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TMI Blog2018 (12) TMI 48X X X X Extracts X X X X X X X X Extracts X X X X ..... for the assessment year 2010-2011. The following substantial questions of law arise for consideration: "(i) In the facts and circumstances of the case, ought not the Tribunal have held that the expenditure incurred by the appellant for purchasing laboratory equipments as per Government Order No.1740/2008/home dated 31.05.2008 is revenue in nature? (ii) Ought not the Tribunal have allowed the appeal? (iii) Ought not the Tribunal have held that the appellant is allowed to claim deduction under section 37 of the Income Tax Act, 1961?" 2. The assessee-Kerala State Beverages (M&M) Corporation Ltd. is a wholesale trader of Indian Made Foreign Liquor and Beer in the State of Kerala and holds the monopoly in the sale of the aforesaid liq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at Thiruvananthapuram, Ernakulam and Kozhikode, and hence, administrative sanction for purchase of equipments worth Rs. 90 lakhs was granted by the Government, and the assessee was directed to meet the expenses in tune of Rs. 90 lakhs for the above purpose and the final bill for payment was to be submitted by the Chief Chemical Examiner to the Managing Director of the assessee for effecting payment. In accordance with the aforesaid Government Order, the assessee paid the amount and allowance was claimed on that ground from the Revenue. The learned counsel for the assessee submits that the articles purchased were installed in the Government Laboratory for the testing not only of the liquor sent for examination by the assessee, but also of an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wed that claim. The Madras High Court held inter alia that on a reading of the various provisions of the Madras Town Planning Act, it was evident that the betterment contribution was a compulsory levy made by the Corporation and the levy as such did not lead to an increase in value of land which would be occasioned only upon the implementation of the Town Planning Scheme. The contribution hence had no nexus with the increase in value of the properties within the Scheme and the levy was one essentially for better facilities of roads drainage etc., which would be laid out for the business. Hence, the payment of betterment contribution did aid the business but not as a capital expenditure and surely as revenue expenditure. The Hon'ble Supr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is contention that in deciding whether an expenditure is a capital expenditure or a revenue expenditure, the question of voluntary and/or involuntary payment becomes immaterial, and it is the nature of expenditure that determines the issue. In L.H.Sugar factory's case (supra), it was specifically indicated by the Apex Court that the assessee did not acquire any tangible or intangible right on the roads constructed in and around the factory but because of such roads constructed, day-to-day running of the business was improved by minimising the operational cost in manufacturing sugar. In such circumstances, the expenditure incurred for improving day-to-day running of the business by way of voluntary contribution of Rs. 50,000/- when such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expenditure, upheld by the Appellate Authority and the Tribunal on the premise that the expenditure incurred will not be a revenue expenditure entitled for deduction, cannot be upheld. We cannot agree with the findings of the Tribunal in this regard. The testing equipments aid the business of the assessee and in purchasing it for a governmental agency the assessee was discharging its business obligations. Especially when the assessee has been conferred with a monopoly of dealing in liquor and testing of the same and ensuring its quality is expedient to its business and the money expended for providing the facilities to an independent government agency, without any acquisition by itself is a revenue expenditure. The questions of law are ans ..... X X X X Extracts X X X X X X X X Extracts X X X X
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