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2012 (3) TMI 321 - DELHI HIGH COURTCapital or revenue expenditure - enduring nature - The contention of the Revenue is that the construction of flyovers, pedestrian facilities etc. was capital expenditure as the facilities being constructed had an enduring benefit and had resulted in creation of permanent facilities - held that the expenditure incurred on construction of flyovers etc was revenue expense and not capital expense - Decided in favor of the assessee. Regarding diversion - The concept of diversion of income by way of overriding title for the purpose of income tax was expounded and explained by the Supreme Court in CIT vs. Sitaldas Tirathdas, (1960 -TMI - 49527 - SUPREME Court) - The nature of obligation by reason of which income becomes payable to a person other than the one entitled to it, is the relevant and the determinative factor - A part of the said amount i.e. 5 paise per bottle was retained by the assessee to meet their administrative and other corporate expenses and the other part of that was to be used for construction of flyovers and pedestrian facilities by the assessee. The said 95 paise was not transferred or paid by the assessee to the Delhi Administration - held that the amount standing in TIUF was not diverted at source by way of overriding title and, therefore, was to be included in the taxable income of the assessee - Decided against the assessee. Taxability of part of sale proceeds kept in separate account - held that:- Mere fact that the amount was retained in the bank account of the assessee under the head ‘OGES’, does not show or prove that it was the income of the assessee. Mere realization of an amount in course of trading was not determinative whether the amount received was income. The court/authorities must determine the nature and character of the receipts before the amount can be taxed as income. This part of the sale consideration i.e. OGES was kept in a deposit unrelated to the business of the respondent assessee. The assessee did not exercise dominion over the said fund/deposit and deal with the said fund/deposit. Keeping in view the aforesaid elucidation of law and applying the same to the factual matrix, noting the nature and character of the OGES, it has to be held that the same was not taxable income of the assessee. The same has to be excluded from the profit. The aforesaid receipts were not income earned and do not have character of income earned by the assessee over which it had dominion or right.
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