TMI Blog2016 (8) TMI 213X X X X Extracts X X X X X X X X Extracts X X X X ..... . 2. While admitting the appeal, this court framed the following substantial question of law: Whether on the facts and in the circumstances of the case, the Tribunal was justified in holding that the payment to GEDA is revenue expenditure as ownership is not vested with the assessee? 3. The facts of the case are that the assessee filed its return of income declaring total income at ₹ 19,26,06,270/-. The 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 ₹ 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 17 and 17.1 which are extracted below: 17. Ground No. 16 is regarding disallowance of contribution paid to Gujarat Development Authority (GEDA) for ₹ 1,25,00,000/-. The Authorized Representative submitted that contribution of ₹ 1,25,00,000/- was paid for laying down pipelines. Company has set up Wind Farm Project in Saurashtra. The ownership of the said pipelines was not with the appellant company but with the said authority GEDA. 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 ₹ 2,13,000/- to the lessee as ownership of the said property belongs to the lessor. Relying on the same, I direct the Assessi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w of infraction of law. Our view is fortified upon the judgment in the cases of Everready Industries and Navsari Cotton Silk Mills Ltd. (supra), which we respectfully follow. In view thereof, we hold that no infirmity is found in the order of the CIT (A), which is upheld, Revenue's ground is dismissed. In the result, Revenue's appeal for the A.Y 199798is dismissed. With regard to the payment of ₹ 2,53,000/, we find this issue is also covered in favour of the assessee by the 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 ₹ 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ized of the matter, addressed itself to the root of the continuing problem, and finding the same to be a social problem, with economic dimensions, being cost-prohibitives, required all the affected units to come together to set up a common facility for the purpose, charging the Gujarat Industrial Development Corporation (GIDC) as a Government agency to monitor the process, with OPEL acting as the agency for the actual execution of the work. In view of the same, we find this payment to be essentially as 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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