TMI Blog1992 (4) TMI 76X X X X Extracts X X X X X X X X Extracts X X X X ..... t the assessee was not entitled to deduction of the above mentioned amounts as the same were not paid before the end of the previous year relevant to the assessment year under consideration. 4. On appeal, filed by the assessee, the disallowance has been confirmed by the CIT(A). Ground No. 1 has not been pressed before us so far as items 1, 2 3 are concerned. 5. Learned counsel for the assessee candidly conceded that the issue relating to the disallowance made under s. 43B in respect of sales tax and other liabilities is squarely covered in favour of the Revenue and against the assessee by the decisions of the jurisdictional High Court of Delhi in Sangi Motors vs. Union of India Ors. (1991) 91 CTR (Del) 15 : (1991) 187 ITR 703 (Del) and Escorts Ltd. vs.Unionof India Ors. (1991) 93 CTR (Del) 169 : (1991) 189 ITR 81 (Del). Respectfully following these authorities we hold that in respect of liabilities relating to sales tax, additional tax, etc., the ITO was justified in making disallowance under s. 43B. Ground No. 1 is, accordingly, rejected. 6. In ground No. 2 the assessee has assailed the disallowance of Rs. 1,95,000 as capital expenditure. The assessee incurred an expen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reme Court in the case of Travancore Cochin Chemicals Ltd. vs. CIT, is a direct authority on the point. In that case also the assessee claimed deduction on account of expenditure incurred on construction of roads. The expenditure was held to be of a capital nature by the Supreme Court. So, the issue in fact is covered by the said decision of the Supreme Court. We, accordingly, hold that the authorities below were justified in holding that the expenditure of Rs. 1,95,000 is a capital expenditure. The disallowance is, accordingly, confirmed. 9. Ground No. 3 is as follows: "That the CIT(A) erred on facts and in law in upholding the action of the ITO in allowing deduction under s. 80-I at Rs. 13,31,400 only rejecting, inter alia, contention of the appellant that deduction under s. 80-I was to be calculated on the commercial profits and not gross total income." 10. The ITO allowed Rs. 13,31,400 as deduction under s. 80-I being 25% of Rs. 53,25,601. The matter was carried in appeal before the CIT(A) before whom it was contended on behalf of the assessee that the Assessing Officer should have adopted commercial profits as the basis for working out deduction under s. 80-I. The impun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it which was includible in gross total income. Reliance has been placed on the decision of the Bombay High Court in Antifriction Bearings Corpn. Ltd. vs. CIT (1990) 186 ITR 181 (Bom). 14. We have considered the rival submissions as also the facts on record. In the case of Antifriction Bearings Corpn. Ltd. vs. CIT cited on behalf of the Revenue, the question referred to the High Court was as follows: "Whether relief under s. 80-I should be allowed after allowing development rebate under s. 33?" The High Court disposed of the matter in the following manner: "Counsel are agreed that, following the Supreme Court decision in Cambay Electric Supply Industrial Co. Ltd. vs. CIT (1978) CTR (SC) 50 : (1978) 113 ITR 84 (SC), the question must be answered in the affirmative and in favour of the Revenue. The question is so answered. No order as to costs." 15. The Orissa High Court in the case of CIT vs. Tarun Udyog also considered the decision of the Supreme Court in the case of Cambay Electric Supply Industrial Co. Ltd. vs. CIT, and held that though an industrial undertaking may earn profit, its gross total income may be substantially less than the profit, and the taxable income may, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enduring advantage or benefit which is of capital nature. According to him, it is an expenditure for acquisition of an asset. It is, therefore, a capital outlay. The CIT(A) has further held that the expenditure incurred by the assessee for the purpose of making lawns in the factory complex is a capital expenditure. He, accordingly, upheld the disallowance. 18. Learned counsel for the assessee submitted that the expenditure incurred on making and maintenance of lawns was a revenue expenditure and was, therefore, an allowable deduction under s. 37(1). Reliance has been placed on the decision of the Supreme Court in the case of Empire Jute Co. Ltd. vs. CIT (1980) 17 CTR (SC) 113 : (1980) 124 ITR 1 (SC). We have also heard learned Departmental Representative who has fully supported the orders of the authorities below on the point. 19. We have considered the rival submissions and have gone through the record of the case. According to the findings of the CIT(A) the expenditure has been incurred on making of lawns in the factory complex. This expenditure, according to the authorities below, is in the capital field. We do not agree. By incurring the expenditure on making lawns the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X
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