Potain India Pvt. Ltd., Pune V. JCIT, Range-6, Pune

ITA 258/PUN/2013

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 1170 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 7 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 18-03-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 28-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS M S VERMA
• Keywords: Capital asset; Depreciation; Transfer pricing; International transaction; Revenue expenditure; Capital expenditure
• Section: 143(3); 32

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUN E , , ! ' , #$ BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM / ITA NO. 258/PN/2013 #% & '& / ASSESSMENT YEAR : 2008-09 POTAIN INDIA PRIVATE LIMITED, 72-76, INDUSTRIAL ESTATE, MUNDHWA, PUNE-411036 PAN : AABCS4211K ....... / APPELLANT (% / V/S. JOINT COMMISSIONER OF INCOME TAX, RANGE 6, PUNE / RESPONDENT ASSESSEE BY : SHRI KETAN VED REVENUE BY : MRS. M.S. VERMA / DATE OF HEARING : 02-06-2015 / DATE OF PRONOUNCEMENT : 31-08-2015 ) / ORDER PER VIKAS AWASTHY, JM: THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ASSES SMENT ORDER DATED 27-11-2012 PASSED U/S. 143(3) R.W.S. 144C OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). IN GROUNDS OF APPEAL, THE ASSESSEE HAS RAISED AS MANY AS 8 GROUNDS. HOWEVER, THE 2 ITA NO. 258/PN/2013, A.Y. 2008-09 CRUX OF THE ISSUE AGITATED BY THE ASSESSEE IN APPEAL IS; W HETHER THE EXPENDITURE INCURRED ON IMPROVEMENT/ADDITIONS TO LEASEHOLD PROPERTY IS TO BE TREATED AS CAPITAL OR REVENUE EXPENDITURE? TH E ASSESSEE HAS CLAIMED THE EXPENDITURES AS REVENUE, WHEREAS THE DEPART MENT TREATED THE SAME AS CAPITAL IN NATURE. THE ASSESSEE HAS MADE AN ALTERNATE PRAYER WITHOUT PREJUDICE TO HIS SUBMISSIONS MADE IN SUPPO RT OF MAIN PRAYER, THAT THE ASSESSING OFFICER HAS ERRED IN NOT ALLOWING PROPORTIONATE EXPENDITURE INCURRED ON LEASEHOLD IMPROVEME NTS OVER THE LEASE PERIOD THE SAME MAY BE ALLOWED. 2. THE BRIEF FACTS OF THE CASE ARE : THE ASSESSEE COMPAN Y (FORMERLY KNOWN AS M/S. SHIRKE CONSTRUCTION EQUIPMENTS PRIVATE LIM ITED) IS ENGAGED IN MANUFACTURING OF TOWER CRANES AND MAST INSER TS, WHICH ARE USED IN TOWER CRANES. THE ASSESSEE FILED ITS RETURN OF INC OME FOR THE ASSESSMENT YEAR 2008-09 ON 12-03-2009 DECLARING TOTAL INCOME OF RS.19,49,46,219/-. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND NOTICE U/S. 143(2) WAS ISSUED ON 07-09-2009. SINCE, T HE ASSESSEE COMPANY HAD CERTAIN INTERNATIONAL TRANSACTIONS WITH ITS A E, THE CASE OF THE ASSESSEE WAS REFERRED TO TRANSFER PRICING OFFICER (T PO). APART FROM INTERNATIONAL TRANSACTIONS CERTAIN ADDITIONS/DISALLOWANCES WE RE MADE BY THE ASSESSING OFFICER IN RESPECT OF DOMESTIC TRANSACTION S. THE ASSESSEE HAD INCURRED AN EXPENDITURE OF RS.1,39,96,739/- O N IMPROVEMENT OF LAND TAKEN ON LEASE FOR THE STORAGE OF RAW MATERIALS AND FINISHED GOODS. THE ASSESSEE CLAIMED THE SAID EXPENDITURE AS REVENUE IN NATURE. ON THE OTHER HAND, THE ASSESSING OFFICER HELD THE SAME TO BE CAPITAL IN NATURE. 3 ITA NO. 258/PN/2013, A.Y. 2008-09 AGGRIEVED BY THE FINDINGS OF ASSESSING OFFICER IN DRAFT ASSESS MENT ORDER QUA, THE NATURE OF EXPENDITURE ON LEASEHOLD PROPER TY, THE ASSESSEE FILED OBJECTIONS BEFORE THE DRP. THE DRP REJECT ED THE OBJECTIONS OF THE ASSESSEE AND DIRECTED THE ASSESSING O FFICER TO TREAT THE EXPENDITURE OF RS.1,39,96,739/- AS CAPITAL. THE ASSESS ING OFFICER VIDE IMPUGNED ASSESSMENT ORDER FOLLOWED THE DIRECTIONS OF DRP AND TREATED THE SAID EXPENDITURE AS CAPITAL AND ALLOWED THE BENEFIT OF DEPRECIATION ON SAME. AGAINST THE AFORESAID FINDINGS OF ASS ESSING OFFICER, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 3. SHRI KETAN VED APPEARING ON BEHALF OF THE ASSESSEE S UBMITTED THAT THE ASSESSEE HAD TAKEN LAND MEASURING 4.5 ACRES O N LEASE FROM B.G. SHIRKE CONSTRUCTION EQUIPMENTS PVT. LIMITED ALONG WITH STRUCTURES CONSISTING OF EQUIPMENT SHOP ADMEASURING 1572 4.07 SQ. MTRS. BUILT UP AREA AND STORE AND OFFICE BLOCK ADMEASURING APPROXIMATELY 1191 SQ. MTRS. THE ASSESSEE INCURRED EXPE NDITURE TOWARDS THE LEVELING AND FLOORING OF THE LAND AND CONSTRUCTION OF STORA GE SPACE FOR RAW MATERIAL MEASURING 3600 SQ. MTRS. AND FOR FIN ISHED GOODS ADMEASURING 5000 SQ. MTRS. THE ASSESSEE HAD CLAIMED THE EXPENDITURE ON THE CONSTRUCTION OF THE SAID STRUCTURES AS REVENUE IN NATURE. THE LEASE AGREEMENT WAS FOR THE PERIOD OF 3 YEARS WITH RENEW AL OPTION OF FURTHER PERIOD OF 3 YEARS I.E. TOTAL PERIOD OF 6 YEARS. THE IMPROVEMENT MADE BY THE ASSESSEE OVER THE LEASE LAND WAS PRIMARILY FOR ADVANCEMENT OF THE BUSINESS OF THE ASSESSEE AND NOT FOR CREATING ANY NEW CAPITAL ASSET. THE OWNERSHIP OF THE NEWLY CREATED STRUCTURES WAS TO REMAIN WITH THE LESSOR AND NO ENDURING BENEFIT WAS D ERIVED BY THE ASSESSEE FROM THE SAID STRUCTURES. THE ASSESSEE HAD ONLY THE RIGHT TO USE THE LEASEHOLD PROPERTY INCLUDING IMPROVEMENTS DURING THE LEASE 4 ITA NO. 258/PN/2013, A.Y. 2008-09 PERIOD. THE LD. AR OF THE ASSESSEE IN SUPPORT OF HIS SUBMIS SIONS PLACED RELIANCE ON THE DECISION OF HON'BLE SUPREME COURT OF INDIA IN THE CASE OF CIT VS. MADRAS AUTO SERVICE (P.) LTD. REPORTED AS 233 ITR 468 (SC) AND THE DECISION OF HON'BLE MADRAS HIGH COURT IN THE CASE OF CIT VS. TVS LEAN LOGISTICS LTD. REPORTED AS 293 ITR 432 (MADRAS). 4. MRS. M.S. VERMA REPRESENTING THE DEPARTMENT SUBMITTED THAT IN VIEW OF EXPLANATION 1 TO SECTION 32, ANY EXPENDITURE INCURR ED BY THE ASSESSEE FOR THE PURPOSE OF BUSINESS ON CONSTRUCTION OF ANY STRUCTURE ON THE LEASED BUILDING HAS TO BE CAPITALIZED. THE ASSESS EE IS ENTITLED TO CLAIM DEPRECIATION ON THE SAID IMPROVEMENTS/NEW STRUCTURE . THE LD. DR FURTHER SUBMITTED THAT IN FACT THE LAND WAS TAKEN ON LEASE BY M/S. SHIRKE CONSTRUCTION EQUIPMENTS PRIVATE LIMITED FROM B.G. SH IRKE CONSTRUCTION EQUIPMENTS PVT. LIMITED. THE ASSESSEE HAD C AME INTO PICTURE MUCH LATER. AS SUCH, THE ASSESSEE CANNOT CLAIM T HE EXPENDITURE INCURRED ON CONSTRUCTION OF NEW STRUCTURES AS REVENUE. THE LD. DR VEHEMENTLY DEFENDED THE ORDERS OF THE AUTHOR ITIES BELOW. IN SUPPORT OF HER SUBMISSIONS THE LD. DR PLACED RELIANCE ON TH E FOLLOWING DECISIONS: I. CIT VS. KHIMLINE PUMPS LTD.; 258 ITR 459 (BOM). II. JCIT VS. MUKUND LTD.; 106 ITD 231 (MUM)(SB). III. NATIONAL STOCK EXCHANGE OF INDIA VS. ACIT IN ITA NO. 3799/MUM/2004 FOR ASSESSMENT YEAR 1998-99 DECIDED ON 27- 04-2011. 5. WE HAVE HEARD THE SUBMISSIONS MADE BY THE RIVAL SIDES AND HAVE PERUSED THE ORDERS OF THE AUTHORITIES BELOW. WE HAVE ALS O CONSIDERED THE DECISIONS ON WHICH THE RESPECTIVE SIDES HAVE PLACED R ELIANCE. THE 5 ITA NO. 258/PN/2013, A.Y. 2008-09 UNDISPUTED FACTS IN THE CASE ARE : M/S. MANITOWOC COMPANY INC, ACQUIRED 100% SHARES OF M/S. SHIRKE CONSTRUCTION EQUIPME NTS PRIVATE LIMITED THROUGH A GROUP COMPANY NAMED MANITOWOC CRANE GROUP ASIA PRIVATE LIMITED, SINGAPORE ON 19-07-2007. SUBSEQUENTLY, T HE NAME OF INDIAN COMPANY WAS CHANGED TO POTAIN INDIA PRIVATE LIM ITED. ON 18-07-2007, B.G. SHIRKE CONSTRUCTION EQUIPMENTS PVT. LIMITED HAD ENTERED INTO LEASE AGREEMENT WITH M/S. SHIRKE CONSTRUCTIO N EQUIPMENTS PRIVATE LIMITED IN RESPECT OF LAND MEASURING 4.5 ACRES ALONG WITH BUILDING AND STRUCTURES INCLUDING FACTORY, SHED, EQ UIPMENT SHOPS ETC. FOR THE PERIOD OF 3 YEARS. AS PER THE TERMS AND CONDITIONS OF LEASE AGREEMENT THE USER/LESSEE COULD MAKE CHANGES IN THE SAID STRUCTURE FROM TIME TO TIME AND BUILD FURTHER STRUCTURE ON THE SAID LA ND DURING THE LEASE PERIOD. THE ASSESSEE CONSTRUCTED SHED S MEASURING 3600 SQ. MTRS. FOR STORAGE OF RAW MATERIALS AND 5000 SQ. MTRS. FOR STORAGE OF FINISHED GOODS. APART FROM THE ABOVE THE ASSE SSEE HAD ALSO CONSTRUCTED DRAINAGE, FENCE WITH GATE, EXPENDITURE WAS ALS O INCURRED ON ELECTRICAL LIGHTING, LANDSCAPING, LEVELING AND FLOORING OF LAND. THE ASSESSEE TREATED THE EXPENDITURE ON THE AFORESAID STRU CTURES / IMPROVEMENTS AS REVENUE IN NATURE. ON THE CONTRARY TH E DEPARTMENT HELD THE EXPENDITURE ON THE AFORESAID IMPROVEMENTS AND CONSTRUCTIONS AS CAPITAL. 6. IN APPEAL THE ISSUE RAISED IS; WHETHER THE EXPENDITUR E INCURRED BY THE ASSESSEE ON CONSTRUCTION OF SHEDS ETC. IS IT BE C LASSIFIED AS REVENUE OR CAPITAL EXPENDITURE. WHETHER THE EXPENDITURE IS REVENUE OR CAPITAL IN NATURE IS A QUESTION OF FACT WHICH HAS TO BE DEC IDED IN THE FACTS AND CIRCUMSTANCES OF THE EACH CASE. THE PRIMARY R EASON FOR HOLDING THE EXPENDITURE AS CAPITAL BY THE DEPARTMENT IS E XPLANATION 1 6 ITA NO. 258/PN/2013, A.Y. 2008-09 TO SECTION 32. THE RELEVANT EXTRACT OF EXPLANATION 1 TO SECTION 32 IS AS UNDER: [EXPLANATION 1.WHERE THE BUSINESS OR PROFESSION O F THE ASSESSEE IS CARRIED ON IN A BUILDING NOT OWNED BY HIM BUT IN RES PECT OF WHICH THE ASSESSEE HOLDS A LEASE OR OTHER RIGHT OF OCCUPANCY AND ANY CAPITAL EXPENDITURE IS INCURRED BY THE ASSESSEE FOR THE PUR POSES OF THE BUSINESS OR PROFESSION ON THE CONSTRUCTION OF ANY STRUCTURE OR DOING OF ANY WORK IN OR IN RELATION TO, AND BY WAY OF RENOVATION OR EXTE NSION OF, OR IMPROVEMENT TO, THE BUILDING, THEN, THE PROVISIONS OF THIS CLAUSE SHALL APPLY AS IF THE SAID STRUCTURE OR WORK IS A BUILDIN G OWNED BY THE ASSESSEE. 7. A BARE PERUSAL OF EXPLANATION SHOWS THAT IT APPLIES TO THE BUILDING TAKEN ON LEASE, RENT OR OTHERWISE BY THE ASSES SEE FOR THE PURPOSE OF BUSINESS. THUS, THE EXPLANATION DOES NOT APPL Y TO ANY CONSTRUCTION OR IMPROVEMENT OVER THE LAND TAKEN ON LEAS E. THE HON'BLE MADRAS HIGH COURT IN THE CASE OF CIT VS. TVS LEAN LOGIST ICS LTD. (SUPRA) HAS EXPLICITLY EXPLAINED THE PROVISIONS OF EXPLANATION 1 TO SECTION 32. THE RELEVANT EXTRACT OF THE ORDER OF HON'BLE HIGH COU RT IS AS UNDER: WHAT CONSTITUTES A CAPITAL EXPENDITURE AND WHAT DO ES NOT, TO ATTRACT EXPLANATION 1 TO SECTION 32(1) OF THE ACT DEPENDS U PON THE CONSTRUCTION OF ANY STRUCTURE OR DOING ANY WORK OR IN RELATION TO A ND BY WAY OF RENOVATION, EXTENSION OR IMPROVEMENT TO THE BUILDIN G WHICH IS PUT UP IN A BUILDING TAKEN ON LEASE BY HIM FOR CARRYING ON HIS BUSINESS AND PROFESSION OF THE ASSESSEE, BUT NOT IN A CASE OF CO NSTRUCTION OF ANY STRUCTURE OR DOING ANY WORK OR RELATION TO WHERE SU CH BUILDING IS PUT UP/CONSTRUCTED FOR THE PURPOSE OF BUSINESS OR THE P ROFESSION OF THE ASSESSEE IN A LAND TAKEN ON LEASE BY THE ASSESSEE. BECAUSE THE ASSESSEE DID NOT ACQUIRE A CAPITAL ASSET, VIZ., THE LAND IN THE INSTANT CASE, BUT HAS PUT UP A CONSTRUCTION OF THE BUILDING ONLY FOR THE BUSINESS ADVANTAGE, WITH THE RESULT THE ENTIRE CONSTRUCTION COST IS ADMISSIBLE AS THE REVENUE EXPENDITURE. 7 ITA NO. 258/PN/2013, A.Y. 2008-09 8. IN THE PRESENT CASE, THE ASSESSEE CONSTRUCTED ST ORAGE SITES ON A VACANT PIECE OF LAND FOR STORAGE OF RAW MATERIALS AND FINISH ED GOODS. IT IS NOT THE CASE OF REVENUE THAT THE ASSESSEE HAS MADE IMPROVEMENTS IN THE EXISTING BUILDING/STRUCTURES TO SUIT ITS REQUIREMENT. THE EXPENDITURE INCURRED BY THE ASSESSEE IN CONSTRUCTION O F STORAGE SHEDS AND FENCE WALL WITH GATE IS IN FURTHERANCE TO CARRY ITS BUS INESS IN MORE CONVENIENT MANNER. THE HON'BLE SUPREME COURT OF INDIA IN THE CASE OF CIT VS. MADRAS AUTO SERVICE (P.) LTD. (SUPRA) HAS HELD THAT WHERE EXPENDITURE IS INCURRED FOR THE PURPOSE OF CONDUCTING THE BUSINESS OF ASSESSEE MORE PROFITABLY OR MORE SUCCESSFULLY AND THE A SSET CREATED BY INCURRING SUCH EXPENDITURE DOES NOT BELONG TO THE ASSES SEE, IN SUCH CASES THE EXPENDITURE HAS TO BE TREATED AS REVENUE E XPENDITURE. THE RELEVANT EXTRACT OF THE ORDER OF HON'BLE SUPREME COURT OF INDIA READS AS UNDER: 6. IN ORDER TO DECIDE WHETHER THIS EXPENDITURE IS REVENUE EXPENDITURE OR CAPITAL EXPENDITURE, ONE HAS TO LOOK AT THE EXPE NDITURE FROM A COMMERCIAL POINT OF VIEW. WHAT ADVANTAGE DID THE AS SESSEE GET BY CONSTRUCTING A BUILDING WHICH BELONGED TO SOMEBODY ELSE AND SPENDING MONEY FOR SUCH CONSTRUCTION? THE ASSESSEE GOT A LON G LEASE OF A NEWLY CONSTRUCTED BUILDING SUITABLE TO ITS OWN BUSINESS A T A VERY CONCESSIONAL RENT. THE EXPENDITURE, THEREFORE, WAS MADE IN ORDER TO SECURE A LONG LEASE OF NEW AND MORE SUITABLE BUSINESS PREMISES AT A LOWER RENT. IN OTHER WORDS, THE ASSESSEE MADE SUBSTANTIAL SAVINGS IN MONTHLY RENT FOR A PERIOD OF 39 YEARS BY EXPENDING THESE AMOUNTS. TH E SAVING IN EXPENDITURE WAS A SAVING IN REVENUE EXPENDITURE IN THE FORM OF RENT. WHATEVER SUBSTITUTES FOR REVENUE EXPENDITURE SHOULD NORMALLY BE CONSIDERED AS REVENUE EXPENDITURE. MOREOVER, THE AS SESSEE IN THE PRESENT CASE DID NOT GET ANY CAPITAL ASSET BY SPEND ING THE SAID AMOUNTS. THE ASSESSEE, THEREFORE, COULD NOT HAVE CLAIMED ANY DEPRECIATION. LOOKING TO THE NATURE OF THE ADVANTAGE WHICH THE AS SESSEE OBTAINED IN A COMMERCIAL SENSE, THE EXPENDITURE APPEARS TO BE REV ENUE EXPENDITURE. 8 ITA NO. 258/PN/2013, A.Y. 2008-09 9. THE HON'BLE APEX COURT AFTER ANALYZING VARIOUS DECISIO NS ON THE ISSUE CONCLUDED: 13. ALL THESE CASES HAVE LOOKED UPON EXPENDITURE W HICH DID BRING ABOUT SOME KIND OF AN ENDURING BENEFIT TO THE COMPA NY 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 B USINESS ADVANTAGE BY EXPENDING THE AMOUNT. IN ALL THESE CAS ES, THE EXPENSES HAVE BEEN LOOKED UPON AS HAVING BEEN MADE FOR THE P URPOSE OF CONDUCTING THE BUSINESS OF THE ASSESSEE MORE PROFIT ABLY OR MORE SUCCESSFULLY. IN THE PRESENT CASE ALSO, SINCE THE ASSET CREATED BY SPENDING THE SAID AMOUNTS DID NOT BELONG TO THE AS SESSEE BUT THE ASSESSEE GOT THE BUSINESS ADVANTAGE OF USING MODERN PREMISES AT A LOW RENT, THUS SAVING CONSIDERABLE REVENUE EXPENDITURE FOR THE NEXT 39 YEARS, BOTH THE TRIBUNAL AS WELL AS THE HIGH COURT HAVE RIGHTLY COME TO THE CONCLUSION THAT THE EXPENDITURE SHOULD BE LOOKE D UPON AS REVENUE EXPENDITURE. 10. AN ANALYSIS OF THE FACTS IN THE PRESENT CASE, MAKES IT CLEAR THAT THE STRUCTURES CREATED BY ASSESSEE FOR CONVENIENCE OF ITS BUSINESS DOES NOT BELONG TO THE ASSESSEE. NO NEW ASSET HAS BEEN A CQUIRED BY THE ASSESSEE. THE ASSESSEE CREATED THE STRUCTURES ON LEA SE HOLD LAND FOR CONDUCTING ITS BUSINESS IN MORE PROFITABLE AND CONVENIENT MANNER. THEREFORE, WE ARE OF THE CONSIDERED OPINION THAT THE EXPE NDITURE INCURRED IS OF REVENUE IN NATURE. 11. THE LD. DR IN SUPPORT OF HIS SUBMISSIONS HAS PLACED RE LIANCE ON THE DECISION OF JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. KHIMLINE PUMPS LTD. (SUPRA). IN THE SAID CASE A PLOT OF LAND WAS LEASED BY MIDC TO APV EQUIPMENTS LTD. FOR A PERIOD OF 95 YEARS ON YEARLY RENT OF RE.1/-, APV WENT INTO LIQUIDATION. THE ASSESSEE PURCHA SED ENTIRE UNIT, INCLUDING LAND AND BUILDING AND PLANT AND MACHINERY FOR R S.75 LAKHS. UNDER THE DEED OF ASSIGNMENT, IT WAS MENTIONED THA T THE VALUE 9 ITA NO. 258/PN/2013, A.Y. 2008-09 OF LAND AND BUILDINGS AND PLANT AND MACHINERY STOOD BIFURCAT ED FOR THE PURPOSES OF PAYMENT OF STAMP DUTY INTO TWO PARTS VIZ RS .72 LAKHS FOR LAND AND BUILDING AND RS.3 LAKHS FOR PLANT AND MACHINERY. THE ASSESSEE CLAIMED RS.72 LAKHS AS REVENUE EXPENDITURE BEING THE COST OF THE LAND PURCHASED FROM THE OFFICIAL LIQUIDATOR. THE ASSESSIN G OFFICER FOUND THAT THE ASSESSEE HAD PURCHASED THE WHOLE UNIT FO R RS.75 LAKHS, OUT OF WHICH RS.45 LAKHS RELATED TO ACQUISITION OF LEASEHOLD LAND. THE ASSESSING OFFICER TREATED RS.45 LAKHS AS CAPITAL EXPENDITUR E FOR THE PURPOSE OF LEASEHOLD RIGHTS. IN APPEAL, THE TRIBUNAL UPH ELD THE FINDINGS OF ASSESSING OFFICER. THE MATTER TRAVELLED TO THE HO N'BLE HIGH COURT. THE HON'BLE HIGH COURT CONFIRMED THE FINDINGS OF TH E TRIBUNAL IN TREATING THE COST OF LEASEHOLD LAND AS CAPITAL EXPENDITURE. WE FIND THE FACTS OF THE PRESENT CASE ARE ENTIRELY DIFFEREN T. THUS, THE RATIO LAID DOWN BY THE HON'BLE BOMBAY HIGH COURT IN T HE CASE OF CIT VS. KHIMLINE PUMPS LTD. (SUPRA) CANNOT BE APPLIED IN THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE. 12. THE LD. DR HAS FURTHER PLACED RELIANCE ON THE DECISION OF TRIBUNAL IN THE CASE OF NATIONAL STOCK EXCHANGE OF INDIA VS. ACIT (SUPRA). WE FIND THAT THE TRIBUNAL HAS DECIDED THE ISSUE BY FOLLOWING TH E JUDGMENT RENDERED IN THE CASE OF CIT VS. KHIMLINE PUMPS LTD. (SUPRA). WE HAVE ALREADY DISCUSSED THE SAID JUDGMENT AND HELD THAT THE S AME IS NOT APPLICABLE IN THE FACTS OF THE PRESENT CASE. 13. THE LD. DR HAS ALSO RELIED ON THE DECISION OF SPECIAL B ENCH IN CASE OF JCIT VS. MUKUND LTD. (SUPRA). THE SPECIAL BENCH H ELD THAT LUMPSUM NON-REFUNDABLE PREMIUM PAID FOR SECURING LEASEHO LD RIGHTS 10 ITA NO. 258/PN/2013, A.Y. 2008-09 IN LAND FOR FACTORY IN INDUSTRIAL AREA FROM STATE DEVELOPMEN T CORPORATION IS CAPITAL IN NATURE. THE ASSESSEE HAD PAID LUMPSUM PAYMENT FOR ACQUIRING LEASE RIGHTS FOR 99 YEARS. THE ASS ESSEE HAS GOT ADVANTAGE OF ENDURING NATURE. IN THE PRESENT CASE THE ASSESSEE HAS INCURRED EXPEND ITURE ON CONSTRUCTION OF SHEDS ETC. ON LEASEHOLD LAND FOR ADVANCEM ENT OF ITS BUSINESS. THE LEASE PERIOD IN THE PRESENT CASE IS 3 YEAR S WHICH IS FURTHER EXTENDABLE FOR THE PERIOD OF 3 YEARS. THUS, THE TOTAL PERIOD OF LEASE IS 6 YEARS ONLY. THE ASSESSEE HAS NOT RECEIVED A NY ADVANTAGE OF ENDURING NATURE, NO NEW ASSET HAS COME INTO EXISTENCE FO R THE ASSESSEE. THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF DCIT VS. SUN PHARMACEUTICALS IND. LTD.; 329 ITR 479 (GUJ) WHILE DEALING WIT H SIMILAR CONTROVERSY HELD THAT LEASE RENTAL PAID ON 99 YEARS LEAS E IS ALLOWABLE AS REVENUE EXPENDITURE. IN THE SAID CASE, THE ASSESSEE HA D MADE PAYMENT OF LEASE CHARGES TO GIDC AND CLAIMED THE SAME A S REVENUE EXPENDITURE. THE ASSESSING OFFICER DISALLOWED THE SAME ON T HE GROUND THAT THE ASSESSEE HAD ACQUIRED A BENEFIT OF ENDURING NAT URE IN THE FORM OF USE OF LAND FOR A PERIOD OF 99 YEARS, THE LAND HAS BEEN TRANSFERRED THROUGH A REGISTERED DEED INVOLVING TRANSFER OF IMMOVABLE PROPERTY, THUS, THE ASSESSEE HAS ACQUIRED FIXED ASSET. THE COMM ISSIONER OF INCOME TAX (APPEALS) UPHELD THE ORDER OF ASSESSING OFFICER. THE TRIBUNAL REVERSED THE FINDINGS OF THE COMMISSIONER OF INCOME TAX (APPEALS). IN APPEAL BY THE DEPARTMENT, THE HON'BLE HIGH C OURT UPHELD THAT THE FINDINGS OF THE TRIBUNAL, THAT THE LAND IN QUESTIO N WAS NOT ACQUIRED BY THE ASSESSEE. THAT MERELY BECAUSE THE DE ED WAS REGISTERED THE TRANSACTION IN QUESTION WOULD NOT ASSUME A DIFFERENT C HARACTER. 11 ITA NO. 258/PN/2013, A.Y. 2008-09 THE LEASE RENT WAS VERY NOMINAL. BY OBTAINING THE LAND ON LEASE THE CAPITAL STRUCTURE OF THE ASSESSEE DID NOT UNDERGO ANY CHANGE. THE ASSESSEE ONLY ACQUIRED A FACILITY TO CARRY ON BUSINESS PR OFITABLY BY PAYING NOMINAL LEASE RENT. THUS, FROM THE ANALYSIS OF THE ABOVE JUDGMENT OF THE HON 'BLE GUJARAT HIGH COURT IT CAN BE SAFELY CONCLUDED THAT THE SPECIAL BENCH DECISION IN THE CASE OF JCIT VS. MUKUND LTD. (SUPRA) CANNO T BE APPLIED IN THE FACTS OF THE PRESENT CASE. 14. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. T HE EXPENDITURE INCURRED BY THE ASSESSEE ON CONSTRUCTION O F STORAGE STRUCTURE ETC. HAS TO BE ALLOWED AS REVENUE EXPENDITURE. ORDER PRONOUNCED ON MONDAY, THE 31 ST DAY OF AUGUST, 2015. SD/- SD/- ( . . / R.K. PANDA) ( ! ' / VIKAS AWASTHY) #' / ACCOUNTANT MEMBER $ % #' / JUDICIAL MEMBER / PUNE; &# / DATED : 31 ST AUGUST, 2015 RK )*+#,-!.!', / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ' () / THE DCIT(TP-IV), PUNE 4. ' / THE CIT-III, PUNE 5. !*+ %%,- , ,- , . /01 , / DR, ITAT, A BENCH, PUNE. 6. + 2 34 / GUARD FILE. // ! % // TRUE COPY// #5 / BY ORDER, %6 ,1 / PRIVATE SECRETARY, ,- , / ITAT, PUNE