Court allows depreciation on Captive Power Plant, deems expenditure as revenue. Appeal dismissed, no substantial question of law.

The High Court condoned the delay in re-filing the appeal, allowed depreciation on a Captive Power Plant, and determined the expenditure as revenue in nature. The Court dismissed the appeal, stating no substantial question of law arose, as the Captive Power Plant was not owned by the assessee, and the expenditure was for facilitating business operations, not creating enduring fixed capital.

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Issues:
1. Condonation of delay in re-filing the appeal.
2. Challenge to the order of the Income Tax Appellate Tribunal regarding depreciation on a Captive Power Plant.
3. Determination of whether the expenditure is capital or revenue in nature.

Issue 1: Condonation of Delay
The application for condonation of delay of 124 days in re-filing the appeal was considered by the High Court. After hearing both parties' counsels, the delay was condoned based on the sufficient cause shown in the application.

Issue 2: Challenge to ITAT Order
The appeal was filed under Section 260A of the Income Tax Act, 1961, challenging the ITAT's order regarding depreciation on a Captive Power Plant for the Assessment Year 2005-2006. The respondent-assessee, involved in Aluminium production, had paid Rs. 22.62 crores to NTPC for using their facilities. The Assessing Officer disallowed depreciation, but CIT(A) and ITAT deleted the disallowance based on previous judgments.

Issue 3: Expenditure Nature - Capital or Revenue
The appellant argued that depreciation on the Captive Power Plant should not have been allowed as the ownership condition under Section 32(1) of the Act was not satisfied. The respondent contended that the issue was settled by a Division Bench judgment dismissing similar appeals by the Revenue. Various legal principles were cited, including those from Supreme Court cases, to determine capital or revenue expenditure. The Court concluded that since the Captive Power Plant was not owned by the assessee, no fixed capital of enduring nature was created, and the expenditure was for facilitating business operations, thus being revenue in nature. The Court dismissed the appeal, stating no substantial question of law arose.

In conclusion, the High Court dismissed the appeal without any order as to costs, based on the finding that the expenditure was revenue in nature and no enduring fixed capital was created by the respondent-assessee.

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