1. MIDC Leasehold Land premium can be spread & is revenue expenditure 2. ITO finally got power to make correction in Challan

*Supreme court has also given Judgment in favor of allowing as Revenue
expense on ground that it is Lease Rent paid in advance. So, **MIDC Premium
on Pro-rata Lease is revenue Expenditure*

The agreement entered into with MIDC for land at Usar, constitutes revenue
expenses. In view of the Supreme Court decision in the case of Madras
Industrial Investment Corporation Limited- 225 ITR 802 (SC) the total
amount of lease premium paid in respect of such agreements should be
amortized over the period of lease and only the amount pertaining to the
relevant previous year should be allowed as a deduction. The AO is,
therefore, directed to verify all the lease agreements in respect of which
the amortization is claimed and allow the pro-rata lease premium in respect
of such agreements as are similar to the above mentioned agreement with
MIDC in respect of the land at Usar. Such agreements would be those under
which no annual lease rental, or a nominal lease rental of Rs.1/- per
month/annum is payable and a premium is paid on entering into the agreement
which can be taken to be advance rent paid, as found by Karnataka High
Court in the above mentioned decision. However, in case of an agreement in
which an annual payment of rent, other than a nominal rent, is required,
the amount of lease premium cannot be said to be payment of rent inadvance
and in such cases the premium will be in the nature of capital expenditure
incurred for obtaining lease hold rights and no amortization will be
allowable."

Its regarding Lease Hold land W/off....

please click on following links to see relevant case laws.


In many cases issue is of whether expenses are of capital nature or of
Revenue nature.And keeping this in mind various cases putted in front of
SC, out of which imp is

http://law.incometaxindia.gov.in/DitTaxmann/IncomeTaxActs/2008ITAct/%5B1997%5D225ITR0802%28SC%29.htm

This case is for "Discount allowed on issue of bonds (to the extent not
written off), it is to be w/off over period of Debentures life.

And

http://law.incometaxindia.gov.in/DitTaxmann/IncomeTaxActs/2008ITAct/%5B2002%5D254ITR0201%28Mad%29.htm

For Lease Rent

And

http://www.taxpundit.org/phocadownload/ITD/133ITD/133ITD460.pdf

for lease rent

And

Article in Economic Times with all relevant cases

http://articles.economictimes.indiatimes.com/2002-12-28/news/27353007_1_rent-advance-lease



*Good News from Our Local Income Tax Office*

Happy to inform that our local Income Tax office can make Corrections in
challans. Those who are facing the problems related to the challans now can
get rectified from the department. As you aware that since long local
Income Tax officers were not able to make necessary correction in the
challan on the request of depositors, now the systems are now made
operative for Income Tax officer. You may approach to the relevant officer
for necessary changes.