TMI Blog2022 (10) TMI 687X X X X Extracts X X X X X X X X Extracts X X X X ..... o revenue but to capital. If the advantage which had accrued to the assessee was to facilitate its trading operation or the conduct of its business while leaving the fixed capital untouched, the expenditure would be on the revenue account. Expenditure which was incurred by the assessee in the laying of transmission lines was clearly on the revenue account -CL. The expenditure which was incurred by the assessee was for facilitating the efficient conduct of its business since the assessee had to supply electricity to its sole consumer - This was not an advantage of a capital nature. The Tribunal was, in these circumstances, correct in affirming the view of the Commissioner (Appeals) - Decided in favour of assessee. - Honourable Mr.Justice S.Vaidyanathan And The Honourable Mr. Justice C.Saravanan For the Appellant (in both the appeal) : Mr.M.Swaminathan and Ms.V.Pushpa For the Respondent (in both the appeal) : Mr.R.Vijayaraghavan COMMON JUDGMENT C.SARAVANAN, J. The Revenue has filed these appeals challenging the orders dated 29.06.2007 passed by the Income Tax Appellate Tribunal. 2. The Revenue has filed T.C.A.No.22 of 2010 raising the following ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion line and other supporting work. The assessee started generating power which had to be sold to UPPCL which was the only customer. Agreements were entered into by the assessee in similar terms on 11 August 2006 in relation to its three units which stipulated that the entire expenditure for erection and installation of power transmission lines, towers and ancillaries from the point of power generation to the Sub Grid Station would be incurred by the assessee. UPPCL was to ensure quality control of the equipment and material and the work was to be carried out subject to the its supervision and prior approval. The agreement stipulated that the entire power transmission line including the towers, after erection, would be the property of UPPCL which would provide for the subsequent supervision and maintenance. The assessee claimed the entire expenditure as a deduction under Section 37(1). The Assessing Officer held that, in the present case, since the work of the transmission line and other ancillary work was carried out at the business premises of the assessee and it could not be used by any other person except the assessee, it was absolutely clear that it would be the property of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hed, the expenditure would be on revenue account, even though the advantage may endure for an indefinite future. The test of enduring benefit is, therefore, not a certain or conclusive test and it cannot be applied blindly and mechanically without regard to the particular facts and circumstances of a given case... 10. In other words, if the advantage which had accrued to the assessee was to facilitate its trading operation or the conduct of its business while leaving the fixed capital untouched, the expenditure would be on the revenue account. The same principle was laid down in a decision in L H Sugar Factory and Oil Mills (P) Ltd Vs Commissioner of Income Tax [1980] 125 ITR 293/4 Taxman 5 (SC), where before the Supreme Court, there was a case in which the assessee had made a contribution for meeting the cost of construction of roads in the area around its sugar factory under a sugarcane development scheme. The Supreme Court held as follows: Now it is clear on the facts of the present case that by spending the amount of Rs 50,000, the assessee did not acquire any asset of an enduring nature. The roads which were constructed around the factory with the help of the amoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eculiar feature in this case is that the amount was spent for securing electric supply for the Beneficiation Plant which was intended to enable the assessee-company to carry on its business more efficiently and more profitably. It was a business which was being previously carried on by the assessee-company, namely of extracting fluorspar ore and selling it but in order to enable it to carry on that business more efficiently and more profitably, the Beneficiation Plant was proposed to be installed and the electric cables and supply lines were laid or that Beneficiation Plant as has been pointed out by the Tribunal in its order. Once the purpose of the Beneficiation Plant is properly understood, it is obvious that the advantage consisted merely in facilitating the conduct of the assessee's business and enabling the assessee to carry on its business more efficiently and more profitably but the capital, in the sense of the block capital was remaining untouched by the expenditure of this amount of Rs 2046 lakhs Hence, in the commercial sense, it was not an advantage in the capital field. Since it left the fixed capital of the assessee employed for the main business of mining untouch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eal No. of 2002, dated 30.01.2009], it was held that the erection of power lines by the assessee was for facilitating its routine operations and for smooth functioning of its business. The power lines remained the property of the Electricity Board. The Rajasthan High Court came to the conclusion that the assessee had not acquired a capital asset or any enduring benefit or advantage. 15. Following the principle of law which has been laid down by the Supreme Court, we hold that the expenditure which was incurred by the assessee in the laying of transmission lines was clearly on the revenue account. Upon the erection of transmission lines, they were to vest absolutely in UPPCL. The expenditure which was incurred by the assessee was for facilitating the efficient conduct of its business since the assessee had to supply electricity to its sole consumer UPPCL. This was not an advantage of a capital nature. The Tribunal was, in these circumstances, correct in affirming the view of the Commissioner (Appeals). 6. Considering the fact that the question of law raised in these appeals has already been answered in favour of the asseessee in similar appeal referred to above, we are inc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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