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TMI Blog1992 (10) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... of dyeing and tentering of voile on job basis for which the assessee obtained land in the industrial area from RIICO. The development charges of Rs. 5,925 were claimed as revenue expenditure. The Income-tax Officer found that the assessee has debited a sum of Rs. 3,950 to the profit and loss account and Rs. 1,975 has been debited under the head "Discount" which has ultimately been adjusted in the processing account. The Income-tax Officer came to the conclusion that the said amount is the consideration for acquisition of leasehold rights in the plot allotted to the assessee by the RIICO. The assessee by acquiring the leasehold rights certainly acquired an advantage and an asset of enduring nature. The said expenditure was considered as cap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me. They are as follows : 1. Outlay is deemed to be capital when it is made for the initiation of a business, for extension of a business, or for a substantial replacement of equipment : vide Lord Sands in IRC v. Granite City Steamship Co. [1927] 13 TC 1, 14. In City of London Contract Corporation v. Styles [1887] 2 TC 239, at page 243, Bowen L. J., observed as to the capital expenditure as follows: ' You do not use it "for the purpose of" your concern, which means, for the purpose of carrying on your concern, but you use it to acquire the concern.' 2. Expenditure may be treated as properly attributable to capital when it is made not only once and for all, but with a view to bringing into existence an asset or an advantage for the end ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r loss. Fixed capital, on the other hand, is not involved directly in that process and remains unaffected by it." The above judgment has been approved by the Supreme Court in Assam Bengal Cement Co. Ltd. v. CIT [1955] 27 ITR 34. In CIT v. Mihir Textiles Ltd. [1976] 104 ITR 167 (Guj) and in Addl. CIT v. Rohit Mills Ltd. [1976] 104 ITR 132 (Guj), it was held that the contribution towards betterment charges levied were against the increased potential value of the lands covered by the scheme and not against the running business of the assessee, and the assessee gained an enduring advantage by payment of the amount and the fact that the payment was under a statutory obligation and not because the assessee desired it, was immaterial. The expend ..... X X X X Extracts X X X X X X X X Extracts X X X X
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