2019 (6) TMI 881 - HC - Income Tax

Nature of expenditure - Animal Breeding Co-operative Development Expenses - revenue or capital expenditure - HELD THAT - As decided in THE PANCHMAHAL DIST. CO-OPERATIVE MILK (SIC) UNION LTD 2018 (12) TMI 1657 - GUJARAT HIGH COURT expenditure incurred by the assessee was general in nature and aimed at improving the practices for better fertility amongst milch animals by addressing the issues which caused infertility. The expenditure, therefore, was for the purpose of its business and would not be co-relatable to any tangible returns which can be expected out of such expenditure. Thus, this court has held that such expenditure incurred by the assessee is not capital in nature. - Decided in favour of assessee.

Summary

Issues:
1. Appeal under section 260A of the Income Tax Act, 1961 against the order of the Income-tax Appellate Tribunal regarding the deletion of disallowance of Animal Breeding & Co-operative Development Expenses as Capital Expenditure.

Analysis:
The High Court dealt with an appeal under section 260A of the Income Tax Act, 1961, challenging the order of the Income-tax Appellate Tribunal regarding the deletion of disallowance of Animal Breeding & Co-operative Development Expenses as Capital Expenditure for the assessment year 2013-14. The substantial question of law raised was whether the ITAT erred in confirming the deletion of the disallowance. The court noted that a similar issue had been decided by a co-ordinate Bench in a previous case, where the deletion of such expenses was upheld. The court referred to the decision in the case of Gujarat Cooperative Milk Marketing Federation Ltd., where it was held that the expenditure incurred for improving practices for better fertility among milch animals was not capital in nature but general business expenditure. The court found that the expenses in question were aimed at improving practices for better fertility and were not co-relatable to tangible returns, thus not capital in nature. Therefore, the court concluded that the impugned order did not give rise to any substantial question of law warranting interference. Consequently, the appeal was dismissed as the issue was settled based on previous judgments.

In conclusion, the High Court dismissed the appeal as the issue regarding the treatment of Animal Breeding & Co-operative Development Expenses as Capital Expenditure had already been settled in previous cases. The court relied on the decision in the Gujarat Cooperative Milk Marketing Federation Ltd. case, where it was held that such expenses were general business expenditure aimed at improving practices for better fertility among milch animals and not capital in nature. Therefore, based on the previous judgment and reasoning, the court found no substantial question of law in the impugned order and dismissed the appeal accordingly.