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2015 (8) TMI 669 - HC - Income TaxEntitlement to depreciation - expenses incurred to complete the title/ ownership of the land - whether the payment of ₹ 23.35 lakhs was in the nature of revenue expenditure or capital expenditure? - Held that:- The impugned orders of the authorities have reached a correct finding of fact that the land was not being used for the purposes of the Appellant's business. It was a vacant land to be exploited in the future. The business of the Appellant i.e. of manufacturing of cutting tools continued and the factory land nor its manufacturing activities was affected by the ULCA even remotely. Decision of Empire Jute Co. Ltd. v/s. CIT [1980 (5) TMI 1 - SUPREME Court ] have no application to the present facts as the advantage of enduring benefit was not obtained in the capital field i.e. the payment made merely facilitated the assessee's day to day business while leaving the fixed capital untouched.. The reliance by the Appellant upon the decision of this Court in Brihan Maharashtra Sugar Syndicate (1986 (3) TMI 21 - BOMBAY High Court) is not of any assistance to it. The Appellant therein` held land which it used for sugarcane cultivation so as to carry on its business of manufacturing sugar. This land was being acquired under the Land Ceiling Act. The Appellant therein incurred expenses to protect the land which was used for its sugarcane cultivation from acquisition. Therefore, it was an expenses incurred to protect/maintain its running business and/or business asset. It was in the above background, that the Court held that the expenditure incurred for litigation, was revenue in nature. In the present facts, the excess land was not a business asset i.e. not being used in running a business but was to be exploited in future. Therefore, no occasion to apply the decision of this Court can arise. Thus no reason to disturb the finding of the Tribunal upholding the order of the lower authority that amount of ₹ 23.35 lakhs is an expenditure on revenue account. We have found that the expenditure of ₹ 23.35 lakhs has been incurred so as to complete the title/ ownership of the land. Therefore, the above expenditure cannot be attributed to the construction of the building. The construction of the building mandated by the exemption order under Section 20 of ULCA is only on consequence of the title/ ownership becoming complete. Therefore, we see no reason to interfere on this account as also with the impugned order of the Tribunal negating the plea of the Appellant that the amount of ₹ 23.35 lakhs be added to the cost of constructing the buildings so as to avail of depreciation on the same. - Decided in favour of revenue
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