Income Tax, Issue Update

Stamp Duty paid for execution of lease deed: Revenue Expenditure Vs. Capital Expenditure

Case:  Fiserv India Pvt Ltd vs. ACIT, Delhi ITAT

Outcome: In favour of Assessee


  • The Assessee was a company engaged in the business of providing software development and maintenance services to Fisqaerv Global Services Inc USA. The Assessee had claimed deduction on stamp duty paid on account of leased property holding.
  • However, the Assessing Officer disallowed the stamp duty expenses of Rs. 68 lakhs on account of stamp duty paid by the Assessee on the leased property by holding that it was for the long- term and provided enduring benefit to the Assessee and therefore, it was a capital expenditure.

Key points

  • The Tribunal placed reliance on the decision of Commissioner of Income Tax Vs. Cinceita Pvt. Ltd., wherein it was held that the period of lease for which the property was taken could not be regarded as a decisive test to determine the nature of the expenditure.
  • Further, it was observed that the stamp duty amount was paid on lease deed for the carrying on of the business of the Assessee and therefore, the amount of stamp duty paid was a revenue expenditure.
  • In view of this, following the decision of said case law in the present facts of the case the Assessee was allowed to claim deduction on the stamp duty charges of Rs. 68 lakhs paid as revenue expenditure under section 37(1) of the Income Tax Act.

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