TaxTMI 
TaxTMI 
TaxTMI 
1987 (2) TMI 125
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....lease under both the leases was 5 years ending with 31-10-1985. The lesses ran the mill under the name Lokeshwara Trading Corporation which is the assessee before us. The original of the lease deed dated 21-10-1980 under which plant and machinery was taken on lease was filed before us on behalf of the assessee in the paper compilation from pages 13 to 20. It may be mentioned that both the lease deeds were registered lease deeds. Para 4 of the lease deed states that if within the periods of lease any part of the machinery requires repairs and the expenditure for those repairs does not exceed Rs. 200 the said expenditure should be borne by the lessees. However, if the expenditure incurred for repairs over the machinery exceeds Rs. 200, after carrying out the repairs the lessees are entitled to recover the expenditure over the repairs from out of the lease amount payable to the lessor. Clause 5 of the lease deed says that if either for political causes or as an act of his major if either the machinery in the mill or constructions in the mill require more repairs, the lessees should intimate the lessors. Thus repairs should be carried out by the lessors within 30 days, and after showin....
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....bsp; 4 5 ------------------------------------------------------------------------------------------ Qtls. Rs. Rs. 1. 1982-83 (year under appeal) 88,624 5,74,248 1,58,206 2. 1983-84 1,11,891 8,72,468 1,61,549 3. 1984-85&....
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....bsp; 2,060.40 5. Boiled baskets, brooms, busk baskets, etc. 8,153.05 6. Current materials and oils 7,915.58 7. Coarse and red soil, etc. 3,062.00 8. Iron Bowls 449.62 9. Shafts 3,373.00 10. Foundry Majuri 4,805.00 11. Huller sheets &nb....
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..... 30,000 for five years period and deleted Rs. 6,000 from Rs. 30,000 and added Rs. 24,000 in the taxable income of the assessee firm for assessment year 1982-83 and completed the assessment dated 10-1-1982 on a total income of Rs. 97,800 under section 143(3). 3. The assessee firm appealed to the Appellate Assistant Commissioner, Vijayawada. It was contended before him that for immediately preceding assessment year 1981-82 the appellant took on lease the same rice mill and a sum of Rs. 1,26,388 was claimed and allowed on account of maintenance and repairs of the mill. The agreement of lease for earlier assessment years and the clauses in the agreement for the present lease are similar, contended the assessee. There was no disallowance ordered by the Income-tax Officer in the earlier years. The Appellate Assistant Commissioner from the records stated to have gathered that the expenditure mentioned in Annexure 14 of the income-tax return filed on 23-6-1982 appeared to the Income-tax Officer capital in nature and therefore he made the disallowance under consideration. He found five items in the said annexures: The Appellate Assistant Commissioner held that though some of the items wo....
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....r considered by any of the lower authorities. On the other hand, the learned departmental representative sought to contend that he is entitled to dispute the allowance of entire amount of Rs. 1,58,207 in the second appeal before us. 6. After hearing both sides it appears to us that the assessee's counsel is perfectly justified in raising this preliminary objection. Before answering the preliminary objection either way we have to identify what is the amount of subject-matter of the appeal before us. The ITO disallowed only Rs. 24,000 from out of Rs. 1,58,207. The assessee went in appeal and got relief even with regard to the disallowance of Rs. 24,000. Now the second appeal is filed before this Tribunal against the said decision. Therefore, it is clear that it is only Rs. 24,000 disallowance which forms the subject-matter of the appeal. We fully agree with Shri Krishnamurthy when he contended that the question of total disallowance of Rs. 1,58,207 does not arise from either of the orders of the lower authorities because it was not considered by any of them. In Chaturvedi and Pithisaria's Income-tax Law, 3rd Edition, 5the volume, page 4347, the learned authors stated as follows: "I....
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.... by the lessees. In view of this position clause 4 was never adhered to and remained as a dead letter. It is also stated that if the said clause was followed literally it would have given rise to an anomalous situation whereunder the owners of the mill might have to pay substantial amounts to the lessee firm every year far exceeding the annual rental of Rs. 41,000. It is also reiterated that clause 4 is a hollow and casual reproduction of similar clauses in the lease deeds normally written by the scribe since long past without proper understanding of the real intention of the partners concerned. He also brought to our notice that the Income-tax Officer who raised objection for allowing a mere Rs. 24,000 for assessment year 1982-83 allowed much more sums towards repairs expenses incurred in the subsequent assessment years as already shown in the table furnished in the above paras. Therefore, it is sought to be contended that clause 4 of the lease deed was never acted upon or intended to be acted upon and it was provided in a routine manner by the scribe without gathering the intention of the parties or without himself knowing the implications thereof and so it should be ignored. 8.....
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....advantage for some years is a revenue expenditure or a capital. In CIT v. Kirkend Coal Co. [1970] 77 ITR 530 (SC) the question was whether a company which expenditure carried on the business of coal mining and which incurred expenditure on stowing operations was entitled to for its deduction as business expenditure. The Tribunal found it as a fact that stowing is an operation carried out in the process of extraction of coal and unless it is carried out extraction of coal is not possible irrespective of whether depillaring had been done or not. The Supreme Court held that expenditure incurred by the assessee in stowing operations is a revenue expenditure allowable as a deduction. In CIT v. Rama Krishna Steel Rolling [1974] 95 ITR 97 (Delhi) a lease was taken for a period of five years, without option for extension. There Mills was no provision in the first instance in the lease deed regarding liability of assessee for repairs. However there was a subsequent letter to the effect that the repairs were the assessee's responsibility (lessee's). There was heavy expenditure on repairs to the roof of the premises in the second year. The question is whether the expenditure is allowable as r....