TMI Blog1993 (8) TMI 57X X X X Extracts X X X X X X X X Extracts X X X X ..... boat charter agreement dated July 8,1970, between the assessee and Messrs. Hind Shipping Agencies, the owners of the Steam Cargo Vessel 'Vardhini', the Tribunal was right in holding that the payment of a non-refundable amount of Rs. 2,50,000 was capital expenditure ? At the instance of the Revenue: 2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in upholding the Appellate Assistant Commissioner's order allowing to the assessee-company deduction for the assessee's claim of gratuity liability of Rs: 3,25,000 as against only Rs. 64,000 allowed by the Income-tax Officer for the assessment year 1971-72 ? 3. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd. v. Union of India [1993] 199 ITR 43. Following the same, it is answered in the negative, that is, against the assessee and in favour of the Revenue. So far as question No. 1, which is referred at the instance of the assessee, is concerned, learned counsel for the assessee submits that this question is not covered by any binding decision and the same needs consideration. We shall, therefore, deal with the said question and for that purpose set out the facts relevant for determination of the said question. The assessee acquired a steam cargo vessel from Messrs. Hind Shipping Agencies under a bareboat charter agreement dated July 8, 1970. Under the said agreement, the owners chartered to the assessee a vessel "Vardhini" for a period o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation for the grant of the charter" in addition to and apart from the monthly hire of Rs. 20,000. It was not refundable even if the ship was lost. It was, in effect, a payment made by the assessee not for the charter of the ship for 4 1/2 years but for the grant of the charter itself. For user of the ship the assessee was to pay a sum of Rs. 20,000 per month during the subsistence of the lease. Under the circumstances, we are of the clear opinion that the lump sum payment made by the assessee as consideration for grant of the charter has to be treated as a capital outlay. Accordingly, we answer the question in the affirmative, that is, in favour of the Revenue and against the assessee. Under the facts and circumstances of the case, we m ..... X X X X Extracts X X X X X X X X Extracts X X X X
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