Lease
Venkatesh
(Querist) 08 December 2009
This query is : Resolved
Bus shelters have been acquired for advertising by advertising co for OOH media under a lease for 10 years.
We have claimed it as a capital expenditure and charged depreciation according to Income tax rates.
However the ITO wants us to consider it as a deferred revenue expenditure & w/off over the perid of lease. which is appropriate pls advice. thanks in advance. pls do quote relevant case laws
Vineet
(Expert) 08 December 2009
It is a case of leasing out of advertorial space and cannot be construed as know-how, patents, copyrights, trade marks, licences, franchises or any other business or commercial rights of similar nature, for consideration as Intangible right. If it is a lease, the annual lease rent should have been clearly defined and therefore ITO is right in considering the same as deferred revenue expenditure.
Bombay High Court in its recent judgement in the case of CIT Vs Techno Stocks and Shares Ltd 225CTR337 while dealing on the issue of allowability of depreciation on BSE Membership Card observed that every capital expenditure is not eligible for depreciation u/s 32 and such expenditure should definitely fall within the definition of categories enumerated in that section.
Arul Kumar
(Expert) 08 December 2009
I agree with Mr. Vineet.
