TMI Blog2018 (12) TMI 48X X X X Extracts X X X X X X X X Extracts X X X X ..... getting the samples examined by the laboratory, the assessee would need to pay examination fees as is required by any other agency which sends samples for examination. The findings of the AO to disallow the claim of revenue expenditure, upheld by the Appellate Authority and the Tribunal on the premise that the expenditure incurred will not be a revenue expenditure entitled for deduction, cannot be upheld. When the assessee has been conferred with a monopoly of dealing in liquor and testing of the same and ensuring its quality is expedient to its business and the money expended for providing the facilities to an independent government agency, without any acquisition by itself is a revenue expenditure - assessee is entitled to treat the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the monopoly in the sale of the aforesaid liquor and Beer. 3. The Assessing Officer (AO) while completing the assessment disallowed expenses incurred by the assessee towards expenses, meant for setting up infrastructure facility in the Excise Division at their laboratory for testing and analysing of liquor samples. The AO disallowed the expenses on the ground that it cannot be treated as revenue expenditure and that the expenditure is relating to acquisition of capital assets and also for the reason that the purchase is not in the assessee's name. 4. The appeal filed by the assessee was dismissed by the appellate authority upholding the reasons assigned for the disallowance by the AO. On a challenge before the Tribunal, referrin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the liquor sent for examination by the assessee, but also of any liquor, such as contraband seized under the Abkari Act by the Excise Department and the Police. As the instruments were installed in the Government Laboratory of the Chief Chemical Examiner coming directly under the Government, the assessee cannot claim the expenditure as capital expenditure for the purpose of their business. No depreciation on that ground could also be claimed because the articles purchased now belong to the Government and not to the assessee. The learned counsel for the assessee submits that the assessee is entitled to claim exemption as revenue expenditure, since it was for facilitating the business of sale of liquor which requires safe and good quality liq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penditure and surely as revenue expenditure. The Hon'ble Supreme Court did not find favour with the above reasoning. 8. In (1980) 125 ITR 293 (SC) [L.H.Sugar Factory and Oil Mills (P) Ltd. v. Commissioner of Income Tax], it was held by the Honourable Supreme Court that the construction of roads for which the assessee had contributed, had facilitated the transport of the sugarcane to the factory and outflow of sugar manufactured by the assessee to the market centers. The construction of roads had facilitated the business operation of the assessee and had enabled the management to carry on business more efficiently and profitably and that the advantage secured for the business of the assessee was of a long duration and therefore the am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g of the business by way of voluntary contribution of ₹ 50,000/- when such expenditure had no connection with the increase or in creation of any capital asset or acquiring any tangible or intangible right in the property in question namely the roads constructed in or around the factory, was treated as revenue expenditure. 10. Distinguishing the two decisions referred to above, the Honourable Supreme Court further held thus: In our view, the High Court of Gujarat has rightly held that the betterment charge on account of increase in the valuation of the land of the assessee should not be held as a revenue expenditure although general improvement of the area may have an impact on better running of the business. We, therefore ..... X X X X Extracts X X X X X X X X Extracts X X X X
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