Krishak Bharati Cooperative Ltd., New Delhi V. Addll. CIT, New Delhi

ITA 4637/DEL/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 3507 (ITAT-DELHI)
• Duration Of Justice: 7 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-07-2010
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 13-07-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 09-12-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MANEESH BAHUGUNA
• Keywords: Capital asset; Business income; Rule of consistency; Revenue expenditure; Capital expenditure
• Section: 207

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : D NEW DELHI BEFORE SHRI G.E. VEERABHADRAPPA, VICE PRESIDENT AN D SHRI RAJPAL YADAV, JUDICIAL MEMEBR I.T.A NO. 4637/DEL/09 ASSTT. YEAR 2006-07 KRISHAK BHARATI COOPERATIVE LIMITED RED ROSE HOUSE, 49 5-, NEHRU PLACE, NEW DELHI. VS. ADDITIONAL COMMISSIONER OF INCOME TAX, RANGE 24 (PRESENTLY ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE 24 (1), C.R. BUILDING, NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY: NONE RESPONDENT BY: SHRI MANEESH BAHUGUNA, SR. DR ORDER PER RAJPAL YADAV, JM: THE ASSESSEE IS IN APPEAL BEFORE US AGAINST THE ORD ER OF LD. CIT(A) DATED 12.10.2009 PASSED FOR ASST. YEAR 2006- 07. IN RESPONSE TO THE NOTICE OF HEARING NO-ONE HAS COME PRESENT ON BE HALF OF THE ASSESSEE. THEREFORE WE PROCEED TO DECIDE THE APPEAL EX PARTY QUA THE ASSESSEE. THE SOLITARY GRIEVANCE OF THE ASSESSEE IS THAT LD. CIT(A) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF RS. 6,17,36 4/- WHICH HAS BEEN ITA NO. 4637/DEL/2009 ASST T. YEAR 2006-07 2 WRITTEN OFF BY THE ASSESSEE IN THE PREVIOUS YEAR RE LEVANT TO THIS ASSESSMENT YEAR TOWARDS AMORTIZATION OF LEASE AMOU NT PAID FOR THE LAND OBTAINED FROM NOIDA AUTHORITIES. 2. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE OB TAINED LAND ON LEASE FROM NOIDA AUTHORITIES FOR A PERIOD OF 90 YEA RS. IT HAD PAID A LUMPSUM AMOUNT AND IS AMORTIZING THE LEASE PAYMENT OVER THE LEASE PERIOD. IN OTHER WORDS 1/90 TH OF THE VALUE FOR THE LAND IS CONSUMED BECAUSE THE LAND HAS BEEN GIVEN BY NOIDA AUTHORITIE S FOR A PERIOD OF 90 YEARS. THEREFORE, THE ASSESSEE HAS BEEN DEDUCTING A NNUALLY RS. 6,17,364/- BEING THE EXPIRED PERIOD OUT OF 90 YEARS . ACCORDING TO THE ASSESSEE THIS HAS BEEN ALLOWED AS A DEDUCTION IN AL L THESE YEARS UPTO ASTT. YEAR 2003-04. THE AO HAS DISALLOWED THE CLAIM OF ASSESSEE. LD. CIT(A) HAS UPHELD THE DISALLOWANCE BY OBSERVING THA T IN ASSTT. YEAR 2004-05 HE HAS DISALLOWED THIS CLAIM OF ASSESSEE IN HIS APPELLATE ORDER PASSED ON 20 TH FEBRUARY, 2009. THIS ORDER HAS BEEN UPHELD BY THE ITAT IN ITA NO. 1696/D/09. LD. CIT(A) HAS REPRODUCED THE ORDER OF THE ITAT ON PAGES NO. 46 TO 51 AND THEREAFTER HELD THAT ITAT HAS UPHELD HIS ORDER ON THIS ISSUE AND DISMISSED THE APPEAL OF THE ASSESSEE. THEREFORE ASSESSEE IS NOT ENTITLED TO CLAIM THE DEDUCTION OF THIS AMOUNT IN THIS YEAR ALSO. THE ORDER OF THE ITAT IN ASSTT. YEAR 2004-05 HAS BEEN PLACED ON RECORD. ITA NO. 4637/DEL/2009 ASST T. YEAR 2006-07 3 3. WITH THE ASSISTANCE OF LD. DR WE HAVE GONE THROU GH THE RECORD CAREFULLY. TAKING INTO CONSIDERATION THE GROUNDS OF APPEAL ORDER OF THE LD. CIT(A) WE FIND THAT ISSUE IS SQUARELY COVERED A GAINST THE ASSESSEE BY THE ORDER OF ITAT. THE FINDING OF THE ITAT HAS B EEN REPRODUCED BY THE LD. CIT(A) WHICH READ AS UNDER :- 2. GROUND NOS. 1, 2 AND 3 ARE IN RELATION TO D EDUCTION OF A SUM OF RS. 2,75,045/-, BEING THE AMOUNT WRITTEN OFF TOWARDS PREMIUM AMOUNT PAID TO THE NOIDA. IT IS MENTIONED TH AT THE EXPENDITURE DID NOT CONFER ANY OWNERSHIP RIGHT ON THE ASSESSEE BUT ONLY ALLOWED IT TO USE THE LAND FOR THE PURPOSE OF CONSTRUCTION OF ITS OFFICE AND, THEREFORE, THE SAME WAS IN THE NATURE OF REVENUE EXPENDITURE. IT IS ALSO MENTIONED THAT SIMILAR AMOUNT WAS ALLOWED IN EARLIER YEARS AND, THEREFORE, THE SAME SHOU LD HAVE BEEN ALLOWED IN THIS YEAR ALSO FOLLOWING THE PRINCIPLE OF CONSISTENCY. 2.1 IN THIS CONNECTION, IT IS MENTIONED IN THE AS SESSMENT ORDER THAT THE ASSESSEE OBTAINED LEASE OF LAND FROM NOIDA , SUBSISTING FOR 90 YEARS, FOR WHICH CERTAIN AMOUNT WAS PAYABLE TO IT. THE AMOUNT WAS AMORTISED AND A SUM OF RS. 7.09 LAKH (ACT UALLY THIS AMOUNT IS RS. 2,75,045/-) WAS WRITTEN OFF IN THIS YEAR. TH E ASSESSEE WAS REQUIRED TO SHOW CAUSE AS TO WHY THIS EXPENDI TURE MAY NOT BE CONSIDERED TO BE CAPITAL IN NATURE, PARTICU LARLY IN THE LIGHT OF THE DEFINITION OF THE EXPRESSION IMMOVABLE PROPERT Y FURNISHED IN SECTION 269UA (D)(I). THE ASSESSEE RELIED ON THE DECISION OF HONBLE MADRAS HIGH COURT IN THE CASE OF CI T VS. GEMINI ARTS (P) LTD., (2002) 254 ITR 201, AND CONTENDED THAT THE EXPENDITURE WAS REVENUE IN NATURE. THE AO DID NOT ACCEPT THE SUBMISSIONS OF THE ASSESSEE AND FOUND THAT THE FACTS OF THE AFORESAID CASE WERE DISTINGUISHABLE. IT WA S HELD THAT LEASE OF LAND FOR A PERIOD OF 90 YEARS CONFERRED A BENEFIT OF ENDURING NATURE ON THE ASSESSEE AND, THEREFORE, IT WA S IN THE NATURE OF CAPITAL EXPENDITURE. CONSEQUENTLY, THIS AMOUNT WAS NOT ALLOWED AS DEDUCTION. 2.2 IN APPEAL, THE ASSESSEE ALSO RELIED ON THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF CIT VS. MADRAS AUTO SERVICES (P) LTD. (1998) 233 ITR 468. THE LEA RNED CIT(APPEALS) CONSIDERED THE FACTS OF THE CASE AND SUBMISS IONS MADE BEFORE HIM. IT WAS MENTIONED THAT THE ASSESSEE ENT ERED INTO AN AGREEMENT WITH NOIDA ON 6.1.1989 FOR OBTAINING LAND ON LEASE FOR A PERIOD OF 90 YEARS. THE ASSESSEE WAS ENTI TLED TO CONSTRUCT AN OFFICE COMPLEX ON THE LAND. THE ASSESSEE WAS REQUIRED TO PAY ITA NO. 4637/DEL/2009 ASST T. YEAR 2006-07 4 PREMIUM OF RS. 2,53,96,993/- TO NOIDA. OVER A ND ABOVE THE AFORESAID AMOUNT, THE ASSESSEE WAS ALSO REQ UIRED TO PAY LEASE RENT ANNUALLY @ 2.5% OF THE PREMIUM. THE LEASE RENT COULD BE ENHANCED AFTER 12 YEARS. THE ASSESSEE AMOR TIZED THE EXPENDITURE BY WAY OF PREMIUM OVER THE PERIOD O F LEASE, AND CLAIMED DEDUCTION OF RS. 2,75,045/- IN THIS YEAR . IT WAS FURTHER MENTIONED THAT THE LAND WAS ACQUIRED BY THE NOIDA UNDER LAND ACQUISITION ACT, 1896, FOR SETTING UP AN URBA N AND INDUSTRIAL TOWNSHIP. THE ASSESSEE WAS NOT ENTITLED TO TRANSFER THE LAND BEFORE ERECTION OF THE BUILDING WITHOUT THE PERM ISSION OF THE NOIDA, WHICH MEANS THAT IT COULD TRANSFER THE LAND A FTER ERECTION OF THE BUILDING. THE ASSESSEE WAS ALSO PERMITTED T O RAISE LOAN BY WAY OF MORTGAGING THE LAND. IN CASE OF NON-FULFI LLMENT OF TERMS AND CONDITIONS OF THE LEASE AGREEMENT, BUILDING RU LES OR ANY OTHER RULES LAID DOWN BY THE AUTHORITY, THE LEASE COULD BE CANCELLED AND POSSESSION OF THE PREMISES COULD BE TAKEN OVER BY NOIDA. IT IS ALSO MENTIONED THAT SIMILAR ISSUE CAME UP BEFO RE SPECIAL BENCH OF MUMBAI TRIBUNAL FOR ADJUDICATION IN THE CASE OF MUKUND LIMITED ( 2007) 291 ITR (AT) 249. IN THAT CASE, TH AT ASSESSEE ENTERED INTO AN AGREEMENT WITH MIDC FOR THE PURPOSE OF SETTING UP ITS FACTORY IN THANE. THE LEASE PERIOD WAS FIXED AT 99 YEARS. THE ASSESSEE PAID A SUM OF RS. 2.04 CRORE AS PR EMIUM TO THE MIDC. THE ASSESSEE WAS PERMITTED TO CONSTRUCT A FACTORY BUILDING ON THE LAND AND UTILIZED THE SAME FOR A PERIOD OF 99 YEARS. APART FROM THE PREMIUM, THE ASSESSEE WAS ALSO R EQUIRED TO PAY RENT AT RE. 1/- PER ANNUM. THE PREMIUM WAS NON-REFUN DABLE. THE COURT CAME TO THE CONCLUSION THAT THE PREMIUM WAS NOT ADVANCE PAYMENT OF RENT. THERE WAS ALSO NO MATERIAL ON RECOR D TO SHOW THAT THE PAYMENT WAS MADE FOR SECURING REDUCTION IN RENT PAYABLE IN COMING YEARS. THEREFORE, THE EXPENDITURE WA S TREATED TO BE CAPITAL IN NATURE. HE ALSO CONSIDERED CERTAIN OTHER CASES AND CAME TO THE CONCLUSION THAT THE AMOUNT COULD B E AMORTIZED AND ALLOWED AS EXPENDITURE ONLY IF IT WAS AN EXPENDITURE OF REVENUE NATURE. HOWEVER, THE EXPENDITURE WAS CAPITA L IN NATURE. COMING TO THE PRINCIPLE OF CONSISTENCY, IT WAS MENTI ONED THAT ON MERITS, THE DECISION IN THE CASE OF MUKUND LIMITED (SUPRA ) WAS SQUARELY APPLICABLE TO THE FACTS OF THE CASE. THE PR INCIPLE WAS ALSO APPROVED BY THE JURISDICTIONAL HIGH COURT IN TH E CASE OF DABUR INDIA LTD. VS. CIT (2008) 13 DTR 34 AND CIT V S. JYOTI APPAREL (2007) 209 CTR 288. THEREFORE, IT WAS HELD T HAT THE EXPENDITURE WAS CAPITAL IN NATURE, NOT DEDUCTIBLE IN COMPUT ING THE INCOME. 3. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE REFERRED TO PAGES 135 TO 147 OF THE PAPER BOOK, BEING THE LEASE A GREEMENT BETWEEN NOIDA AND THE ASSESSEE. THE AGREEMENT STIPU LATED PAYMENT OF PREMIUM OF RS. 2,53,96,993/-. THE ASSESSEE WAS ALSO REQUIRED TO PAY ANNUAL LEASE RENT @ 2.5% OF THE TOTAL PRE MIUM AMOUNT PAYABLE, WHICH WAS SUBJECT TO ENHANCEMENT A FTER EVERY 12 ITA NO. 4637/DEL/2009 ASST T. YEAR 2006-07 5 YEARS SO HOWEVER THAT THE RENT SHALL NOT E XCEED 50% OF THE RENT LAST FIXED. IN LIEU THEREOF, THE ASSESSEE WAS ENTITLED TO CONSTRUCT OFFICE COMPLEX, LAY WATER MAIN, DRAINAGE SEW ERAGE AND ELECTRICAL WIRE UNDER OR ABOVE THE PREMISES. IT HAD FULL TITLE TO ALL MINES AND MINERALS IN AND UNDER THE DEMISED PREMISES OR ANY PART THEREOF. THE ASSESSEE WAS NOT ENTITLED TO TRANSFER T HE PLOT OF LAND BEFORE ERECTION OF BUILDING WITHOUT PRIOR PERMISSION O F THE NOIDA. IN CASE OF TRANSFER, 50% OF THE DIFFERENCE BETWEEN THE PREMIUM PAID AND MARKET VALUE THEREOF AT THE TIME OF TRANSFER WAS PAYABLE TO NOIDA. THE ASSESSEE WAS ENTITLED TO RAISE LOAN ON MORTGAGE OF THE LAND. NOIDA HAD PRE-EMPTIVE RIGHT TO PURC HASE THE MORTGAGED OR CHARGED PROPERTY AFTER DEDUCTING SUCH PERC ENTAGE AS DECIDED BY IT AS UNEARNED INCREASE. IT WAS SUBMIT TED THAT THE AGREEMENT STIPULATED PAYMENT OF PREMIUM AND RENT. THE PREMIU M WAS AMORTIZED OVER THE PERIOD OF LEASE. THE AMORTIZED AMOUN T WAS CLAIMED IN PAST ALSO. SUCH A CLAIM WAS ACCEPTED BY THE LOWER AUTHORITIES. THE CASE OF THE LD. COUNSEL WAS THAT THE ASSES SEE DID NOT BECOME THE OWNER OF THE LAND ON ACCOUNT OF RESTRICTIO NS ON TRANSFER. THE PAYMENT OF PREMIUM WAS ALSO NOT IN CONNECTION W ITH THE RENT, WHICH COULD BE INCREASED AFTER 12 YEARS. THEREFORE , THE PAYMENT WAS REVENUE IN NATURE. 3.1 IN ORDER TO SUPPORT THE AFORESAID ARGUMENT, RELIANCE WAS PLACED ON THE DECISION IN THE CASE OF GEMINI ARTS (P) LTD. (SUPRA). IN THAT CASE, THE ASSESSEE HAD TAKEN LAND ON LEASE FOR A PERIOD OF 48 YEARS, FOR WHICH A LUMP SUM AMOUNT WAS PAID. THE TERMS OF THE LEASE DID NOT CONTEMPLATE ANY INCREASE IN THE RENT DURING THE PERIOD OF LEASE. THE ASSESS EE GOT NO OTHER ADVANTAGE BY REASON OF THIS LUMP SUM PAYMENT EXCEPT THE LEAVE OF HAVING TO MAKE ANNUAL PAYMENT DURING THE PERIOD OF LEASE. THE CONTENTION OF THE REVENUE WAS THAT THE ASSESSEE RECEIVED AN ADVANTAGE OF ENDURING NATURE BY MA KING THE LUMP SUM PAYMENT. THE HONBLE COURT REFERRED TO THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF CIT VS . MADRAS AUTO SERVICE (P) LTD. (SUPRA), WHEREIN IT WAS HELD T HAT IN ORDER TO DECIDE THE NATURE OF EXPENDITURE, ONE HAS TO LOOK AT IT FROM A COMMERCIAL POINT OF VIEW. AT PAGE 472, THE HONBLE COURT OBSERVED THAT WHATEVER IS THE SUBSTITUTE FOR REVENUE EXPEN DITURE SHOULD NORMALLY BE CONSIDERED AS REVENUE EXPENDI TURE. IN THE LIGHT OF THIS OBSERVATION, IT WAS MENTIONED BY HONBLE MADRAS HIGH COURT THAT IF THE ASSESSEE HAD CHOSEN TO PAY ANNUAL R ENT EVERY YEAR, SUCH EXPENDITURE WOULD HAVE BEEN REVENUE EX PENDITURE. IF THE PAYMENT IS MADE IN LUMP SUM FOR THE ENTIRE PE RIOD OF LEASE, THE NATURE OF THE PAYMENT DOES NOT CHANGE AND IT R EMAINS REVENUE EXPENDITURE. THE HONBLE COURT ALSO REFERRED T O ITS OWN DECISION IN THE CASE OF CIT VS. PRASAD PRODUCTION (P) LTD. (2001) 249 ITR 502, IN WHICH INVESTMENT ALLOWANCE WAS HELD TO BE ALLOWABLE WITH REGARD TO PROCESSING AND DRYING PLANT BELONGING TO A FILM ITA NO. 4637/DEL/2009 ASST T. YEAR 2006-07 6 PROCESSING LABORATORY. IT WAS MENTIONED THAT SIMILAR POSITION WAS OBTAINED HERE. THUS, THE QUESTION WAS ANSW ERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. 3.2 THE LD. COUNSEL ALSO RELIED ON THE DECIS ION OF HON'BLE SUPREME COURT IN THE CASE OF MADRAS INDUST RIAL INVESTMENT CORPORATION LTD. VS. CIT (1997) 225 ITR 802. THE FACTS OF THAT CASE ARE THAT THE ASSESSEE RAISED DEBENTURES AT DISCOUNT. THE TOTAL DISCOUNT AMOUNTED TO RS. 3.00 LAKH. THE ASSESSEE WROTE OFF PROPORTIONATE AMOUNT OF THE DISCOUNT IN THE BOOKS O F ACCOUNT AND CLAIMED IT AS REVENUE EXPENDITURE. IT WAS HELD THAT THE LIABILITY TO PAY THE DISCOUNTED AMOUNT OVER AND ABOVE THE AMOUNT RECEIVED WAS INCURRED FOR GENERATING FUNDS FOR THE BUS INESS OF THE ASSESSEE. THIS EXPENDITURE WAS REVENUE IN NATURE. HOWEVER, THE BENEFIT OF THE EXPENDITURE ENURED OVER T HE PERIOD OF DEBENTURES. THEREFORE, PROPORTIONATE WRITE OFF CONSTITUTED AN ADMISSIBLE EXPENDITURE. 3.3 THE LD. COUNSEL ALSO DISTINGUISHED THE FACTS OF THE CASE OF MUKUND LIMITED (SUPRA). IN THAT CASE, THE ASS ESSEE HAD TAKEN LEASE FOR A PERIOD OF 99 YEARS, FOR WHICH PR EMIUM OF RS. 2.04 CRORE WAS PAID. THE ANNUAL RENT WAS FIXED AT RE. 1/- AS AGAINST THE AFORESAID, THE ASSESSEE WAS REQUIRED TO PAY SUBSTANTIAL ANNUAL RENT AT 2.5% OF THE PREMIUM, WHICH COULD ALSO BE INCREASED AFTER 12 YEARS. THUS, IT WAS ARGUED THAT THE RATIO OF THE AFORESAID DECISION IS NOT APPLICABLE. 3.4 IN REPLY, THE LEARNED DR REFERRED TO TH E FINDINGS RECORDED BY THE LEARNED CIT(APPEALS) IN PARAGRAPH 4 OF H IS ORDER, WHICH HAVE ALREADY BEEN SUMMARISED BY US. HE RELIED ON THE ORDER OF SPECIAL BENCH OF MUMBAI TRIBUNAL IN THE CASE OF MUKUND LTD. (SUPRA). HE ALSO RELIED ON THE DECISION OF HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. JYOTI APPAREL (SUPRA). IN THAT CASE, THE TRIBUNAL HAD ALLOWED THE APPEAL OF THE ASSES SEE BY HOLDING INTEREST INCOME TO BE THE BUSINESS INCOME FOR THE PURPOSE OF DEDUCTION U/S 80HHC. IN DOING SO, THE TRIBUNAL FOLLOWED THE PRINCIPLE OF CONSISTENCY BY MENTIONING THAT THE ORDER OF THE LEARNED CIT(APPEALS) FOR AN EARLIER YEAR WAS ACCEPTE D BY THE REVENUE. THE HONBLE COURT MENTIONED THAT THE ASSESS EE MAY HAVE A POINT IN REGARD TO THE ISSUE OF CONSISTENCY. HOWEVER, THE CHANGE IN LAW BROUGHT WITH EFFECT FROM 1.4.1992 BY WAY OF INTRODUCTION OF CLAUSE (BAA) IN THE EXPLANATION CANNOT BE LOST SIGHT OF. ONCE A RECEIPT IS TREATED AS INCOME FROM OTHER SOURCES, IT GOES OUTSIDE THE AMBIT OF SECTION 80HHC. THEREFORE, IT MUST BE HELD THAT THE APPROACH OF THE DEPARTMENT IN EARLIER YEAR WAS NOT IN CONSONANCE WITH LAW. ITA NO. 4637/DEL/2009 ASST T. YEAR 2006-07 7 4. WE HAVE CONSIDERED THE FACTS OF THE CASE AND RIVAL SUBMISSIONS. WE MAY BRIEFLY STATE THE TER MS AND CONDITIONS OF THE LEASE DEED DATED 6.1.1989 ENTERED INTO BETWEEN THE NOIDA AND THE ASSESSEE. THE ASSESSEE WAS REQUIRED TO PAY PREMIUM OF RS. 2,53,96,993/- AND ANNUAL RENT @ 2.5% OF THE PREMIUM AMOUNT. THE LEASE COMMENCED WITH EFFECT FROM 6.1.198 9 AND IT WAS FOR A PERIOD 90 YEARS. THE ASSESSEE WAS ENTITLE D TO SET UP AN OFFICE COMPLEX ON THE LAND AND MAKE ARRANGEMENTS TO LA Y WATER MAIN AND ELECTRICITY WIRING. THE LEASE RENT COUL D BE ENHANCED AFTER A PERIOD OF 12 YEARS. THE ASSESSEE WAS NOT E NTITLED TO TRANSFER THE PLOT OF LAND BEFORE ERECTION OF THE BUILDING EX CEPT WITH PRIOR PERMISSION OF THE NOIDA. IN CASE OF TRANSFER, 50% OF THE UNEARNED INCOME WAS TO BE PAID TO THE NOIDA. THE ASSESSEE WAS ENTITLED TO MORTGAGE THE PROPERTY AND NOID A HAD PRE-EMPTIVE RIGHT TO PURCHASE THE MORTGAGED PROPERTY SU BJECT TO DEDUCTION OF A PART OF UNEARNED INCREASE. THE LESSEE WAS ENTITLED TO ALL THAT LAY BELOW THE LAND. IT IS CLEAR FROM THE AGR EEMENT THAT THE ADVANTAGE OBTAINED BY THE ASSESSEE WAS FOR A VERY LONG PERIOD. THE ASSESSEE WAS TO PAY PREMIUM AS WELL A S RENT. ON THIS BASIS ALONE, THE DECISION OF HONBLE MADRAS HIGH COURT IN THE CASE OF GEMINI ARTS (P) LTD. (SUPRA) IS DISTI NGUISHABLE AS IN THAT CASE, IT WAS HELD THAT THE LUMP SUM PAYMENT C ONSTITUTED RENT PAID FOR THE WHOLE PERIOD OF LEASE. THE DECISIO N IN THE CASE OF MADRAS INDUSTRIAL INVESTMENT CORPORATION LTD. (SU PRA) WAS IN RELATION TO THE EXPENDITURE INCURRED FOR BORR OWING MONEY FOR THE PURPOSE OF BUSINESS. THE EXPENDITURE INCURRED FOR RAISING A LOAN IS OBVIOUSLY REVENUE IN NATURE, WHICH DOES NOT CONFER ANY ADVANTAGE OF ENDURING NATURE ON THE ASSESSEE. THUS, THE FACTS OF THIS CASE ARE ALSO DISTINGUISHABLE. COMING TO THE DECISION IN THE CASE OF EMPIRE JUTE CO. LTD. VS. CIT (1980) 124 ITR 1, RELIED UPON BY THE LD. COUNSEL, THE FACTS ARE THAT A TIME ARRANGEMENT WAS ENTERED INTO BETWEEN MEMBERS AND THE AS SOCIATION TO RESTRICT THE NUMBER OF WORKING HOURS PER WE EK. THE MEMBERS WERE ENTITLED TO TRANSFER WHOLLY OR PARTLY TH EIR ALLOTTED HOURS TO ANY OTHER MEMBER FOR A CONSIDERATION. THE QUESTION WAS WHETHER THE EXPENDITURE WAS OF CAPITAL NATURE OR REVENUE N ATURE. THE HONBLE COURT HELD THAT THE ALLOTMENT OF LOOM HOURS WAS NOT ANY RIGHT CONFERRED ON ANY MILL, BUT IT WAS ONLY A CONT RACTUAL LIMITATION ON THE USE OF LOOM HOURS, SO THAT THE TRANSFER EE MILL COULD WORK ITS LOOMS FOR LONGER PERIOD. THE EXPENDITURE WA S INCURRED FOR REMOVING THE RESTRICTION WITH A VIEW TO INCREASE ITS PROFITS. NO NEW ASSET WAS CREATED AND THERE WAS NO EXPANSION O R ADDITION TO THE PROFIT MAKING APPARATUS OF THE ASSESSEE. THUS, THE EXPENDITURE WAS REVENUE IN NATURE. THE COURT ALSO HELD TH AT THERE MAY BE INSTANCES WHERE THE EXPENDITURE MAY BE INCURRE D FOR OBTAINING AN ADVANTAGE OF ENDURING NATURE, BUT NONETHELESS THE EXPENDITURE IS ON REVENUE ACCOUNT AND THIS TEST MAY FAIL. IT IS NOT EVERY ADVANTAGE OF ENDURING NATURE WHICH LEADS TO A N ADVANTAGE IN THE ITA NO. 4637/DEL/2009 ASST T. YEAR 2006-07 8 CAPITAL FIELD. IF THE ADVANTAGE IS MERELY FO R FACILITATING THE TRADING OPERATION, THE SAME IS IN THE REVENUE FIELD. W E ARE OF THE VIEW THAT THE RATIO OF THAT DECISION IS ALSO NOT APPLIC ABLE TO THE FACTS OF THIS CASE. THERE ARE MANY REASONS FOR THE SAME. F IRST OF ALL, IN THIS CASE, THE LAND WAS TAKEN ON A LONG-TERM LE ASE FOR SETTING UP THE BUSINESS OF THE ASSESSEE. IT HAD NOTHING TO DO WITH THE NUMBER OF HOURS FOR WHICH THE ASSESSEE COULD WORK ITS OFFICE. THE EXPENDITURE NOT ONLY BROUGHT A BENEFIT O F ENDURING NATURE BUT ALSO CONFERRED PROPRIETARY RIGHTS ON THE ASSESSEE AS THE LAND COULD BE TRANSFERRED TO A THIRD PARTY WITH THE PAYMENT OF 50% OF UNEARNED INCREASE TO NOIDA. THE LAND COULD ALS O BE MORTGAGED FOR RAISING LOAN. IN SUCH AN EVENTUALITY THE P RE-EMPTIVE RIGHT TO PURCHASE WAS VESTED IN NOIDA. THE PAYMENT WAS NOT BY WAY OF RENT AS THE RENT WAS TO BE PAID SEPARATE LY, WHICH COULD ALSO BE INCREASED. THUS, THE PAYMENT OF PREMIUM W AS SEPARATE AND DISTINCT FROM RENT, AND FOR THE PURPOSE OF SECU RING THE LAND, A CAPITAL ASSET, FOR USE OF THE ASSESSEE FOR A LONG PERIOD WITH CERTAIN PROPRIETARY RIGHT INCLUDING THE RIGHT O VER ANY ASSET FOUND UNDER THE LAND. IN THE AFORESAID CASE, THE HONBLE COURT HELD THAT THE TEST OF ENDURING BENEFIT MAY FAIL IN SOM E CASES WHEN ADVANTAGE IS ONLY IN THE REVENUE FIELD. SUCH IS NOT THE CASE HERE, AS THE ADVANTAGE IS ALSO THERE IN THE CAPITAL FIELD. WE FIND THAT THE FACTS ARE QUITE NEARER TO THE FACTS IN THE CASE OF MUKUND LTD. (SUPRA), IN WHICH A PREMIUM WAS PAID FOR TAKIN G LEASE OF LAND FOR 99 YEARS. THE AMOUNT WAS NOT REFUNDABLE AS I N THIS CASE AND, THEREFORE, THE SAME COULD NOT BE CONSIDERED TO B E ADVANCE PAYMENT OF RENT. THE HONBLE TRIBUNAL CONSIDERE D THE CASE OF GEMINI ARTS (P) LTD. (SUPRA), RELIED UPON BY THE LD. COUNSEL, AND DISTINGUISHED THE FACTS OF THAT CASE. IT AL SO CONSIDERED THE DECISION IN THE CASE OF MADRAS INDUSTRIAL INVE STMENT CORPORATION LTD. AND CAME TO THE CONCLUSION THAT THE EXPENDI TURE IS CAPITAL IN NATURE. FINALLY, COMING TO THE DECISION IN THE CASE OF MADRAS AUTO SERVICES (P) LTD. (SUPRA), THE FINDINGS O F THE HON'BLE SUPREME COURT WERE THAT THE EXPENDITURE WAS INCURR ED WITH A VIEW TO SECURE THE LEASE AT A MUCH LOWER RENT. THE RENT, BEING A REVENUE EXPENDITURE, THE EXPENDITURE WAS ALS O IN THE NATURE OF REVENUE EXPENDITURE. WE FIND THAT IN THIS CASE, PAYMENT OF RENT WAS OVER AND ABOVE THE PAYMENT OF PREMIUM. THE ASSESSEE ALSO OBTAINED CERTAIN OWNERSHIP RIGHTS IN LAND. THUS , IT IS HELD THAT THE EXPENDITURE IS REVENUE IN NATURE. 4.1 COMING TO THE ISSUE OF CONSISTENCY, IT MAY BE MENTIONED THAT THE SAME IS NOT APPLICABLE IN EVERY CASE , MORE SO WHEN THE POINT OF VIEW OF THE REVENUE WAS CONTRARY T O LAW IN EARLIER YEAR, ALTHOUGH IN FAVOUR OF THE ASSESSEE. IN THE CA SE OF JYOTI APPAREL (SUPRA), THE JURISDICTIONAL HIGH COURT DID NOT ACCEPT THIS ARGUMENT AS IT WAS FOUND CONTRARY TO ITS OWN DECISION IN THE CASE OF SHRI RAM HONDA POWER EQUIPMENTS AND OTHERS (2007) 207 CTR (DEL) ITA NO. 4637/DEL/2009 ASST T. YEAR 2006-07 9 689. THEREFORE, THE PRINCIPLE OF CONSISTENCY CANNOT BE TAKEN TO BE OF UNIVERSAL APPLICABILITY AND IT MAY FAI L WHERE THE EARLIER DECISION TAKEN BY THE REVENUE WAS NOT CORRE CT IN LAW. 4.2 IN THE RESULT, THESE GROUNDS ARE DISMISSED. 4. THERE IS NO DISPARITY ON FACTS OR EVEN IN GROUND S OF APPEAL. THEREFORE, RESPECTFULLY FOLLOWING THE ORDER OF THE ITAT IN EARLIER YEAR WE DO NOT FIND ANY MERIT IN THIS APPEAL IT IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 23.7.2010. SD/- [G.E. VEERABHADRAPPA] [RAJPAL YADAV] VICE PRESIDENT JUDICIAL MEMBER DATED: 23.7.2010 VEENA COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT