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TMI Blog1989 (7) TMI 41X X X X Extracts X X X X X X X X Extracts X X X X ..... these items were not being used for packing the material and considered the expenditure to be of capital nature. On appeal, the Commissioner of Income-tax (Appeals) came to the conclusion that depreciation on the purchase cost to the extent of 10% was allowable. On further appeal, the Income-tax Appellate Tribunal, Chandigarh, agreed with the view taken by the Income-tax Officer but upheld the order of the Commissioner of Income-tax (Appeals) allowing depreciation as no appeal against it was filed by the Revenue. This has necessitated the Tribunal to refer the following question for the opinion of this court: "Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that the value of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and advantageous to the assessee, if any expenditure is incurred for the construction of water pipe lines and high tension electricity supply lines or construction of roads by the assessee on Government or, municipal land, such an expenditure is allowable as revenue expenditure. We are of the opinion that the expenditure incurred on the purchase of tarpaulins and polythene covers to save the very existence of the foodgrains, which is the main business of the assessee, from rain, dust, storm, sun, etc., would certainly be a revenue expenditure. Whether an expenditure is of revenue or capital nature, various tests have to be kept in mind in view of the Supreme Court decisions in Assam Bengal Cement Co. Ltd. v. CIT [1955] 27 ITR 34, CIT v. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erations were carried on under the directions of the mining department to enable the assessee to extract coal for a score of years and such an expenditure was held to be of revenue nature and was allowed. In the second case, the assessee who was carrying on the business of tea-growing had set up proper fencing to protect the tea gardens and such expenses were allowed considering the same to be of revenue character. The facts of the present case are much better than the facts of the aforesaid decided cases. Here, for keeping the stocks-in-trade intact, covers have to be provided and such an expenditure would be nothing but an expenditure of revenue nature. The Tribunal was not right in disallowing the deduction of the cost thereof as a rev ..... X X X X Extracts X X X X X X X X Extracts X X X X
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