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2016 (7) TMI 1650 - AT - Income TaxNature of expenditure - disallowance being payment made to NHAI towards land acquisition - assessee had claimed the entire expense as revenue expenditure which was related to construction of an elevated corridor from Beach road to Maduravoil in Chennai which has been approved by the Central Government - AO rejected the claim of the assessee for treating it as revenue expenditure and held the expenditure to be in the nature of capital expenditure - HELD THAT:- Assessee had incurred the expenditure only with the primary motive of facilitating its business and earning more revenue. Just because the benefit of the expenditure incurred by the assessee also flows to some unrelated parties, the expenditure cannot be disallowed under section 37(1) of the Act. This is a conscious decision taken by the assessee in concurrence with the Central Government and State Government. See AIRPORT AUTHORITY OF INDIA VERSUS COMMISSIONER OF INCOME TAX [2011 (12) TMI 114 - DELHI HIGH COURT] The only purpose of the expenditure is to generate more profit and the benefit of which will overflow to subsequent years and the period is unknown. Hence, the expenditure incurred by the assessee is nothing but deferred revenue expenditure and accordingly the same has to be allowed as deduction under section 37(1) in the year in which it is incurred. Therefore, we hereby direct the learned Assessing Officer to treat the expenditure as revenue expenditure and allow deduction accordingly. - Decided in favour of assessee. Disallowance being expenditure incurred towards strengthening and realigning of the tracks in the harbor - As per AO assessee has claimed deduction being the expenditure incurred towards strengthening and realigning of shed line-II and connecting lines at inner harbor - AO held the expenditure incurred by the assessee as capital expenditure and therefore, disallowed the same as allowable deduction either under section 31 or under section 37(1) - CIT-A agreed with the view of AO and directed the Assessing Officer to allow depreciation on the same - HELD THAT:- We find that it is necessary for the assessee to incur these expenditures in order to carry out its business activities. Further, by incurring such expenditure a new asset is not created but only the existing assets are reconditioned by carrying out extensive repairs. In such circumstances, the expenses incurred by the assessee will purely amount to revenue in nature and therefore allowable as deduction under section 37(1) On a similar situation that of the present assessee also in the case of COATS VIYELLA INDIA LTD. [2000 (11) TMI 24 - MADRAS HIGH COURT] it was categorically held that contribution made to Govt. for building a new bridge in place of old one with a view to provide access to factory for workmen and goods though not owned by the assessee and when there is no addition to value of any of its assets would be treated as a revenue expenditure. Similarly, the Hon’ble High Court of Delhi in the case of Airport Authority of India Vs. CIT (2011 (12) TMI 114 - DELHI HIGH COURT] also held the issue in favour of the assessee. - Decided in favour of assessee. Disallowance u/s 14A read with Rule 8D - As per AO Assessee has invested in equity shares of certain corporation limited companies, the dividend earned from which is exempt from tax - HELD THAT:- As relying on relevant portion of the decision of this Tribunal in the case of Kamarajar Port [2016 (5) TMI 315 - ITAT CHENNAI] we hereby hold this issue in favour of the assessee, subject to verification that all such investments are made in sister concerns / associate concerns / companies owned by the Government. Thus, this issue is also decided in favour of the assessee.
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