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TMI Blog2010 (8) TMI 26X X X X Extracts X X X X X X X X Extracts X X X X ..... tion could not be allowed to the assessee – Held that: - we are of the view that as the Captive Power Plan is not owned by the respondent-assessee, no fixed capital of enduring nature has come into existence. It is pertinent to mention that expenses were incurred wholly and exclusively for the purposes of business. Moreover, as pointed out by the CIT(A), had the respondent-assessee not incurred the expenditure in question, it would have to pay for use of the facilities and such payment would have been allowed as revenue expenditure. In the present case, the advantage consists in facilitating the assessee’s business and trading operations leaving the fixed capital untouched. Consequently, in our view, the expenditure will be on revenue accou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting some facilities such as coal handling, water treatment etc. was very substantial, respondent-assessee decided to use NTPC facilities for these purposes. Rs. 22.62 crores was paid by the respondent-assessee to the NTPC for this and capitalized in its books, on which depreciation was claimed. 3. The Assessing Officer observed that since the effective ownership and control belonged to NTPC, depreciation could not be allowed to the respondent-assessee. However, Commissioner of Income Tax (Appeals) (in short, "CIT(A)") and ITAT deleted the said disallowance following the earlier judgments passed by ITAT in assesse's own case for assessment years 1995-1996, 1996-1997, 1997-1998, 1999-2000, 2000-2001 and 2001-2002. 4. Ms. Prem Lata Bansal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... delines. What is done now from the Assessment Year in question is that it is the correct step as it should have been taken in accordance with law…..We thus answer the question in favour of the assessee and against the Revenue and therefore, dismiss this appeal." 6. The test to determine whether an expenditure is capital or revenue one has been outlined out in a number of judgments. The Supreme Court in Commissioner of Income Tax Vs. Madras Auto Service (P.) Ltd. (1998) 233 ITR 468 has laid down general principles applicable for determining whether a particular expenditure is capital or revenue one. The general principles outlined by the Supreme Court in the aforesaid case are as under:- "(1) Outlay is deemed to be capital when it is made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... record, which we have referred to above, clearly show that these water pipelines on which the expenditure in question was incurred were not assets of the assessee, but assets of the Shahabad Municipality and hence it was not as if the expenditure resulted in bringing into existence any capital asset for the company. The only advantage derived by the assessee by incurring the expenditure was that it obtained an absolution or immunity, under normal conditions, from levy of certain municipal rates and taxes and charges. In view of this, the first contention of Mr. Manchanda must be rejected." 8. A Division Bench of this Court in Hindustan Times Ltd. Vs. Commissioner of Income Tax, New Delhi (1980) 122 ITR 977 has held that the word "enduring ..... X X X X Extracts X X X X X X X X Extracts X X X X
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