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TMI Blog2019 (1) TMI 1141X X X X Extracts X X X X X X X X Extracts X X X X ..... Port. The said right had its source in an agreement entered into by one other Company with the Government of India; which, later entered into an agreement of transfer of such right with a sister concern of the assessee-Company. It is from that sister concern of the assessee-Company that the right accrued to the assessee; the consideration of which was Rs. 1,75,00,000/-. The right acquired was also for operating the said Berth for a period of twenty years. 3. The assessee having paid up the total amounts for the entire period, sought to split up the same into the twenty years for which the right was obtained. For the first year, being the assessment year 2000-01, the assessee claimed Rs. 8,75,000/- as revenue expenditure. The Assessing Off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The learned Standing Counsel for Government of India (Taxes) would contend that there is an anomaly insofar as the Tribunal having upheld the decision of the Commissioner of Appeals, but having also allowed the claim made before the AO as revenue expenditure. We do not see any apparent conflict in the decision of the Tribunal; but, we observe that the appeals could have been considered together and this would have avoided a contention raised of a conflict having been occasioned. We, hence, frame the following questions of law as arising in the respective years: (i) Whether the Tribunal was right in having affirmed the view of the first appellate authority that for the assessment year 2000-01 that Rs. 8,75,000/- could be treated as revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t than that was received; including amount of discount. The Hon'ble Supreme Court found that the liability to pay the discounted amount over and above the amount received for the debentures is the liability which has been incurred by the Company for the purposes of its business, in order to generate funds for its business activities. The amounts so used by the Company for the purpose of its business was held to be an expenditure. Section 37(1), requires that the expenditure should not be of a capital nature. On the question of a decision on whether an expenditure is a revenue expenditure or capital expenditure, the Supreme Court found that it has to be determined on a consideration of all the facts and circumstances and the application ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ufacturers to the operation of looms in the respective factories of their members, each being allotted a time of few hours. One of the members purchased the loom hours from four other mills for augmentation of production in its own mill. A consideration was paid for the same which was claimed as revenue expenditure. The allotment of loom hours was held to be a self restriction imposed and the purchase of such loom hours by one of the members from other members was found to be a measure adopted to increase the profitability of the business and hence was held to be a revenue expenditure. 9. Applying the aforesaid principles for the assessment year 2000-2001, we have to find that the spreading over of the amounts, paid as license fees for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o whether the loss incurred by the assesee, has to be treated as one incurred on capital or on revenue. The facts need not be repeated. The liability which was paid up in the earlier years had crystallized into a loss, in the subject assessment year 2001-02, for reason the rights acquired by the assessee in the earlier year for 20 years having stood extinguished. The learned Counsel for the revenue has relied on Mrs. Grace Collis and Vania Silk Mills P.Ltd., v. CIT [(1991) 191 ITR 647]. We need not refer to the decision in Vania Silk Mills P.Ltd., since the declaration made therein by a two Judge Bench has been disapproved by the three Judge Bench in Mrs.Grace Collis. 12. The assessee therein, Mrs.Grace Collis, had sold certain shares hel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ears and the liability for the entire years was met by the assessee in that particular year, we found the assessee entitled to claim the same as revenue expenditure. There was no acquisition of a capital asset or a right of a permanent character. There was found justification in the spreading over of the liability in the 20 years in which the right to operate in favour of the assessee was available. Having found that there was no acquisition of capital asset there would also be no transfer or extinguishment of such right created in a capital asset. We hence uphold the order of the Tribunal for the assessment year 2001-02 answering the question of law in favour of the assessee and against the Revenue. ITA Nos.65/2009 and 79/2009, filed by t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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