2014 (3) TMI 585

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....Mr. Rohit Madan, Sr. Standing Counsel with Mr. Pabitra Roy Choudhary, Jr. Standing Counsel. ORDER Mr. Justice S. Ravindra Bhat (Open Court) 1. The following questions of law arise for consideration: (1) Whether the Tribunal was justified in holding that the sum of Rs. 5 lacs was capital in nature and was not revenue expenditure that could properly be deducted? (2) Whether the Tribun....

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.... was to enhance its profit yielding capacity and, therefore, ought not to be considered as capital. The Assessing Officer accepted the explanation in part but added Rs. 5 lakhs which, according to him, was capital in nature. The asssesee appealed to the Commissioner of Income Tax (Appeals) ("CIT(A)"), which found that the Assessing Officer was not justified in treating half the expenditure as capi....

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....as to why even the 50% that was allowed should be treated as revenue expenditure given the nature of the construction. It was argued in this regard that the entire expenses had to be treated in the revenue stream because it merely enhanced the income generating capacity of the assessee and did not in any manner create any new asset. Learned counsel relied upon the decision in Empire Jute Co. Ltd. ....

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....ion of any new asset. Rather, it is only the sitting capacity of the existing bar that was increased with the renovation carried out. Considering these factors, the ratio in Empire Jute Company (supra) that an action that merely facilitates the assessee's business (making it more profitable), whilst leaving the fixed capital untouched, is squarely applicable. 6. For these reasons, the first que....