TMI Blog1981 (9) TMI 35X X X X Extracts X X X X X X X X Extracts X X X X ..... its registered office in Bombay but owned a colliery in Orissa. In the assessment year 1967-68 it claimed as deduction under s. 37(1) of the I.T. Act, 1961, a sum of Rs. 59,183 which it put under the head " Staff welfare expenses ". This amount was spent by the company by way of expenditure incurred on the construction of 100 tenements for its workers and staff at the colliery. It would appear that an agreement dated 18th November, 1966, was executed between the assessee-company and the Coal Mines Labour Housing Board (hereinafter referred to as " the Board ") constituted under the Coal Mines Labour Welfare Fund Act, 1947. A copy of the said agreement is annex. A to the statement of case. The agreement was to remain in force for a period o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was not to exceed Re. 1 per month. This was also the lease amount payable by the assessee-company to the Board. According to the ITO, the assessee secured by this agreement a right to house its staff in the quarters for which the assessee contributed its share. This was an amount paid once and for all for which certain rights had been secured. In his view, therefore, the expenditure was of a capital nature.' The assessee was held not entitled also to depreciation because the houses vested in the Board. When the matter was carried in appeal to the A.A.C, he concurred with the ITO. In his opinion this expenditure brought into existence an advantage of enduring benefit to the business of the assessee and was, therefore, required to be trea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er production results. This is, as already stated, for the purpose of carrying on the assessee's concern efficiently. We have, therefore, no hesitation in holding that it is a revenue expenditure. " The learned advocate for the Commissioner has submitted that the decision of the Tribunal is erroneous and has relied on the decision of the Allahabad High Court in Raza Buland Sugar Co. Ltd. v. CIT [1980] 122 ITR 817 (All). In that case an amount of Rs. 32,004 had been spent by the company as payment towards the cost of construction of certain quarters under a scheme for construction of workmen's staff quarters introduced by the Uttar Pradesh Government. According to the Allahabad High Court, the quarters were freshly built and were to be exc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ference, according to the Andhra Pradesh High Court, whether the expenditure was incurred on account of a statutory obligation or on voluntary basis out of the assessee's desire to provide extra facilities to its employees. In the view of the said High Court, it was more than clear that the assessee incurred the expenditure not for the purpose of bringing into existence an enduring benefit for its business but for carrying on its business better and more efficiently. Accordingly, the Andhra Pradesh High Court allowed as revenue expenditure the sum of Rs. 1,06,333 for the assessment year 1964-65 and the sum of Rs. 2,55,103 for the assessment year 1965-66. The agreement and the circumstances in the case before us are almost identical with t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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