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TMI Blog1963 (4) TMI 63X X X X Extracts X X X X X X X X Extracts X X X X ..... r the appellant's business as sugarcane of good quality was not available in sufficient quantity in the neighbourhood and also as it suffered from ravages of flood. With a view to improve its business the appellant removed its factory from Sitalpur to another place called Garaul and in the process of dismantling the building and machinery, transportation from Sitalpur to Garaul and refitting the machinery at the latter place, it incurred a total expense of Rs. 3,19,766 in the year of account. In the assessment of its income-tax, it claimed a deduction of these expenses as revenue expenses. That claim was rejected. The questions referred concern these expenses. The first question was this : " Whether the expenditure of Rs. 3,19,766 incurre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perly attributable not to revenue but to capital ". The test formulated by Viscount Cave has been accepted by this court : see Assam Bengal Cement Co. Ltd. v. Commissioner of Income-tax [1955] 1 S. C. R. 972 ; [1955] 27 I. T. R. 34. Here the expenditure produced an enduring advantage in the shape of transfer to a better factory site, an advantage which enabled the trade to prosper and an advantage that could be expected to last forever. It was an expense properly attributable to capital under Viscount Cave's dictum. Mr. Pathak did not question the authority of the test laid down in Atherton's case [1925] 10 Tax Cas. 155, 192 but said that that test had no application in the present case as it would not apply unless by the expenditure a mat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se to refer to two of them only. First there is the case of Granite Supply Association Ltd. v. Kitton [1905] 5 Tax Cas. 168. The assessee was a company whose business was to buy and sell granite. It found it necessary to shift to a larger yard and in doing so incurred expenses for removal of stones and cranes from the old to the new yard and for re-erecting the cranes in the latter yard. It was held that the company was not entitled to a deduction for these expenses. It was said that the expenses were of the same kind as those which might have been incurred in the buying of new cranes. Lord McLaren said : (2) " I think that the cost of transferring plant from one set of premises to another more commodious set of premises is not an expense i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the new drainage constructed under the scheme. As a result of the new drainage the company was enabled to work its seams without incurring the liability under the statute as the new drainage system had been so constructed as to remain unaffected by the company's workings. It was contended by the company that the payment for the new drainage was a revenue expenditure as it had not resulted in the acquisition of any capital asset, but this contention was rejected and it was held that the expenditure was on capital account and no deduction for it was allowable. Viscount Simon said 1946] 27 Tax Cas. 296, 312, " that the expenses had been incurred ' to secure an enduring advantage, within the proper application of Lord Cave's phrase in Atherton ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure was on capital account, then depreciation should be payable on the amount of the expenditure in the same way as depreciation is allowed on capital. The claim for depreciation was made under section 10(2)(vi) of the Income-tax Act. But, as the High Court rightly pointed out, no such depreciation could be claimed because no tangible asset had been acquired by the expenditure which could be said to have depreciated. Mr. Pathak, therefore, put the case of the appellant from a slightly different point of view. He referred us to Part V of the Form of Return given in the Rules framed under the Act. That part deals with a claim for depreciation. Column 3 of this Part requires a statement to be made for " Capital expenditure during the year for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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