Home Case Index All Cases Income Tax Income Tax + HC Income Tax - 2015 (7) TMI HC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2015 (7) TMI 995 - HC - Income TaxExpenditure incurred on Dry Docking - revenue v/s capital expenditure - Held that:- Substantial question of law already answered against the Revenue as decided in [2015 (6) TMI 104 - UTTARAKHAND HIGH COURT] wherein held according to the accepted principles, capital expenditure is something which is spent once for all, while revenue expenditure is that which has to be incurred from year to year. If the expenditure is to bring into existence or advantage for the enduring profit of the business, then expenditure may be capital in the nature but where the expenditure has direct nexus, connection or relation to the carrying on or conducting the business of the assessee, it must be recorded as an integral part of profit making process and hence revenue in nature. The maintenance of these vessels and rigs is a sine-qua-non for carrying on its business of exploration and production of oil. In the case of the appellant, expenditure was claimed as revenue. Therefore, of the opinion that AO was not right in disallowing the expenditure as capital expenditure - Decided against revenue. Payment made on account of royalty to State Govt. - payment of royalty in excess of 20% - restriction under Section 6A(4) of the Oilfield (Exploration and Development Act), 1948 - to be calculated on international price instead of discounted sale price in the nature of allowable business expenditure? - Held that:- The case set up by the Revenue that it is a case, which involves violation of the mandate of Section 37 in its explanation may not hold good. In this context, we would think that Section 6A may not be read in isolation; instead, we must also view it in the context of the notification read with resolution read with communication. Certainly, we cannot liken it to hafta or extortion money, which appears to have been the intention. It is very fairly conceded by the learned counsel for the Revenue, there is no question of any offence being committed. In fact, the respondents were only faithfully abiding by the decision of the Government of India. In the circumstances of this case, we are therefore of the view that the amounts, which were paid, would not incur the opprobrium of being in violation of Section 37. There is no dispute that all the other ingredients required to sanction the expenditure as expenditure under Section 37 are present. - Decide against revenue.
|