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The Commissioner of Income Tax-II, Chandigarh Versus M/s Punjab Agro Food Grains Corporation Ltd.

2016 (2) TMI 521 - PUNJAB AND HARYANA HIGH COURT

Addition on Land Development Expenditure - Capital or revenue - Held that:- Keeping in view the main objects of the assessee, the activities of the assessee, the nature of expenses incurred and also the legal principles noticed hereinbefore, had concluded that the expenditure was revenue in nature - ITA No. 68 of 2013 (O&M) - Dated:- 28-1-2016 - MR. AJAY KUMAR MITTAL AND MRS. RAJ RAHUL GARG, JJ. For The Appellant : Ms. Urvashi Dhugga, Advocate For The Respondent : None AJAY KUMAR MITTAL, J. 1. T .....

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upholding the decision of Ld. CIT(A) in deleting an addition of ₹ 81,90,000/- made by the Assessing Officer by treating the Land Development Expenditure as Capital in nature? 2. Briefly stated, the facts necessary for adjudication of the instant appeal as narrated therein may be noticed. The assessee- Corporation has been set up by the Punjab Government to carry on the business of land development, contract farming, procurement of foodgrains, marketing and export etc. The assessee filed t .....

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nt at an income of ₹ 1,52,70,854/- by making additions of ₹ 81,90,000/-. The said amount was disallowed considering the same as capital expenses incurred for the purposes of development of the land. Feeling aggrieved, the assessee filed an appeal before the Commissioner of Income Tax (Appeals) [for brevity the CIT(A) ]. The CIT(A) vide order dated 18.5.2012 (Annexure A-2) allowed the appeal and deleted the addition of ₹ 81,90,000/- made by the Assessing Officer by following the .....

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08-09. Hence, the present appeal by the revenue. 3. We have heard learned counsel for the revenue. 4. The primary issue that arises for consideration in this appeal is whether the expenditure incurred by the assessee for reclaiming and development of land was capital expenditure or revenue expenditure. 5. It was not disputed by the learned counsel for the revenue that the similar issue in the case of the assessee for the assessment year 2005-06 had come up for consideration before this Court in .....

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apital expenditure. There is no standard formula providing for determination of an expenditure to be capital or revenue. Every case is to be adjudicated on its own facts and the expenditure is to be looked from commercial point of view. The Supreme Court in Abdul Kayoom (KTMKM) vs. CIT (1962) 44 ITR 689 (SC) noticed that there can be no rule of thumb for determining as to whether a particular expenditure is capital or revenue and that each case has to be decided on its own facts and circumstance .....

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ad resemblance to another case is not at all decisive. What is decisive is the nature of the business, the nature of the expenditure, the nature of the right acquired and their relation inter se and this is the only key to resolve the issue in the light of the general principles, which are followed in such cases. 11 to 13 XX XX XX 14. Examining the factual matrix in the present appeals, the Tribunal after examining the file noting of the Punjab Government dated 28.7.2005 which had been annexed t .....

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