2008 (1) TMI 313

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....pondent. JUDGMENT The judgment of the court was delivered by C. N. RAMACHANDRAN NAIR J.— This is an appeal filed by the Revenue under section 260A of the Income-tax Act, 1961, against the order of the Income-tax Appellate Tribunal rejecting the Departmental appeal. The question raised is whether the contribution of Rs. 25 lakhs paid by the assessee to the State Irrigation Department being par....

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....l improvement under the scheme was earth canal and the purpose of cement lining was to prevent loss of water in transit thereby providing better supply of water for irrigation of farm lands mainly cultivated with sugarcane. Since sugarcane is the raw material of the assessee and since extensive cultivation of sugarcane ensures supply to the assessee, the assessee claimed the expenditure as a busin....

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....h decision of this court in CIT v. Glen View Rubber Co. P. Ltd. [2007 291 ITR 1 (Ker) [FB] and contended that the expenditure is capital expenditure in nature. However, counsel appearing for the respondent-assessee contended that the decision is not applicable to the facts of this case because it was found by this court that the assessee in that case has incurred expenditure for construction of a ....

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....ty on account of non-availability of sugarcane. Therefore, this is a case where the assessee derives the benefit out of the expenditure, but does not create any asset for itself. The Supreme Court has in the decision reported in Empire Jute Co. Ltd. v. CIT [1980] 124 ITR 1, held that even if enduring advantage is derived from the expenditure incurred, it can still be allowed as a revenue expenditu....