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TMI Blog2016 (8) TMI 213X X X X Extracts X X X X X X X X Extracts X X X X ..... return was processed and the Assessing Officer determined the income of the assessee. While making the assessment, the Assessing Officer found that the assessee claimed deduction in respect of contribution of Rs. 1.25 crore made to Gujarat Energy Development Corporation. The Assessing Officer treated the said expenditure as capital expenditure. Being aggrieved, the assessee went in appeal before the Commissioner (Appeals) who held in favour of the assessee by directing the Assessing Officer to allow the contribution paid to GEDA. On appeal to the Tribunal, the Tribunal has held the said expenditure is revenue in nature on the ground that ownership is not vested with the assessee. 4. The learned counsel for the appellant-revenue has taken us to the reasoning adopted by the Assessing Officer for treating the expenditure as capital expenditure at paragraph No. 11 of the assessment order which is extracted below: "During the year the assessee has paid Rs. 1,25,00,000/- to Gujarat Energy Development Board Authority towards their share of cost of power evacuation system and for sanctioned capacity for its wind farm project at Dhank, Bhavnagar District, Gujarat. The assessee has laimed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Reliance was placed on the decision in the case of Uma Textiles 46 TTJ 52 (Ahd). The Assessing Officer has treated the said expenses as capital expenses and depreciation @ 50% was allowed. 17.1 I found the contention of the Authorized Representative is correct. Once the contribution is paid to any authority, for which ownership of the assets belong to the third party and not with appellant company, the said expense is allowable expenses. The said proposition is also held by Supreme Court in the case of CH vs. Madras Auto Services (P) Ltd. 230 ITR 468. Hon'ble Supreme Court allowed the cost of construction Rs. 2,13,000/- to the lessee as ownership of the said property belongs to the lessor. Relying on the same, I direct the Assessing Officer to allow contribution paid to GEDA Rs. 1,25,00,000/-. Depreciation allowed should be withdrawn consequently." 7. The learned counsel for the respondent-assessee has therefore contended that the Commissioner (Appeals) has rightly treated the expenditure as revenue expenditure which the Tribunal has upheld. He has relied on the decision of this court in the case of Commissioner of Income-tax v. Abs Industries Ltd. reported in (2010) 323 ITR 350 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he decision of the Tribunal in the case of JCIT Vs. M/s. Deversons Industries Limited in ITA No. 2008/Ahd/99, wherein the Tribunal has held as under: "14. We take up the matter of examination of Rs. 3,70,000/- first. The obligation of the assessee, as an industrial unit, under the law, being only to treat the effluent to the required degree prior to its discharge in the public drainage, the contribution made by it, on the direction of the Hon'ble Gujarat High Court, to contribute towards the laying of the network of pipelines required for the conveyance of the discharge, in view of the high cost the project entails, being outside the financial capacity of the relevant authority, being AMC, Ahmedabad ,is only an obligation that it assumes as responsible citizen, as in its absence, the entire scheme, as sought to be put in place by the said court, to alleviate a continuing hardship/problem, would become unworkable/unfeasible. That, it may have also been motivated, as a part of the group of participating industrial units of the area, to buy peace with the State Industries, or the Pollution Control Department, or to safeguard themselves from the penal consequences that may visit o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nothing more than the contribution by each individual member to the facility thus generated for the benefit of the smooth conduct of the business of the individual members who may otherwise i.e. individually, not be in a position to install such a facility, or being even otherwise more economical. The consideration that the said units were statutorily obliged to do so, i.e. under law, though relevant, gets diluted in view of the order of the jurisdictional High Court which the impugned units of which the assessee's unit is one, can fail to comply with only at their own peril. Once the matter becomes sub-judice, it is the writ of the court that shall hold the field, so that even as the assessee's primary obligation to treat its discharge may have been the factor weighing unit(s) to contribute also towards the pipeline, only goes to show that it looked at the larger picture, and did not adjudicate in the matter on the basis of that primary obligation alone. And the considerations that would have weighed on the said units in accepting the court's directions, could only be that of business. As such, the contribution of Rs. 4,20,000, even though comprising of two separate am ..... X X X X Extracts X X X X X X X X Extracts X X X X
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