2000 (11) TMI 105

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....molishing the existing compound wall and rebuilding the same was a 'capital expenditure' ? (2) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the new compound wall constructed by the applicant after demolishing of the said compound wall gave the applicant 'enduring benefit' and therefore was in the nature of a 'capital asset' entitled to depreciation ?" The assessee-company filed its return of income on June 30, 1984, admitting an income of Rs. 1,09,820. The assessment came to be completed on July 28, 1986, under section 143(3) of the Act on a total income of Rs. 1,10,000. The assessee had claimed the expenditure on the construction of the wall as a revenue expenditure. Subsequently,....

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..... The right solution would be to examine the facts of the case closely to arrive at the right answer. According to the facts arising in this case the compound wall was completely replaced by another wall. The replacement included the removal of the existing foundation and replacing it with a new foundation. This has resulted in effacing an old asset and bringing into existence a totally new asset. The only probable reason for the replacement of the asset would have been to obtain an enduring benefit from the asset so replaced. Learned counsel for the assessee relied on the decision of the Calcutta High Court in Cultural Enterprises Corporation v. CIT [1992] 196 ITR 488, wherein a Division Bench of the Calcutta High Court held : "the r....