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Commissioner Of Income-Tax vs Hede Consultancy Pvt. Ltd. And Anr. on 10 June, 2002 cites

Commissioner Of Income-Tax, Tamil Nadu ... vs Madras Auto Service (P) Ltd. Etc on 12 August, 1998

11. The apex court in the case of CIT v. Madras Auto Service (P.) Ltd. [1998] 233 ITR 468 had an occasion to deal with an identical question on similar facts. In that case, the assessee was a company carrying on the business of sale of motor parts. Its head office was at Madras. It had a branch at Bangalore. Under the agreement of lease the assessee obtained certain premises for a period of thirty nine years at Bangalore. Under the terms and conditions of the lease, the lessee (that is to say the assessee), had the right to demolish at its own expense the existing premises and appropriate to itself all the material, thereof, without paying to the lessors any compensation and construct a new building thereon to suit the purpose of their business as per the plan approved by the lessors. Under Clause 2 of the lease deed, the lessee was required to pay a rent of Rs. 1,000 per month for the first fifteen years, Rs. 1,500 per month for the next ten years, Rs. 1,650 per month for the next ten years and Rs. 2,000 per month for the remaining years. The lease deed further provided that the new construction shall, right from the commencement of the work, be the property of the lessors and upon completion of the work of construction the lessee would have only the right to be a tenant for a period of 39 years under the existing lease, subject to the payment of rent and observation of other terms and conditions of the lease. The lessee would not be entitled under any circumstances to any compensation whatsoever on account of its putting up the new construction in place of the old. Acting under the lease agreement, the assessee invested a sum of Rs. 1,62,835 in the previous year relevant to the assessment year 1968-69 and Rs. 50,937 during the succeeding year in constructing a new building on the said land. The assessee claimed before the Income-tax Officer the expenditure of the said sums of Rs. 1,62,835 and Rs. 50,937 in the relevant assessment years as capital loss. In the alternative, the assessee claimed deduction of the payments as business expenditure or as extra rent for the lease. Ultimately, the Income-tax Appellate Tribunal held that the expenditure of the said two amounts for the construction of a new building was in the nature of business expenditure for proper carrying on of the business of the assessee. The Tribunal had, therefore, treated these amounts as revenue expenditure. This was upheld by the High Court.
Supreme Court of India Cites 6 - Cited by 286 - S V Manohar - Full Document

Lakshmiji Sugar Mills Co. (P.) Ltd. vs Commissioner Of Income-Tax on 1 May, 1973

(i) Lakshmiji Sugar Mills Co. P. Ltd. v. CIT , wherein the assessee-company was carrying on the business of manufacture and sale of sugar. It paid to the Cane Development Council certain amounts by way of contribution for the construction and development of roads between the various sugarcane-producing centres and the sugar factories of the assessee. The roads remained the property of the Government. The apex court held that the expenditure was not of capital nature and had to be allowed as an admissible deduction in computing the profits of the assessee's business. The expenditure was incurred for the purpose of facilitating the running of the assessee's motor vehicles and other means employed for transportation of sugarcane to its factories.
Delhi High Court Cites 4 - Cited by 56 - Full Document

L. B. Sugar Factory & Oil Mills (P) Ltd. ... vs C.I.T. U.P., Lucknow on 26 August, 1980

(ii) In the case of L.B. Sugar Factory and Oil Mills (P) Ltd. v. CIT , the assessee was carrying on the business of manufacture and sale of sugar. It had its factory in U. P. The assessee paid a contribution towards meeting the cost of construction of roads in the area around its factory under a sugarcane development scheme, The question was whether this amount was deductible in computing the assessee's profits. The apex court held that it was, because although the advantage secured was of long duration, it was not an advantage in the capital field because no tangible or intangible asset was acquired by the assessee ; nor was there any profit to or expansion of the profit-making apparatus of the assessee. The amount was contributed for the purpose of facilitating the business of the assessee and making it more efficient and profitable. It was, therefore, held to be expenditure of revenue nature.
Supreme Court of India Cites 4 - Cited by 74 - P N Bhagwati - Full Document

Commissioner Of Income-Tax,Bombay ... vs Associated Cement Companies Ltd., ... on 4 May, 1988

(iii) In another case CIT v. Associated Cement Companies Ltd. , the respondent-company entered into an agreement to supply water to the municipality and provide water pipelines as also to supply electricity for street lighting and put up a transmission line for that purpose. The assessee also agreed to concrete the main road from the factory to the railway station. The amounts expended for these purposes were held to be revenue expenditure since the installation and accessories were the assets of the municipality and not of the assessee. The expenditure, therefore, was held to be not of capital nature. The advantage secured by the respondent was immunity from liability to pay municipal rates and taxes for a period of 15 years. The apex court said that had these liabilities been paid the payment would have been on revenue account. Therefore, the advantage secured was in the field of revenue and not capital.
Supreme Court of India Cites 6 - Cited by 200 - M H Kania - Full Document

The Commissioner Of Income Tax, Bombay vs Bombay Dyeing & Manufacturing Company ... on 29 February, 1996

(iv) In the case of CIT v. Bombay Dyeing and Manufacturing Co. Ltd. [1996] 219 ITR 521 (SC), the company contributed to the State Housing Board certain amounts for construction of tenements for its workers. The tenements remained the property of the Housing Board. It was held that the expenditure was incurred wholly and exclusively on the welfare of the employees and, therefore, constituted legitimate business expenditure. As the assessee-company acquired no ownership rights in the tenements, the apex court said that the expenditure was incurred merely with a view to carry on the business of the company more efficiently by having a contented labour force. All these cases have looked upon expenditure which did bring about some kind of an enduring benefit to the company as a revenue expenditure when the expenditure did not bring into existence any capital asset for the company. The asset which was created belonged to somebody else and the company derived an enduring business advantage by expending the amount. In all these cases, the expenses have been looked upon as having been made for the purpose of conducting the business of the assessee more profitably or more successfully. As in the present case also since the assets created by spending the said amounts did not belong to the assessee but the assessee got the business advantage of using modern business premises at a low rent, thus saving considerable revenue expenditure for a considerably long period, the Tribunal was perfectly justified in coming to the conclusion that the expenditure should be looked upon as revenue expenditure. No fault can be found with the findings recorded by the Tribunal.
Supreme Court of India Cites 7 - Cited by 64 - B P Reddy - Full Document
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