE DISALLOWANCE MADE BY THE AO WAS DELETED BY THE LD. CIT(A). THE LD. AR SUBMITTED THAT IN AY 2003-04 THE ORDER OF TH E LD. CIT(A) GRANTING DEDUCTION U/S 16 ITA NO. 227/KOL/2011 & C.O. NO. 18/KOL/2011 & ITA N O. 1021/KOL/2012 M/S. BALMER LAWRIE & CO. LTD., AY 2007-08 & 2009-10 80IB WAS UPHELD AND IN THE LATER YEARS TILL AY 2006 -07, NO SECOND APPEAL WAS PREFERRED BY THE REVENUE. HE THEREFORE SUBMITTED SINCE THE NATUR E OF RECEIPTS IN THE HANDS OF CFS WHICH QUALIFIED FOR DEDUCTION U/S 80IA WAS IDENTICAL, THE LD. CIT(A)S ORDER BE UPHELD BECAUSE THE LANGUAGE GOVERNING THE DEDUCTION U/S 80IB AND 8 0IA WERE IDENTICAL. ON THE OTHER HAND, THE LD. DR SUPPORTED THE ORDER OF THE AO. 10. HAVING CONSIDERED THE SUBMISSIONS OF BOTH PARTI ES AND ORDERS OF LOWER AUTHORITIES, WE FIND THAT THE APPELLANT HAD DERIVED CERTAIN RECE IPTS IN THE COURSE OF CFS ACTIVITY LIKE INTEREST ON DELAYED PAYMENT BY CUSTOMERS, CHARGES T OWARDS WAREHOUSING OF CARGO, PROFIT ON DISPOSAL OF FIXED ASSETS, SALE OF TENDER DOCUMENTS, SALE OF SCRAP ETC. WHICH WERE CREDITED UNDER THE HEAD OTHER INCOME IN THE STAND ALONE AC COUNTS OF THE ELIGIBLE UNIT U/S 80IA OF THE ACT. WE NOTE THAT THE REASONING GIVEN BY HIM FO R DISALLOWING THE DEDUCTION CLAIM U/S 80IA IN RESPECT OF SUCH ITEMS OF INCOME WAS IDENTIC AL TO THE FINDINGS RECORDED BY HIM IN THE IMPUGNED ORDER FOR JUSTIFYING THE DISALLOWANCE MADE U/S 80IB. THE LD. CIT(A) IN THE IMPUGNED APPELLATE ORDER ALLOWED THE DEDUCTION U/S 80IB IN RESPECT OF SUCH OTHER INCOME FOLLOWING THE APPELLATE ORDERS PASSED IN THE EARLIE R YEARS. WE NOTE THAT THE REVENUE DID NOT DISPUTE THE LD. CIT(A)S FINDINGS ALLOWING THE DEDU CTION CLAIMED U/S 80IB IN RESPECT OF SUCH OTHER INCOME. WE NOTE THAT FOR ALLOWING THE DEDUC TION UNDER SECTION 80IA AS WELL AS SECTION 80IB THE INCOME MUST BE DERIVED FROM THE OP ERATION OF THE ELIGIBLE UNDERTAKING/FACILITY. IN THE ASSESSEES CASE THE N ATURE OF OTHER INCOME IN RESPECT OF CFS FACILITY AS WELL AS INDUSTRIAL UNDERTAKINGS ELIGIBL E U/S 80IB WAS SAME. IN THE CONTEXT OF SECTION 80IB DEDUCTION, THE REVENUE HAS ACCEPTED TH AT SUCH OTHER INCOME HAD FIRST DEGREE NEXUS WITH THE OPERATIONS OF THE INDUSTRIAL UNDERTA KINGS AND THEREFORE NO SECOND APPEAL WAS FILED IN THIS YEAR. WE THEREFORE SEE NO REASON TO T AKE A DIFFERENT VIEW IN THE CONTEXT OF ALLOWING DEDUCTION U/S 80IA OF THE ACT. WE ALSO FIN D BEFORE US NO MATERIAL WAS BROUGHT BY THE REVENUE TO CONTROVERT THE LD. CIT(A)S FINDINGS THAT SUCH OTHER INCOME WAS DERIVED FROM THE CFS FACILITY OF THE ASSESSEE. WE THEREFORE SEE NO REASON TO INTERFERE WITH THE ORDER OF LD. CIT(A). GROUND NO. 2 IS ACCORDINGLY DISMISSE D. 11. GROUND NO. 3 OF THE REVENUES APPEAL AND THE GR OUNDS TAKEN IN THE CROSS OBJECTION NO. 18/KOL/2011 FILED BY THE ASSESSEE RELATE DISALL OWANCE U/S 14A OF THE ACT. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT THE ASSESSEE HELD IN VESTMENTS IN PSU JOINT VENTURES AND SIMILAR 17 ITA NO. 227/KOL/2011 & C.O. NO. 18/KOL/2011 & ITA N O. 1021/KOL/2012 M/S. BALMER LAWRIE & CO. LTD., AY 2007-08 & 2009-10 COMPANIES. THE ASSESSEE DERIVED DIVIDEND AGGREGATIN G TO RS.1,76,34,900/-. SUCH DIVIDEND COMPRISED OF FOUR DIVIDEND WARRANTS WHICH WERE ENCA SHED BY THE ASSESSEE AT PAR. ACCORDING TO AO THE ASSESSEE DID NOT DISALLOW ANY EXPENDITURE IN RELATION TO EARNING OF SUCH EXEMPT INCOME AND THEREFORE APPLIED RULE 8D NOTIFIED IN AY 2008-09 RETROSPECTIVELY. THE AO MADE DISALLOWANCE OF RS.23,57,060/- BEING 0.5% OF THE AVERAGE VALUE OF INVESTMENTS, TOWARDS ADMINISTRATIVE EXPENSES U/S 14A IN TERMS OF RULE 8D(2)(III). ON APPEAL THE LD. CIT(A) FOLLOWING THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF GODREJ & BOYCE MFG CO LTD (328 ITR 81) HELD THAT RULE 8D COU LD NOT HAVE BEEN APPLIED RETROSPECTIVELY AND HENCE HELD THE DISALLOWANCE OF RS.23,57,060/- COMPUTED BY THE AO UNDER RULE 8D(2)(III) TO BE BAD IN LAW. THE LD. CIT (A) HOWEVER HELD THAT ALTHOUGH RULE 8D IS NOT APPLICABLE BUT SOME EXPENDITURE CAN BE SAID TO HAVE BEEN DIRECTLY OR INDIRECTLY INCURRED FOR EARNING DIVIDEND INCOME. HE THEREFORE ESTIMATED 1% OF THE DIVIDEND INCOME I.E. RS.1,76,349/- TO BE THE REASONABLE SUM DISALLO WABLE U/S 14A OF THE ACT. AGGRIEVED BY THE ORDER OF THE LD. CIT(A), BOTH REVENUE AND THE A SSESSEE ARE IN APPEAL BEFORE US. 12. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE CASE RECORDS. AS FAR AS THE REVENUES CASE IS CONCERNED, IT IS NOTED THAT, THE ISSUE WHETHER RULE 8D CAN BE APPLIED RETROSPECTIVELY OR NOT, IS NO LONGER RES INTEGRA. T HE HONBLE BOMBAY COURT IN THE CASE OF GODREJ & BOYCE MFG CO LTD (SUPRA) HAS HELD THAT RUL E 8D CAN BE APPLIED ONLY FROM AY 2008-09 AND ONWARDS AND THEREFORE IT CANNOT BE APPL IED IN THE RELEVANT YEAR IN CONSIDERATION. RESPECTFULLY FOLLOWING THE JUDGMENT OF THE HONBLE BOMBAY COURT, WE THEREFORE REJECT THE REVENUES GROUND AGAINST THE L D. CIT(A)S ACTION OF DELETING THE DISALLOWANCE OF RS.23,57,060/- COMPUTED BY THE AO I N ACCORDANCE WITH RULE 8D. GROUND NO. 3 OF THE REVENUES APPEAL IS THEREFORE DISMISSE D. 13. SO FAR AS THE CROSS OBJECTION OF THE ASSESSEE I S CONCERNED REGARDING THE LD. CIT(A)S ACTION OF ATTRIBUTING ADMINISTRATIVE EXPENSES OF RS .1,76,349/- TOWARDS EARNING OF DIVIDEND INCOME, WE FIND THAT THIS TRIBUNAL IS CONSISTENTLY HOLDING THAT PRIOR TO AY 2008-09 I.E. INTRODUCTION OF RULE 8D, SOME DISALLOWANCE U/S 14A WAS WARRANTED. HOWEVER THE COORDINATE BENCHES OF THIS TRIBUNAL HAVE CONSISTENT LY HELD THAT SUCH DISALLOWANCE SHOULD BE RESTRICTED TO 1% OF THE DIVIDEND INCOME. WE THEREFO RE SEE NO REASON TO INTERFERE WITH THE 18 ITA NO. 227/KOL/2011 & C.O. NO. 18/KOL/2011 & ITA N O. 1021/KOL/2012 M/S. BALMER LAWRIE & CO. LTD., AY 2007-08 & 2009-10 ORDER OF THE LD. CIT(A) WHICH IS IN CONFORMITY WITH THE VIEW CONSISTENTLY ADOPTED BY THIS TRIBUNAL IN SEVERAL CASES. ACCORDINGLY WE DISMISS T HE CROSS OBJECTION OF THE ASSESSEE. 14. NOW WE TAKE UP THE ASSESSEES APPEAL IN ITA NO. 1021/KOL/2012 FOR AY 2009-10. 15. THE SOLITARY ISSUE IN THIS APPEAL RELATES TO DI SALLOWANCE OF THE AMORTIZATION OF LEASE PREMIUM OF RS.23,50,000/-. AFTER CONSIDERING THE RI VAL SUBMISSIONS, IT IS OBSERVED THAT THE ISSUE INVOLVED IN THIS GROUND IS SIMILAR TO THE GRO UND NO.1 OF DEPARTMENT APPEAL IN A.Y. 2007-08.FOLLOWING OUR CONCLUSION DRAWN IN A.Y. 2007 -08, WE ALLOW THESE GROUNDS RAISED BY THE ASSESSEE. 16. IN THE RESULT, THE APPEAL OF THE REVENUE AND TH E CROSS OBJECTION OF THE ASSESSEE FOR AY 2007-08 STAND DISMISSED AND THE APPEAL OF THE AS SESSEE FOR AY 2009-10 STANDS ALLOWED ORDER IS PRONOUNCED IN THE OPEN COURT ON 23RD A UGUST, 2019. SD/- SD/- (A.L. SAINI) (ABY. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 23RD AUGUST, 2019 BISWAJIT (SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1. ASSESSEE M/S. BALMER LAWRIE & CO. LTD., 21, NE TAJI SUBHAS ROAD, KOLKATA 700 001. 2 REVENUE DCIT, CIRCLE 5, KOLKATA. 3. 4. 5. CIT(A) - VI CIT DR, ITAT, KOLKATA. (SENT THROUGH E-MAIL) / TRUE COPY, BY ORDER, ASSISTANT REGISTRAR/H.O.O ITAT, KOLKATA