AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2018 (10) TMI 807
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....2. The respondent-assessee, who was primarily engaged in the business of developing, maintaining and operating of Bus-Q-Shelters (BQS), metro stations, highways etc., in its return of income filed on 29th September, 2009 had declared net loss of Rs. 8,11,91,801/-. 3. The Assessing Officer, however, vide assessment order dated 29th December, 2010 disallowed expenditure of Rs. 2,08,92,603/- as capital loss suffered by the respondent-assessee for failure to perform its part of the concessionaire agreement with the Delhi Transport Corporation. 4. The disallowance was upheld by the Commissioner of Income Tax (Appeals) vide order dated 28th February, 2014. 5. The Tribunal by the impugned order has reversed the findings and held that the additi....
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....e security for construction; and for operation and maintenance of the bus shelters and payment of concessionaire fee, respectively. The first bank guarantee was to be returned 60 days after completion/construction of all shelters and second bank guarantee was to be returned 90 days after shelters were handed over to the Delhi Transport Corporation. The agreement had also stipulated and required the respondent-assessee to furnish fresh performance security if the original bank guarantees were encashed. 10. It is an undisputed position that the respondent-assessee had furnished bank guarantee of Rs. 2 crores to the Delhi Transport Corporation as performance security. On the Delhi Transport Corporation invoking bank guarantee, the respondent-....
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....nue in character. Even construction cost of the shelters had to be amortized over a period of 10 years. These would, therefore, not be expenditure of capital nature. In view of the aforesaid, decision in Saurashtra Cement (supra) would not be applicable to the present case as in Saurashtra Cement (supra) the assessee had received liquidated damages on account of failure to supply plant and machinery, a fixed asset. There are a number of cases holding that where the property constructed is not owned by the assessee but by third party, the expenditure incurred by the assessee would not be capital expenditure but revenue expenditure [see Lakshmi Sugar Mills Co.(P) Ltd. versus CIT, (1971) 3 SCC 526, CIT versus Bombay Dyeing and Manufacturing Co....
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....t, and was obviously not intended by Lord Dunedin to be, a decisive one in every case; for it is easy to imagine many cases in which a payment, though made "once and for all", would be properly chargeable against the receipts for the year.... But when an expenditure is made, not only once and for all but with a view to bringing into existence an asset or an advantage for the enduring benefit of a trade, I think that there is very good reason (in the absence of special circumstances leading to an opposite conclusion) for treating such an expenditure as properly attributable not to revenue but to capital." 14. Referring to the said test, Lahore High Court in Benarsidas Jagannath, In re, 15 ITR 185 had held :- "It is not easy to define the t....
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....gs in a capital asset, then that puts the business on another footing altogether. Thus, if labour saving machinery was acquired, the cost of such acquisition cannot be deducted out of the profits by claiming that it relieves the annual labour bill, the business has acquired a new asset, that is, machinery. The expressions 'enduring benefit' or 'of a permanent character' were introduced to make it clear that the asset or the right acquired must have enough durability to justify its being treated as a capital asset. 3. Whether for the purpose of the expenditure, any capital was withdrawn, or, in other words, whether the object of incurring the expenditure was to employ what was taken in as capital of the business. Again, it is to be seen ....