1986 (3) TMI 21

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.... depreciation within the meaning of sub-section (6) of section 8 read with clause (b) of sub-section (I 6) of section 2 of the Act and rule 3 of the Maharashtra Agricultural Income-tax Rules, 1962, on the cost price of their assets and not on the basis of the cost price less depreciation allowable under the Act? Question No. 2 : Whether, on the facts and in the circumstances of these cases, the Tribunal was correct in law in holding that the expenses on guest houses, trucks and cars to the extent disallowed by the Income. tax Officer before fixing the common charge were admissible deductions under clause (b) of the proviso to section (9)(1) of the Act? Question No. 3: Whether, on the facts and in the circumstances of these cases, the ....

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....t proceedings were revenue expenditure and allowable as a deduction?" It seems that during the period covered by the three assessment years in question, the assessees had contested the land ceiling proceedings in respect of the land then held by it for sugarcane cultivation. The expenses so incurred which were claimed as a deduction were Rs. 10,660 for assessment year 1964-65, Rs. 7,976 for assessment year 1965-66 and Rs. 10,968 for assessment year 1966-67. These expenses were held as revenue expenses by the Tribunal and were allowed as a deduction. The application of the Department for referring the question of these deductions to the High Court was negatived by the Tribunal. Thereupon the Department filed three applications in this cou....

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....revenue expenditure and allowable as a deduction ? " These expenses were incurred for the purpose of preserving the assessee's capital asset, viz., agricultural land. It is well settled that expenses incurred for the preservation or maintenance of a capital asset are to be considered as revenue expenditure. Such expenditure is deductible as revenue expenditure in contrast to any expenditure which is incurred for improving a capital asset or for acquiring a capital asset. The latter will be capital expenditure. In the case of Ebrahim Aboobaker v. CIT [1971] 81 ITR 664 (Bom), the expenditure which was incurred by the assessee in order to preserve his immovable properties including his cinema theatre, known as " Imperial Cinema " was consid....