Capital or revenue expenditure !

Court :
High Court

Brief :
Membership and entry of a dealer in the OTC Exchange was only on payment of non-refundable deposits, upon the non payment of which the assessee would have been termed as an "inactive" member. This payment could not be treated as one of an "enduring nature" and thus was deductible as revenue expenditure.

Citation :
Neset Holdings P. Ltd. Vs. C.I.T.

Capital or revenue expenditure Neset Holdings P. Ltd. Vs. C.I.T. 5/26/2005 (2006) 282 ITR 601 (Delhi) Case Fact: Whether amount paid to stock exchange as non-refundable deposits for acquiring OTC membership is a capital expenditure or revenue expenditure? Decision: Held by the Hon"ble court that as the membership and entry of a dealer in the OTC Exchange was only on payment of non-refundable deposits, upon the non payment of which the assessee would have been termed as an "inactive" member. This payment could not be treated as one of an "enduring nature" and thus was deductible as revenue expenditure.

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Judgement posted by

CA.Saibaburao Nanduri

Chartered Accountant

I am a commerce graduarte of Andhra University. Studied at HINDU COLLEGE, Guntur. Became FCA and started Practice under the name and style of M/s SAIBABU RAO CO I became Chairman of CA Institute, Guntur Branch, during the year 2008-09 My post qualifications are: Information Systems Audit DISA (ICAI) ... Read more

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