TaxTMI 
TaxTMI 
TaxTMI 
2015 (11) TMI 21
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....ofit. 2. On the facts and in the circumstances of the case, the CIT(A) erred in holding that there was no diminution in the assets on account of Advance Against Depreciation (AAD) and thus, not required to added back to the book profit under clause(i) of Explanation (1) to section 115JB of the Income tax Act, 1961. 3. On the facts and in the circumstances of the case, the Ld. CIT(A) erred in holding that the catchment area expenses are revenue in nature being the expenditure not resulted into any enduring benefit to the assessee as against held by the AO that the benefit derived from such land improvement was long lasting and therefore, the said expenditure resulted in a benefit of enduring nature and was to be treated as capital expe....
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....een settled by the Hon'ble Supreme Court, in National Hydro Electric Power Corporation Ltd. vs CIT 320 ITR 374 (SC). The disallowance of CAT expenses by holding them to be capital in nature, was also deleted by the CITA(A) by holding that the same is a recurring expenditure which has to be incurred every year by the assessee to improve the quality of water by reducing its silt content. The CIT(A) held that neither any enduring benefit resulted from such expenditure nor any asset, tangible or intangible was created by incurring such expenditure. Therefore the expenses were revenue in nature and not capital. Aggrieved by this order the Revenue preferred the present appeal. 4. We shall now deal with the present appeal ground wise. Ground....
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....of the revenue is dismissed. 7. Ground No.3 relates to the issue of treatment of catchment area treatment expenses as revenue. The AO at para 5 of his order held as under: "The reply of the assessee has been considered. The submission that Rs. 8.19 crores towards CAT expenses is revenue in nature is not acceptable. The expenditure incurred was for reduction of silt content in the water by making improvement of land in the catchment area, so that the silt content in the water flowing into the reservoir is reduced. The benefit derived from such land improvement is long lasting and indeed vital for the continued power generation by any hydro-power generating company. Heavy siltation would lead to disruption in power generation, thereby resu....
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....ive period was capitalized by the appellant does not mean that the said expenditure has to be capitalized even in the post-operative period. The CAT expenditure incurred by the appellant during the generation of power is distinctly in the nature of revenue expenditure. Therefore, the Ld. A.O's action of treating the same as capital expenditure is not found to be in order. Accordingly the appellant succeeds on this ground of appeal." 9. Before us the AR relied upon the order of the CIT(A). The DR on the other hand relied on the findings of the AO. 10. On consideration of the rival submissions, we find that CAT payments were made for maintaining the environment and afforestation of the catchment area of the project, which is an operatio....