Coforge Limited (formerly known as NIIT Limited) Vs ACIT
Forum- Delhi High court
Date 5th July 2021
Sub- whether commuted value of lease rent for 90 years paid in one go in an year is a revenue expenditure deductible in the year of payment.

The Delhi high court in this case was dealing interalia with the question whether the Company which had opted to pay the commuted value of lease rent at 11 times the rent payable for 90 years @ Rs 708913/- which amounted to Rs 7798042/- is deductible as expenditure in the year of payment. The revenue argued that the expenditure was for the purpose of enduring benefit and the Tribunal allowed this expenditure to be divided into 90 years to be allowed in each year. However, the Delhi high court relying on the decision of the Taparia Tools Limited Vs JCIT(2015) 372 ITR 605(SC) where the apex court had held that the income-tax act doesn’t have a concept of deferred revenue expenditure and if a liability is certain of being paid, then it doesn’t matter whether the payment is deferred and discharged at a later date and the expenditure was eligible to be allowed in the year of payment. The high court did not also buy the argument that it was against the concept of matching principle

This judgement thus reiterates the law that the quantum of deduction doesn’t matter, if the nature of an expenditure is revenue in nature , the same is allowable in one go.

Ramesh Patodia
16-07-2021