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TMI Blog2012 (8) TMI 449X X X X Extracts X X X X X X X X Extracts X X X X ..... 1) The Order of the learned Commissioner of Income-tax (Appeals)-I, Coimbatore, [CIT(A)], is unsustainable both in law and on facts of the case. 2) The learned CIT(A) erred in confirming the addition of Rs.13,60,000/- paid to TNEB, towards charges for shifting of the windmill, that was claimed by the Appellant as a Revenue expenditure. 3)The learned CIT(A) failed to note that the Appellant had not claimed any dismantling / transport / re-erection expenses but only the payment made by it TNEB which only enables the Appellant to conduct its business and that this case falls squarely within the decision of CIT Vs. DART Manufacturing India (Private) Limited. [(2008) 175 Taxman 6 (Del) decided on 12th August 2008]. 4) Without conceding the claim that the said expenditure is totally revenue in nature, the learned CIT(A) ought to have at-least allowed depreciation (@80%) if the said expenditure ofRs.13,60,000/- was to be treated as Capital expenditure. 5) The learned CIT(A) failed to note that the facts of the case in "Sitalpur Sugar Works Ltd" are distinguishable with that of the Appellant and hence the ruling there on is not applicable to the appellant. 6) In as much as the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubmitted that the CIT(A) has observed that the facts of the assessee s case was distinguishable as there was shifting of existing machinery. The CIT(A) has further held that windmill was a separate unit by itself capable of generating electricity. It was not a part and parcel of another plant or machinery but a separate undertaking. Therefore, shifting a windmill was shifting an entire factory. The CIT(A), therefore, held that when such shifting is effected, the expenditure on relocation has to be treated as capital expenditure and placed reliance on the decision of Hon ble supreme Court in the case of Sitalpur Sugar Works Ltd, 49 ITR 160. The CIT(A) has observed that in that case the Hon ble Supreme Court found that the assessee had a factory in Sitalpur district for manufacturing sugar but the place was disadvantageous for production and consequently the assessee suffered loss. The assessee relocated the factory to Garaul and claimed the expenditure as a revenue item which was disallowed by the Assessing Officer by treating the same as capital expenditure which was upheld by the Hon ble Supreme Court. The CIT(A) has observed that the assessee had earlier installed the windmill ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perused the orders of the lower authorities and materials available on record. In the instant case, the undisputed facts of the case are that the assessee had installed windmills at Vedalai Village, Ramnad District and later shifted to Elavanthi Village, Coimbatore District as they were not generating the expected power and the venture was a failure. The assessee incurred expenditure of Rs. 13,60,000/- by way of fee to TNEB towards infrastructure charges. The assessee has claimed this expenditure of Rs. 13,60,000/- as revenue expenditure but the same was disallowed by the Assessing Officer considering it to be a capital expenditure by following the decision of the Hon ble supreme Court in the case of Sitalpur Sugar Works Ltd vs CIT (supra) where it was held that expenditure on relocation of factory located in Sitalpur District for manufacture of sugar because the place was disadvantageous for production and assessee had suffered loss was a capital expenditure. 6. The D.R, before us, has also relied on the decision of Hon ble Madras High Court in the case of India Pistons Repco Ltd vs CIT (supra) and has submitted that in that decision, the Hon ble Madras High Court, after conside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not be applied blindly and mechanically without regard to the Artherton's case (super). 8. That apart, this court in CIT v. Madura Coats Ltd., held that mere improvement in convenience and increase in efficiency does not mean a permanent advantage which has to be regarded as falling within the capital field and the expenditure incurred for shifting of the administrative office was allowable as a revenue expenditure in the computation of business income. 9. For the reasons well explained above, the expenditure which has been incurred by shifting the factory from Kovilpatti, to Cuddalore is not merely for enduring advantage, but for the reason of its magnitude, viz., for the very survival of the factory and such an expenditure is to be held as a revenue expenditure, Accordingly, we hold that the expenditure incurred by the respondent/assessee by shifting the factory from Kovilpatti to Cuddalore, as rightly held by the Tribunal, is revenue expenditure. 10. Thus, we find that the Hon'ble Madras High Court in its recent decision in the case of CIT vs Loyal Super Fabrics (supra) has pointed out that when shifting of unit is done for securing and enduring advantage then the expendi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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