TMI Blog1975 (7) TMI 36X X X X Extracts X X X X X X X X Extracts X X X X ..... 1,65,424 was properly treated as revenue expenditure and allowed accordingly ? " On question No. 1, learned standing counsel appearing on behalf of the assessee did not seriously contest the position that in view of rule 8 of the Indian Income-tax Rules, 1922, as construed by this court in the case of Anantapur Textiles Ltd. v. Commissioner of Income-tax [1976] 102 ITR 340 (Cal), it could not be disputed that the assessee will not be entitled to full depreciation as claimed. In the premises, the first question is answered in the negative and in favour of the revenue. We make it clear that the assessee will be entitled to depreciation for the relevant period as laid down in the Rules and not for the entire period. So far as the second qu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ous disaster in the immediately preceding year as a result of which the assessee had to construct dams at a cost of Rs. 1,65,424 in compliance with the direction given by the mines department for prevention of recurrence of such disaster. Evidently, the dams were constructed for the protection of the mines as also for the safety of the labourers. We agree with the A. A. C. that the mines being a capital asset of the company, any expenditure incurred for the protection thereof would be a revenue expenditure. " Mr. Suhas Sen, learned counsel on behalf of the revenue, contends that on the facts found in the instant case the expenditure incurred for the purpose of construction of the dams must be held to be of capital nature. He relied on sev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the case of Phillips (H. M. Inspector of Taxes) v. Wheildon Sanitary Potteries Ltd. [1952] 33 TC 213. Here, the assessee manufactured pottery at a factory situate by the side of a canal. The factory was separated from the canal by an embankment. The embankment had subsided and resulted in seepage of water in the factory. A new barrier was built on the site. The Commissioner held that the expenditure incurred in erecting the new barrier was allowable as a deduction. Having regard to the existing factory the court did not hold that the construction of the new barrier was a repair and allowable as a deduction. On taking into account the expenditure, the permanent nature of the new barrier, enduring advantage conferred thereby upon the busine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es. It had no direct connection with the carrying on of the business by the assessee. In the premises it was submitted that the said expenditure should be held to be a revenue expenditure. In support of such contention several decisions were cited. The first was the case of Southern (H. M. Inspector of Taxes) v. Borax Consolidated Ltd. [1942] 110 ITR (Supp) 1, 5 (KB). This decision has already been referred to earlier. The proposition of law laid down in this case was as follows : " On the other question as to whether this is a payment properly attributable to capital or to revenue, in my opinion the principle which is to be deduced from the cases is that where a sum of money is laid out for the acquisition or the improvement of a fixed c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... achinery and clearing the land of debris for the purpose of resumption of mining operations in the said colliery. The entire amount so spent was claimed to be business expenditure. Up to the Tribunal it was held that the said expenses were in the nature of capital expenditure. The court held that on the facts found no new or fresh asset had been acquired by the assessee as a result of such expenditure. The aim and object of this expenditure was only to carry on the operation of the existing concern of the assessee for facility of trade and was aimed at removing the impediments thereto. It was held that such expenditure was a part of the working expenses of the assessee and was laid out for the purpose of profit-earning and was revenue e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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