2006 (9) TMI 101

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....Tribunal, Chandigarh, arising out of its order dated July 3, 1991 in respect of assessment year 1982-83 : "Whether on the facts and in the circumstances of the case, the Appellate Tribunal was justified in holding that the assessee was not entitled to capitalize the expenditure of Rs.1,86,300/- incurred on electric line feeder etc. prior to commencement of business ?" 2. The assessee company....

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....s did not belong to the assessee and that as revenue expenditure it was not incurred in the relevant assessment year. The view of the Assessing Officer was confirmed by Commissioner of Income-tax (Appeals). 4. The Tribunal upheld the claim of the assessee to the extent of Rs.21,854 towards the cost of temporary electric connection which was held to be intimately connected with and having direct....

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....aced on the judgment of Hon'ble Supreme Court in Challapalli Sugar Ltd. v. CIT [1975] 98 ITR 167 and Travencore-Cochin Chemical Ltd. v. CIT [1977] 106 ITR 900 (SC). 6. In Challapalli Sugar's case [1975] 98 ITR 167 it was observed (page 175) : "It would appear from the above that the accepted accountancy rule for determining the cost of fixed assets is to include all expenditure necessary to ....

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....achinery being necessary for commencement of production and had to be capitalized. The Hon'ble Supreme Court in Travancore Cochin's case [1977] 106 ITR 900 applied the test laid down in Atherton v. British Insulated and Helsby Cables Ltd. [1925] 10 TC 155 (HL) to the effect (page 902) : "When an expenditure is made . . . with a view to bringing into existence an asset or an advantage for the en....