1988 (12) TMI 28

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..... is entitled to any depreciation on the cost incurred by the assessee in raising the said barbed wire fencing ?" The assessee is a company. The proceedings relate to its assessment for the assessment year 1972-73. The assessee had claimed revenue expenditure which included an expenditure of Rs. 20,246. These expenses were incurred for putting up a barbed wire fencing at the assessee's factory premises at Khopoli. The Income-tax Officer disallowed the claim observing that it was of capital nature. The Appellate Assistant Commissioner accepted the assessee's claim and held that the barbed wire fencing was done with a view to stop (i) entry of animals inside the factory premises and damaging lawns, gardens, etc. ; (ii) easy entry of outsiders .....

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..... as the nature of the advantage in a commercial sense and it was only where the advantage was in the capital field that the expenditure would be disallowable. If, on the other hand, the advantage consisted merely of facilitating the assessee's trading operations or enabled the management to conduct its business in a more efficient and profitable manner while leaving the fixed capital untouched, the expenditure would be on revenue account, even though the advantage might endure for an indefinite future. It was reiterated that the wire fencing was done in order to preserve the assets of the company and facilitate the carrying on of its business. The wire fencing certainly did not add to the value of the capital assets. Shri Toprani also placed .....

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..... Ltd. [1977] 106 ITR 323 (Bom), the question was whether the roads or roadways laid out by the assessee-company for the purpose of linking several factory buildings within the factory premises should be regarded as building within the meaning of section 10(2)(vi) of the Indian Income-tax Act, 1922. The facts in CIT v. Borosil Glass Works Ltd. [1986] 161 ITR 286 (Bom) are also similar to those in Colour Chem Ltd.'s case [1977] 106 ITR 323 (Bom). The position, thus, is that the principles relating to the question whether an expenditure is of revenue or capital nature are laid down by the Supreme Court in Empire Jute Co. Ltd.'s case [1980] 124 ITR 1 (SC). We have to see whether and to what extent these principles are applicable in this case o .....

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