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2022 Supreme(Online)(Kar) 45674
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 2ND DAY OF AUGUST, 2022
PRESENT
THE HON9BLE MR.JUSTICE P.S.DINESH KUMAR
AND
THE HON9BLE MRS.JUSTICE M.G.UMA
I.T.A. No.379/2018
BETWEEN:
DR.BHUJANG SHETTY
# 237,4TH STAGE, 3RD BLOCK
WEST OF CHORD ROAD
BASAVESHWARANAGAR
BENGALURU-560 079.
& APPELLANT
(BY SRI.A.SHANKAR, SR.COUNSEL A/W SRI.M.LAVA, ADV.)
AND:
THE ADDITIONAL COMMISSIONER OF
INCOME TAX, RANGE-5
BMTC BUILDING, 80 FEET ROAD
KORAMANGALA
BENGALURU-560 095.
& RESPONDENT
(BY SRI.K.C.ARAVIND, ADV.)
THIS ITA IS FILED UNDER SECTION 260-A OF
INCOME TAX ACT, 1961, ARISING OUT OF ORDER DATED
19.01.2018 PASSED IN ITA NO.1851/BANG/2016 FOR THE
2
ASSESSMENT
YEAR
2010-2011
(VIDE
ANNEXURE-A)
PRAYING THIS HON9BLE COURT TO (A) TO FORMULATE
THE SUBSTANTIAL QUESTIONS OF LAW STATED ABOVE
AND ANSWER THE SAME IN FAVOUR OF THE APPELLANT;
(B) TO ALLOW THE APPEAL AND SET ASIDE THE FINDINGS
THEREIN IN THE EXTENT AGAINST THE APPELLANT IN
THE ORDER PASSED BY THE INCOME TAX APPELLATE
TRIBUNAL,
BENGALURU
8B9
BENCH
IN
ITA
NO.1851/BANG/2016
DATED
19.01.2018
FOR
THE
ASSESSMENT YEAR 2010-2011 (VIDE ANNEXURE-A) (C) TO
PASS SUCH OTHER ORDERS, AS THIS HON9BLE COURT
DEEMS FIT AND PROPER TO MEET THE ENDS OF
JUSTICE.
THIS ITA COMING ON FOR HEARING, THIS DAY,
P.S.DINESH KUMAR J., DELIVERED THE FOLLOWING:-
This appeal by the assessee to consider the
following questions of law:
<(1)
Whether the Tribunal was justified in
law in holding that the expenditure incurred
towards lease deed registration is not
allowable as revenue expenditure but has to
be held as capital in nature on the facts and
circumstances of the case?
3
(2)
Without
prejudice,
whether
the
Tribunal was justified in law in not directing
the
lower
authorities
to
allow
depreciation/amortization
on
the
expenditure treated by them as a capital
expenditure on the facts and circumstances
of the case?=
2.
Brief facts of the case are, assessee is a doctor by
profession and he has entered into a lease agreement
dated October 31.10.2009 and taken the building
having 5 floors totally measuring 41,250 Sq.ft for a
period of 29 years and 11 months. In his returns for the
Assessment Year 2010-11, the assessee claimed it as
revenue expenditure. He has paid stamp duty of
Rs.18,04,930/- and registration fee of Rs.4,51,820/-
and in all, a sum of Rs.22,56,750/-. For the
Assessment Year 2010-11, the assessee claimed it as
revenue expenditure. The Assessing Officer rejected the
4
said claim. On appeal, Commissioner of Income Tax
(Appeals) upheld the order passed by the Assessing
Officer and dismissed the appeal. On further appeal, the
Income Tax Appellate Tribunal, Bangalore 8B9 Bench
[ITAT] has also dismissed ITA No.1851/BANG/2016 by
the impugned order dated 19.01.2018.
3.
Shri.A.Shankar,
learned
Senior
Advocate
submitted that assessee has taken the premises on
monthly rent which is allowable as revenue expenditure.
Therefore, the lease agreement which requires payment
of stamp duty and the registration fee is incidental to
the assessee taking the premises on monthly lease.
Therefore, any expenditure made in that behalf would
be treated as revenue expenditure.
4.
He brought to our notice the decision of this Court
in
HOTEL
RAJMAHAL
V/s.
COMMISSIONER
OF
INCOME-TAX1 and submitted that in that case, this
1 (1985) 152 ITR 218 (Kar)
5
Court has treated the expenditure as capital in nature,
on considering the material facts in that case. He also
placed reliance on the PLANTATION CORPORATION OF
KERALA
LTD.,
V/S.
COMMISSIONER
OF
AGRICULTURAL INCOME-TAX2 and submitted that
Kerala High Court has followed the decision of Bombay
High Court in COMMISSIONER OF INCOME-TAX V/S
CINCEITA PVT. LTD.3 and held the expenditure
towards stamp duty and registration charges as revenue
expenditure. Accordingly, he prayed for allowing the
appeal.
5.
Shri.K.V.Aravind, learned Standing Counsel for
the Revenue submitted that there is no formula to
determine as to whether an expenditure is revenue or
capital in nature and each case has to be decided on the
facts of that case. Placing reliance on the decision of
EMPIRE JUTE CO.LTD. v/s COMMISSIONER OF
2 (1994) 205 ITR 364 (Ker)
3 (1982) 137 ITR 652
6
INCOME-TAX4, he argued in support of the impugned
orders passed by the Assessing Officer, CIT[A] and ITAT.
6.
We have carefully considered the rival contentions
and perused the records.
7.
Shri.Shankar, has also placed the lease deed for
our perusal. It shows that rent is payable every month
and the lease period is for 29 years and 11 months.
8.
There is no dispute with regard to the fact that
monthly rent payable by any assessee is to be treated as
revenue expenditure.
9.
Law requires that if the period is more than one
year, the lease deed must be registered under Section
17B of the Registration Act, 1908. Further, based on the
monthly rent and the security deposit, ad valorem
stamp duty will have to be paid. Thus, the intention of
the parties namely, lessor and lessee are clear that the
4 (1980) 124 ITR 1(SC)
7
lessee shall take premises by paying rents every month
for a certain period. There is no dispute that the lessee
has paid stamp duty of Rs.18,04,930/- and registration
charges
of
Rs.4,51,820/-
in
all,
a
sum
of
Rs.22,56,750/-.
10.
In the case of PLANTATION CORPORATION, the
Division Bench of Kerala High Court, f
