RICHARDSON HINDUSTAN LIMITED Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE question of law referred to this Court for the opinion at the instance of the assessee under s. 256(1) of the IT Act, 1961, is:

(2.) THE ITO disallowed the assessee's claim for deduction in respect of both the above items of expenditure on the ground that the expenditure was incurred in connection with the acquisition of a capital asset, that is, the impugned premises, on lease for a period of ten years with provision for renewal for two further consecutive periods of ten years each on the same terms. The disallowance has been confirmed both by the AAC and the Tribunal.

(3.) MR . Jetly, learned counsel for the Department, fairly admitted that so far as the expenditure by way of stamp duty in executing the lease deed is concerned, it is covered by this Court's decision in CIT vs. Cinceita (P) Ltd. (supra). As regards the payment of Rs. 8,396 to Ravee A. Sood, however, he submitted that the decisions relied on by Mr. Dastur are not applicable. According to him, the nature of this expenditure is quite different from that of brokerage or commission paid by the assessee once for all at the time of acquiring premises on lease. Mr. Dastur, on the other hand, stated that payment of commission to an estate agent fixed at a percentage of the lease rent payable to the landlords stands on a much better footing than the brokerage and/or commission paid once for all. According to him, the commission paid to the estate agent month after month is for the use of the premises and is in the nature of rent rather than brokerage or commission.