TaxTMI 
TaxTMI 
2019 (7) TMI 707
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....e contribution of 1,38,54,167-00 made by the Respondent-Rs. Assessee to Goa Infrastructure Development Co. Ltd., a Government Undertaking, during the assessment year 2008-09 for construction of Usgao bridge, which was said to be essential for smooth and efficient running of the business of the Assessee. The question was, whether this expenditure should be treated as 'capital expenditure' or 'revenue expenditure'. The ITAT, in its impugned order, held the expenditure to be entirely a revenue expenditure. That is challenged in this appeal by the Revenue. 3. The basis of the Revenue's challenge is that the concerned expenditure has secured a benefit to the Assessee which is not of a transitory nature, but of an enduring na....
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....dge passage. The ITAT was of the view that the construction of new Usgao bridge had thus resulted in revenue for the Assessee in terms of cost per ton transported as well as increase in the quantity of ore exported/sold. The ITAT, accordingly, held that the expenditure incurred by the company as its share for construction of the new bridge could not be termed as capital expenditure, but was entirely revenue expenditure. The ITAT relied on the Judgment of the Supreme Court in L.H. Sugar Factory and Oil Mills (P) Ltd. vs. CIT, [1980] 125 ITR 293 (SC) and a Judgment of Madras High Court in CIT vs. Coats Viyella India Ltd. , [2002] 253 ITR 667 (Mad), where a similar contribution for construction of a road to facilitate the business of the Asses....
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....ses incurred for repairs of a road, had held that though the assessee enjoyed an advantage of enduring nature, yet the contribution was a revenue expense, because it was spent for facilitating the day-to-day running of the business. The Allahabad High Court held that case to be distinguishable as in that case no asset of an enduring nature had come into existence. The High Court held that in the case before it, the quarters were freshly built and were exclusively used by the assessee and though the assessee was not the owner, it was entitled to its exclusive use for an unlimited period of time. On this reasoning, the Court held the expenditure to be capital expenditure. The Allahabad High Court decision was rendered before the Supreme Court....
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.... enabling management and conduct of the business to be carried on more efficiently or more profitably, while leaving the fixed capital untouched, the expenditure would be on revenue account, even though the advantage may endure for an indefinite future. These observations of the Supreme Court in L.H. Sugar Factory and Oil Mills (P) Ltd., (supra) completely cover the controversy in the present case. 7. As rightly held by the ITAT, in the present case, the contribution made by the Assessee towards the construction of the new bridge facilitated the business of the Assessee, enabling its being carried on more efficiently or more profitably and yet, at the same time, the fixed capital of the Assessee was left untouched. In the premises, the exp....