9911796707
TMI Blog1980 (9) TMI 45X X X X Extracts X X X X X X X X Extracts X X X X ..... tion ? and (2) Whether, on the facts and in the circumstances of the case, the assessee was entitled to depreciation on the amount of the cost of construction of metal roads on the trenching grounds ?" Facts stated and not disputed may be briefly set out. The assessee is a local body. Assessment year in question is 1972-73 for which the accounting period ended on March 31, 1972. The assessee derived income from sale of manure prepared out of waste and night soil dumped in the trenching ground outside the municipal limits. In its return of income, the assessee had claimed deduction of Rs. 67,748 incurred on construction of metal roads over the trenching grounds as revenue expenditure. It was urged on behalf of the assessee that the trenchi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oration. It was considered desirable that the Corporation should prepare compost out of this garbage and night soil so that the same be used as manure. Referring to some observations by the Supreme Court in Lakshmiji Sugar Mills Ltd. v. CIT [1971] 82 ITR 376, the learned counsel urged that the expenditure was incurred by the assessee under a statutory obligation for the removal of night soil and, therefore, this expenditure ought to have been treated as revenue expenditure. It was also urged that the construction of such approach roads was indispensable for transportation of compost for earning income by sale thereof. The case of Lakshmiji Sugar Mills Ltd. [1971] 82 ITR 376 (SC) has no application to the facts of this case. In the cited ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e case the facts were that the assessee was engaged in the manufacture of chemicals and had to transport raw materials and the manufactured products to and from the factory which had no pucca roads. The assessee along with the two other public undertakings approached the Kerala Govt. for laying a new road to that area. The Government bore the cost of construction at 25% and the cost of acquisition of land. The balance of the cost of construction of roads was shared by the assessee and three other public undertakings. The assessee claimed it as revenue expenditure. The High Court on a reference held that the assessee had obtained an enduring advantage by the construction of the road and that, therefore, the amount contributed was capital exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the purposes of the business. Learned counsel for the assessee had contended before the AAC and the Appellate Tribunal that the roads should be treated as " building " within the meaning of s. 32(1) of the Act. Before us this stance was changed and it was urged that the road should be treated as " plant and machinery ". Learned counsel for the assessee cited an English decision by the House of Lords in IRC v. Barclay Carle & Co. Ltd. [1970] 76 ITR 62 and suggested that even roads can be treated as " plant " for the purposes of trade qualifying for depreciation. In the cited case, the assessee had constructed a dry dock for use in its trade of ship builders, ship repairers and marine engineers. For the purpose of construction of the doc ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
