TaxTMI 
TaxTMI 
1982 (12) TMI 10
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....t Barabani in Assam, which involved a heavy amount of concreting work. Under the agreement entered into with the concerned authority the assessee was allowed to use the land at the site on the following condition which was condition No. 5: " Use of land for construction purposes. Such land as may be available will be allowed to be used by the contractor for construction of their camps free of charge. The contractor will be responsible to clear the site after completion of their work in this contract and hand over the land to this department. The contractor will be liable to pay compensation for any damages done to the land. " In order to fix the mixers and plant/machinery at the site, the assessee had to prepare a foundation on the land. For this purpose the assessee incurred a total expenditure of Rs. 11,90,706 during the financial years 1960-61 to 1962-63, and labelled it as " erection charges ". This expenditure was capitalised in the books separately and was written off over the years on the basis of work done in each year. Accordingly, the assessee claimed deduction in the manner following : Assessment years Claimed &....
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.... In that case, such expenses would form part of moving expenses. But the assessee's business is not a travelling one but flitting business. A travelling business is different from a flitting business where the policy of the business is to continually flit, it is not to travel. It is merely a case of substitution of one shop for another and for however short a time a shop lasts, it is permanent in its nature and then the business flits and hence the expenditure incurred in a flitting business is of capital nature (Eastmans Ltd. v. Shaw [1928] 14 TC 218 (HL), Hyam v. IRC [1929] 14 TC 479 (C Sess), Smith v. Westinghouse Brake Co. [1888] 2 TC 357 (QB)). In the circumstances, the assessee's claim to write off installation charges on a self-chosen basis which is not in accordance with the provisions of the Act and is contrary to the conventions of accountancy, is not correct. The installation charges are part and parcel of the cost of the fixed assets and shall be considered for the purpose of allowing depreciation. Writing off is not allowed." There was an appeal before the AAC. The AAC rejected the assessee's claim with the following observations : " The cost of plant and mach....
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....one, stone chips and other building materials. The assessee takes the plant/machinery to the work site and they are normally fixing them to the ground. But at times, the assessee is obliged to fix them on the ground as the work involved is of some special type which requires less vibration, movements, etc. As soon as the work is over at a particular site, the assessee removes the plant/ machinery leaving behind the foundation on which they were fixed. By no stretch of imagination can the expenditure incurred on fixing the plant/ machinery be treated as capital expenditure in the nature of the business carried on by the assessee. The nature of the assessee's business is quite comparable with that of a travelling business like a circus or a trade carried on at fairs. Again, the assessee does not incur such expenses every time it moves from one site to another as most of the plant/machinery could be used without fixing them on the ground. It is only where the work undertaken is of integrated and a special type that the assessee is obliged to fix the plant/machinery for a temporary period. Looking to the nature of the business and its being carried on at different places by the assesse....
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..... In any event, the expenses could not be allowed in the years in question. This specific question was sought to be raised in reference and the Tribunal refused to allow the assessee (revenue ?) to raise this question on the ground that it was not raised and discussed before any of the authorities below. In our opinion, the Tribunal was right in so far as it held that it was not raised before any of the authorities below. Furthermore, it appears to us that, in view of the fact that the Tribunal had refused to refer this specific question which is raised and sought to be referred to this court which the Tribunal declined to refer, it cannot now be allowed to be raised on the plea that this raises a new aspect of the facts already on record. In that view of the matter it is not necessary for us, in our opinion, to discuss in detail the decision, to which our attention was drawn, of the judicial Committee in the case of CIT v. Basant Rai Takhat Singh [1933] 1 ITR 197 (PC), or the observation of this court in the case of Hindustan Aluminium Corpn. Ltd. v. CIT [1983] 144 ITR 474, on this aspect of the matter though this decision was relied on for some other aspect, to which we will refe....
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....fferent kind of case which their authors almost Certainly did not have in mind, according to Lord Reid, in seeking to treat the expressions of judicial opinion as if these were words in an Act of Parliament. A further source of difficulty, according to Lord Reid, has been a tendency in some cases to treat some one criterion as paramount and to press it to its logical conclusion without proper regard to other factors in the case. The Legislature has not, as have been noted in some decisions, defined the distinguishing features of capital and revenue expenditure. It appears to us from these decisions that it must depend on the facts and circumstances and whether a particular expenditure is a revenue expenditure incurred for the purpose of business must be determined on a consideration of all the facts and circumstances of the case and by the application of the principles of commercial trading. The question must be viewed in the larger context of business necessity or expediency. If the outgoing or expenditure was so related to the carrying on or conduct of the business that it might be regarded as an integral part of the profit-earning process and not for acquisition of an asset or f....