TaxTMI 
TaxTMI 
2012 (8) TMI 449
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....in the decision of CIT Vs. DART Manufacturing India (Private) Limited. [(2008) 175 Taxman 6 (Del) decided on 12th August 2008]. 4) Without conceding the claim that the said expenditure is totally revenue in nature, the learned CIT(A) ought to have at-least allowed depreciation (@80%) if the said expenditure ofRs.13,60,000/- was to be treated as Capital expenditure. 5) The learned CIT(A) failed to note that the facts of the case in "Sitalpur Sugar Works Ltd" are distinguishable with that of the Appellant and hence the ruling there on is not applicable to the appellant. 6) In as much as the Appellant was forced to shift the location for mere survival, it is submitted that the decision of the Honourable Madras High Court in the case of CIT Vs. LOYAL SUPER FABRICS (2008) 304 ITR 78 squarely applies to the case of the Appellant. 7)For these and other grounds of appeal that may be adduced at the time of hearing, it is humbly prayed that the addition of Rs.13,60,000/-, incurred towards fees/charges paid to TNEB for shifting of the windmill plant, made by the Assessing Officer be deleted." 3. The A.R. of the assessee, at the time of the hearing, submitted that the only issue inv....
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....n the case of Sitalpur Sugar Works Ltd, 49 ITR 160. The CIT(A) has observed that in that case the Hon'ble Supreme Court found that the assessee had a factory in Sitalpur district for manufacturing sugar but the place was disadvantageous for production and consequently the assessee suffered loss. The assessee relocated the factory to Garaul and claimed the expenditure as a revenue item which was disallowed by the Assessing Officer by treating the same as capital expenditure which was upheld by the Hon'ble Supreme Court. The CIT(A) has observed that the assessee had earlier installed the windmill in Vedalai Village, Ramnad District and later shifted to Elavanthi Village, Coimbatore District as the assessee was not generating the expected power and the venture was a failure. Therefore, he held that the Assessing Officer was right in treating the shifting expenditure was capital expenditure. The A.R also relied on the decision of the Hon'ble Madras High Court in the case of CIT vs Loyal super Fabrics, [2008] 304 ITR 78 (Mad) and submitted that the Hon'ble High Court has held that where the survival of the factory in the existing premises is at stake then the test of enduring advantage ....
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....sidering it to be a capital expenditure by following the decision of the Hon'ble supreme Court in the case of Sitalpur Sugar Works Ltd vs CIT (supra) where it was held that expenditure on relocation of factory located in Sitalpur District for manufacture of sugar because the place was disadvantageous for production and assessee had suffered loss was a capital expenditure. 6. The D.R, before us, has also relied on the decision of Hon'ble Madras High Court in the case of India Pistons Repco Ltd vs CIT (supra) and has submitted that in that decision, the Hon'ble Madras High Court, after considering the decision of Hon'ble supreme Court in the case of Sitalpur sugar Works Ltd vs CIT(supra), has upheld the decision of the Tribunal in disallowing the expenditure incurred by the assessee in dismantling and shifting its factory as capital in nature. 7. On the other hand, we find that the A.R. of the assessee has relied on the decision of the Hon'ble Madras High Court in the case of CIT vs Loyal Super Fabrics, (2008) 304 ITR 78(Mad) and has submitted that in that case the Hon'ble Madras High Court has held the expenditure on shifting of factory from one place to another as revenue expendi....
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....rely for enduring advantage, but for the reason of its magnitude, viz., for the very survival of the factory and such an expenditure is to be held as a revenue expenditure, Accordingly, we hold that the expenditure incurred by the respondent/assessee by shifting the factory from Kovilpatti to Cuddalore, as rightly held by the Tribunal, is revenue expenditure." 10. Thus, we find that the Hon'ble Madras High Court in its recent decision in the case of CIT vs Loyal Super Fabrics (supra) has pointed out that when shifting of unit is done for securing and enduring advantage then the expenditure incurred for shifting will be capital expenditure, but when shifting became necessary for the very survival of the undertaking itself then the shifting expenditure will be revenue in nature. We find that all the above cited decisions relate to expenditure incurred on dismantling of plant and machinery and reassembling of the plant and machinery at a new place. Whereas in the instant case, it is an admitted position that the expenditure in question relates to payment of fee to TNEB. Thus, we find that the expenditure under dispute is not of the same nature which was considered in the aforesaid th....