The AO treated the one time final payment of disputed amount of impact fees to Municipal Corporation as capital expenditure and allowed depreciation at 10 %. On appeal the CIT(A) affirmed the order of the AO. On appeal the Tribunal held that the payment is allowable as revenue expenditure. Followed Prakash Cotton Mills Pvt Ltd v. CIT(1993) 201 ITR 684 (SC) (AY. 2015-16)
Asiatic Colour Chem Ind. Ltd. v. Jt. CIT (2024)116 ITR 7 (SN)(Ahd)(Trib)
S.37(1): Business expenditure-Capital or revenue-Remove defect in title of immoveable property-One time final payment of disputed amount of impact fees to Municipal Corporation-Damages or penalty or interest-Allowable as revenue expenditure. [S. 32, Municipal Corporation Act]