DEEPAK GUPTA, J. - (1.)THIS appeal was admitted on the following substantial question of law:
1. Whether on the facts and in the circumstances of the case, the Tribunal was right in law holding that the expenditure incurred on stamp duty and registration charges at the time of execution of lease agreement for taking on lease the fruit processing plant for seven years, was allowable as revenue expenditure.

(2.)THE brief facts necessary for decision of the case are that during the asst. yr. 1994 -95 the assessee took on lease a fruit processing plant from the HPMC. The lease deed was executed on 27th Dec, 1993, for a period of 7 years. It is not disputed that in fact the lease deed was terminated w.e.f. 17th March, 1994. The assessee had spent a sum of Rs. 3,44,251 as stamp duty and registration charges on the lease deed. The AO treated this expenditure as capital expenditure by relying upon the judgment of the Karnataka High Court reported in the case Hotel Rajmahal v. CIT : [1985]152ITR218(KAR) . On the other hand, the assessee relying upon the judgments of the Madras, Kerala and Gujarat High Courts reported in Sri Krishna Tiles and Potteries Madras (P) Ltd. v. CIT : [1988]173ITR311(Mad) , Plantation Corporation of Kerala Ltd. v. Commr. of Agrl. IT : [1994]205ITR364(Ker) and Gujarat Machinery . v. CIT : [1995]211ITR1010(Guj) , contends that the amount spent as stamp duty and registration charges should be treated as revenue expenditure. The CIT(A) and Tribunal accepted the plea of the assessee. The Revenue has filed the present appeal challenging the order of the learned Tribunal.
The Karnataka High Court in Hotel Rajmahal's case (supra) did not really discuss the matter in detail but held that when for the first time the assessee enters a lease deed securing leaseholding rights for a long period, the expenditure incurred on stamp duty, registration and legal fees, etc. should be treated as expenditure of capital nature.

(3.)HOWEVER , the Madras High Court in Sri Krishna Tiles and Potteries Madras (P) Ltd. case (supra) followed the law laid down by the Bombay High Court in CIT v. Cinceita (P) Ltd. : [1982]137ITR652(Bom) and disagreed with the decision of the Karnataka High Court. It was held that irrespective of whether the incidental expenditure is incurred in or connection with or related to capital expenditure the same has to be treated as revenue expenditure.