TMI Blog1994 (7) TMI 43X X X X Extracts X X X X X X X X Extracts X X X X ..... stances of the case, the assessee is entitled to shortage on copper rolls over and above the depreciation allowed to it on the use of the copper rolls ? 3. Whether, on the facts and in the circumstances of the case, the development charges paid to RIICO is in the nature of capital or revenue ? 4. Whether, on the facts and in the circumstances of the case, the payment made to RIICO for water-treatment plant is capital or revenue in nature ? 5. Whether, on the facts and in the circumstances of the case, the assessee is entitled to depreciation on the printing tables at 15 per cent. ? 6. Whether, on the facts and in the circumstances of the case, the amount of Rs. 5,222 paid to RIICO for legalising the unauthorised construction is an a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntitled to depreciation on copper rolls at 30 per cent. In respect of the second point, it has been observed by the Income-tax Officer that the shortage in copper rolls during the engraving process is claimed and included under the head "factory overhead expenses" debited to the trading account. The Income-tax Officer found that the claim of the assessee is not allowable when the entire design expenses are separately allowed as revenue expenditure. The Income-tax Appellate Tribunal found that the shortage in respect of copper due to repeated engraving could have been allowed to the assessee if the copper rolls were in the nature of tools and implements which are used in the process of manufacturing. It was found in the present case that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee himself and, in that event the expenditure so incurred by the assessee would be definitely capital in nature though the land is a leasehold land. The expenditure was held to be capital in nature. This matter was considered by this court in the case of Manoj Dyeing Co. v. CIT [1995] 212 ITR 299 (D. B. Income-tax Reference No. 6 of 1987, decided on October 14, 1992), and it was held that the development charges paid by the entrepreneur are capital in nature. Following the said decision, we are of the view that the Incometax Appellate Tribunal was justified in coming to the conclusion that the said charges are capital in nature. The assessee has made payment to RIICO for the water-treatment plant. It was found by the Tribunal tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the water-treatment plant is capital expenditure. The assessee has claimed depreciation on printing tables at the rate of 15 per cent. The Commissioner of Income-tax (Appeals) allowed the same on the ground that the tables come into contact with corrosive chemicals. The Tribunal found that the tables are used for printing, which printing is done with the help of chemicals, and as such, the tables come into contact with the corrosive chemicals. The depreciation was held allowable at 15 per cent. So far as this point is concerned, where a finding of fact has been given by the Tribunal that the tables are used for printing, which printing is done with the help of chemicals and, therefore, the tables come into contact with corrosive chemi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are for the extra area covered than earlier sanctioned by RIICO, and such area of the factory-shed was used for business purposes. The charges paid for regularising such extra construction were for the purpose of business. Such an expenditure is allowable under section 37 of the Act and the assessee gained an extra advantage for his business. The expenditure was directly to facilitate the carrying on of the business alone, as it has not been stressed that there was any infraction/violation of any law. But, it was pointed that only on account of the construction of the factory-shed at an area more than permitted by RIICO, the amount had been paid. It was only to legalise the unauthorised construction, which was made for the purpose of busin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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