TMI Blog2018 (10) TMI 807X X X X Extracts X X X X X X X X Extracts X X X X ..... onaire fee of ₹ 4.09 crores per month. Any expenditure or payment of the said nature would necessarily be revenue in character. Even construction cost of the shelters had to be amortized over a period of 10 years. These would, therefore, not be expenditure of capital nature. The Assessment Order does not refer to the enduring or permanent benefit acquired by the respondent-assessee and therefore on default and failure to abide by the terms, the expenditure or loss incurred by the respondent-assessee was capital expenditure/loss. Cost of construction as recorded and held above was not capital expenditure. Further, the respondent-assessee was liable to pay monthly fee of ₹ 4.09 crores to the Delhi Transport Corporation, which is certainly revenue expenditure. Additionally, the respondent-assessee was under obligation to maintain and operate shelters which again would be revenue expenditure. - Decided in favour of assessee - Income Tax Appeal No. 1067/2018 - - - Dated:- 5-10-2018 - MR. SANJIV KHANNA AND MR. CHANDER SHEKHAR JJ. Appellant Through: Mr. Ruchir Bhatia, Advocate. Respondent Through: Mr. Aniket D. Agrawal, Advocate. SANJIV KHANNA, J. (ORAL): ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rough advertising, etc. to be displayed on the bus shelters. 9. The respondent-assessee was required to furnish two bank guarantee of ₹ 1 crore and ₹ 1.5 crores to the Delhi Transport Corporation as performance security for construction; and for operation and maintenance of the bus shelters and payment of concessionaire fee, respectively. The first bank guarantee was to be returned 60 days after completion/construction of all shelters and second bank guarantee was to be returned 90 days after shelters were handed over to the Delhi Transport Corporation. The agreement had also stipulated and required the respondent-assessee to furnish fresh performance security if the original bank guarantees were encashed. 10. It is an undisputed position that the respondent-assessee had furnished bank guarantee of ₹ 2 crores to the Delhi Transport Corporation as performance security. On the Delhi Transport Corporation invoking bank guarantee, the respondent-assessee had approached the Delhi High Court and a stay/restraint order against encashment was passed. However, by the order dated 26th March, 2009 the stay order was vacated and the Delhi Transport Corporation was permi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (in the words used by Lord Sumner in Usher case [(1914) 6 TC 399] a proper debit item to be charged against incomings of the trade when computing the profits of it; or, in other words, whether it is in substance a revenue or a capital expenditure. This appears to me to be a question of fact which is proper to be decided by the Commissioners upon the evidence brought before them in each case; but where, as in the present case, there is no express finding by the Commissioners upon the point, it must be determined by the Courts upon the materials which are available and with due regard to the principles which have been laid down in the authorities. Now, in Vallambrosa Rubber Company v. Farmer [(1910) SC 519 : 5 TC 529] Lord Dunedin, as Lord President of the Court of Session, expressed the opinion that in a rough way it was not a bad criterion of what is capital expenditure as against what is income expenditure to say that capital expenditure is a thing that is going to be spent once and for all and income expenditure is a thing which is going to recur every year ; and no doubt this is often a material consideration. But the criterion suggested is not, and was obviously not inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n cannot be deducted out of the profits by claiming that it relieves the annual labour bill, the business has acquired a new asset, that is, machinery. The expressions enduring benefit or of a permanent character were introduced to make it clear that the asset or the right acquired must have enough durability to justify its being treated as a capital asset. 3. Whether for the purpose of the expenditure, any capital was withdrawn, or, in other words, whether the object of incurring the expenditure was to employ what was taken in as capital of the business. Again, it is to be seen whether the expenditure incurred was part of the fixed capital of the business or part of its circulating capital. Fixed capital is what the owner turns to profit by keeping it in his own possession. Circulating or floating capital is what he makes profit of by parting with it or letting it change masters. Circulating capital is capital which is turned over and in the process of being turned over yields profit or loss. Fixed capital, on the other hand, is not involved directly in that process and remains unaffected by it. 15. The Assessment Order does not refer to the enduring or permanen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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