|The Tax Publishers2021 TaxPub(DT) 0095 (Del-Trib)
INCOME TAX ACT, 1961
When leased premises were to be used for the purposes of business of the assessee, necessary lease registration charges were also liability of the assessee and merely because joint venture partners decide about who put in money in JV for what purposes, it was merely that they were deciding about the sources of funds, expenditure of JV might be financed out of that, but that does not make it the liabilities of JV partners, instead of JV itself. Therefore, expenditure for registration of lease deed was allowable in assessee's hands.
Business expenditure - Allowability - Lease Deed Registration Charges -
As per share-holders' agreement entered into between National Textile Corporation and M/s. Alok Industries Ltd., National Textile Corporation offered its factory premises to assessee company at an yearly rent of Rs. 100 and Alok Industries was to bring additional amount into the company for making payment of registration on lease agreement, etc. The amount to be paid by Alok Industries towards above expenditure was to be treated as share premium and share capital. Assessee claimed deduction of Lease Deed Registration Charges. AO held that payment of registration charges and stamp duty was the liability of Alok Industries and, therefore, no deduction could be allowed to assessee. Held: National Textile Corporation was providing its building on lease to assessee and lease deed charges, etc., were to be paid though incurred by assessee, but to defray these expenditure necessary amount was brought in by Alok Industries Ltd. That means for the purpose of the payment of lease deed registration charges and stamp duty, Alok Industries would bring in the money into the joint venture. However, that does not mean that liability of assessee did not exist for payment of stamp duty. In fact, the source of the fund for payment of the stamp duty is by way of share capital and share premium from M/s. Alok Industries Ltd. However, liability to pay the same remained with assessee. Therefore, expenditure for registration of lease deed was allowable in assessee's hands.
FAVOUR : In assessee's favour.
A.Y. : 2013-14
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