2019 (10) TMI 464

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....and 2016-17. We heard both the appeals together and disposing the same by this common order. 2. Let's first take assessment year 2013-14. The only issue arises for consideration is disallowance of cost of construction of the building on the leasehold land. 3. Shri AR.V. Sreenivasan, the Ld. Departmental Representative, submitted that this is the second round of litigation before this Tribunal. In the first round of litigation, this Tribunal by an order dated 09.11.2017, remitted back the matter to the file of the Assessing Officer to consider the judgment of Madras High Court in CIT v. TVS Lean Logistics Ltd. (2007) 293 ITR 432 and the judgment of Supreme Court in CIT v. Madras Auto Service (P.) Ltd. (1998) 233 ITR 468. According to t....

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....o the case of the assessee and that of the case before the Apex Court and Madras High Court is factually not correct. Hence, in view of the judgment of Madras High Court as well as the Apex Court, according to the Ld. representative, the expenditure incurred by the assessee has to be allowed as revenue in nature. 5. We have considered the rival submissions on either side and perused the relevant material available on record. In the earlier round of litigation, this Tribunal in I.T.A. No.291/Mds/2017, examined this issue and remitted back the matter to the file of the Assessing Officer with a direction to re-examine the matter in the light of the judgment of Apex Court in Madras Auto Service (P.) Ltd. (supra) and the judgment of Madras Hi....

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.... Service (P) Ltd. (supra). The Apex Court at para 6 of its judgment observed as follows:- "6. The test for distinguishing between capital expenditure and revenue expenditure in our country was laid down by this court in Assam Bengal Cement Co. Ltd. v. CIT [1955] 27 ITR 34 . In that case, the appellant-company had acquired from the Government of Assam lease of certain limestone quarries for a period of 20 years for the purpose of manufacture of cement. The lessee had, inter alia, agreed to pay an annual sum during the whole period of the lease as a protection fee and in consideration of that payment, the lessor undertook not to grant to any person any lease, permit or prospecting licence for limestone. This court examined tests laid....

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....ly be regarded as a business expense, but if the lump sum payment brings in a capital asset, then that puts the business on another footing altogether. 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 whether the expenditure incurred was part of the fixed capital of the business or part of its circulating capital." (underlining ours) Relying upon the second test enumerated above, learned counsel for the appellant had submitted that the assessee got enduring benefit of a capital nature by spending the amount because the assessee obtained a new buildi....

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....ce, it has to be followed. The language employed in a statute is the determinative factor of the legislative event and even assuming there is a defect or any omission in the words used in the legislation, the court cannot correct or make up the deficiency, especially when a literal reading thereof produces an intelligible result and any departure from the literal rule would really be amending the law in the garb of interpretation, which is not permissible and which would be destructive of judicial discipline, vide Raghunath Rai Bareja v. Punjab National Bank [2007] 135 Comp Cas 163 (SC) ; [2007] 2 SCC 230. 8. What constitutes a capital expenditure and what does not, to attract Explanation 1 to section 32(1) of the Act depends upon ....

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....he Government for exploring new market is capital receipt or revenue receipt. 10. We heard the Ld. D.R. and the Ld. representative for the assessee. Admittedly, this issue was examined by this Tribunal in the assessee's own case for the assessment years 2011-12 and 2012-13 in I.T.A. Nos.47 & 48/Mds/2016 by order dated 17.05.2016. This Tribunal after considering the very same facts and circular issued by the CBDT in Circular No.564 dated 05.07.1990, observed as follows at para 9 of its order:- "9. We have considered the rival submissions on either side and also perused the relevant material available on record. The Market Linked Focus Product Scheme is a scheme promoted by the Director General of Foreign Trade wherein incenti....