Held that there had been no addition of capital asset of enduring nature in the hands of the assessee and after the payment of the amount there had been no change in the capital structure of the assessee. It had paid the amount to get back possession of its own asset which had been given on licence basis under the hotel operator agreement and not for acquisition of an asset that the assessee did not already own or possess. The expenditure was to facilitate its business and trading operations. The expenditure was revenue. (AY. 2006-07)
PCIT v. Elel Hotels and Investments Ltd. (2022) 447 ITR 92/ 220 DTR 478/(2023) 332 CTR 870 (Delhi)(HC) Editorial : Order of Tribunal in PCIT v. Elel Hotels and Investments Ltd. (2022) 28 ITR (Trib)-OL 616 (Delhi)(Trib.), affirmed.
S. 37(1) : Business expenditure-Capital or revenue-Owner of Hotel-Compensation paid towards termination of agreement to receive back possession of building, furniture and fixtures-Allowable as revenue expenditure.