Bombay High Court
Commissioner Of Income-Tax, Bombay ... vs Burroughs Wellcome & Co. (India) Pvt. ... on 8 April, 1981
Equivalent citations: (1981)23CTR(BOM)102, [1982]133ITR37(BOM)
Author: P.B. Sawant
Bench: P.B. Sawant
JUDGMENT Chandurkar, J.
1. The question referred in this reference under s. 256(1) of the I. T. Act, 1961, is as follows :
"Whether, on the facts and in the circumstances of the case, the amount of Rs. 11,518 spent by the assessee-company by way of brokerage or commission in obtaining the two premises on lease was an expenditure of revenue nature and is an admissible deductio ?"
2. The amount of Rs. 11,518 spent by the assessee by way of brokerage or commission in obtaining the two premises on lease, one of which was for the purpose of locating its factory and the other was for the residence of its sales manager was claimed as expenditure of a revenue nature, but the ITO disallowed the same on the ground that the lease of the premises in question had resulted in an enduring benefit to the assessee-company. This view was, however, reversed by the AAC, whose order was confirmed by the Appellate Tribunal. The Appellate Tribunal took the view that the execution of lease deed secured the period for which the premises could be used by the assessee for the business purpose and, therefore, in view of the decision of the Supreme Court in India Cements Ltd. v. CIT [1966] 60 ITR 52, the amount spent by way of commission or brokerage in securing the two premises on lease for its business was an allowable deduction. The correctness of this view is put in issue in the question referred Shri Joshi, appearing on behalf of the revenue, has fairly brought to our notice a decision of this court which concludes the controversy against the department, viz., CIT v. Hoechst Pharmaceuticals Ltd. [1978] 113 ITR 877, where expenses incurred by way of brokerage and stamp duty for acquiring office premises on lease for a short period of five years were held to be allowable deductions in computing the total income of the assessee, since the period of the lease could not be said to be such a long period that the assessee could be said to have acquired or brought into existence an advantage of an enduring character. The decision of the Supreme Court in India Cements Ltd. was relied upon. In view of the decision in Hoechst Pharmaceuticals Ltd.'s case [1978] 113 ITR 877 (Bom), we do not think the mater involved in the reference acquires any fresh consideration. Accordingly, the question is answered in the affirmative and against the revenue. The revenue to pay the costs.