TMI Blog2001 (11) TMI 25X X X X Extracts X X X X X X X X Extracts X X X X ..... erential levy price of cane sugar of Rs.3,49,898 and Rs.36,07,388 collected by the assessee during the years should not be treated as revenue receipt and be brought to tax?" whether the Tribunal was correct in holding that the assessee is entitled to higher rate of depreciation on the basis of the certificate obtained from the chemical engineer. The assessee had claimed higher rate of depreciation at the rate of 15 per cent. on certain machinery on the ground that they came into contact with corrosive chemicals. - - - - - Dated:- 8-11-2001 - Judge(s) : R. JAYASIMHA BABU., A. K. RAJAN. JUDGMENT The judgment of the court was delivered by R. JAYASIMHA BABU J.-The assessee wanted to set up a new project for the manufacture of "methano ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the assessee was trying to start was a new business for the manufacture of a new product. The expenditure incurred therein was clearly capital expenditure and not revenue expenditure. Counsel for the assessee relied on the decision of the Supreme Court in the case of B.R. Ltd. v. V.P. Gupta, CIT [1978] 113 ITR 647. The court there was not concerned with the assessee starting a new industrial project, and subse quently abandoning the same. The case there concerned a trader who had, while retaining the same management and control of the business, sought to carry forward the losses in the import business of an earlier year against the profit of the export business of a later year. He was allowed to do so after the court found that the two ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expenditure was unfruitful, as the project was not established but was abandoned. The abandonment was obviously to avoid any further expenditure being incurred, and to avoid any other adverse effects by reason of incurring of additional expenditure which the assessee itself thought would no longer be beneficial to pursue. Such expenditure incurred by it for a new project which was in the nature of capital expenditure remains such, and by claiming it in a subsequent year as revenue expenditure, the assessee cannot convert what was capital expenditure into revenue expenditure. The question referred to us as to whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the sums of Rs.5,93,672 and Rs.31 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring the years should not be treated as revenue receipt and be brought to tax?" That question is required to be answered in favour of the assessee as those amounts had been allowed to be collected by the assessee in terms of the interim orders made by the High Court pending disposal of litigation with regard to the assessee's right to collect those amounts, and the assessee had been directed to keep those amounts in a separate account and the amount was kept in deposit subject to the final decision of the Supreme Court. During the assessment years litigation continued to be pending and it could not be said that those amounts belong to the assessee and form part of its trading receipt. Those amounts therefore are not to be treated as r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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