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TMI Blog2021 (12) TMI 652X X X X Extracts X X X X X X X X Extracts X X X X ..... sing floor height of Godown can be rightly considered as revenue expenditure as claimed by the Appellant?" 2. Appellant was a ware-house keeper. Appellant's ware-house was at Dr. Ambedkar Road, just next to Jijamata Udyan, Byculla. That area is prone to severe water logging during monsoon. According to Appellant, whenever water logging happened, it would damage the goods stored in the ware-house. Somehow, Appellant was pulling on with its business. One of the biggest customer of Appellant was Bombay Dyeing Manufacturing Company Limited (the Customer). At the relevant time, the Customer was storing its goods in the ware-house of Appellant for the past three or four years and was occupying nearly 90% of the total space available in the ware- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot going into that aspect since that is not a substantial question of law that has been framed while admitting the Appeal. The Court has only to answer whether the expenditure incurred by Appellant for raising the floor height was a revenue expenditure as claimed by Appellant or a capital expenditure as claimed by the Revenue. 3. During the execution of this work, there were issues with the Bombay Municipal Corporation with which we are not concerned. 4. It is Appellant's case that by spending the said amount of Rs. 10,70,000/- (Ten lakhs seventy thousand only), Appellant did not bring into existence any new asset. 5. Ms. Hariya submitted that expenditure was wholly and solely incurred to ensure that the existing business with the Custom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expenditure would not be an expenditure of a revenue nature but it would be a capital nature. (b) If the expenditure incurred was with a view to bring into existence advantage of enduring nature, it cannot qualify for deduction as revenue expenditure but should be considered as a capital expenditure. (c) Considering the nature of expenditure incurred, the Assessing Officer, Commissioner of Income Tax (Appeals) and the ITAT were correct in holding that the expenditure incurred by Appellant was a capital expenditure. 8. Both Ms. Hariya and Mr. Suresh Kumar relied upon a judgment of the Apex Court in Ballimal Naval Kishore and Another v/s. Commissioner of Income Tax (1997) 224 ITR 414 (SC). From Ballimal Naval Kishore (Supra), it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , it should be held to be revenue expenditure. However, if the purpose and aim of the expenditure is to acquire an asset or a right of a permanent character, the possession whereof is a condition precedent to the commencement or continuance of the business, the expenditure would be of a capital nature. Ms. Haria also relied upon (i) Bombay Steam Navigation Co. (1953) (P) Ltd. v/s. CIT (1965) 56 ITR 52 (SC) where the Court held it is not easy ordinarily to evolve a test for ascertaining whether in a given case expenditure is capital or revenue, for the determination of the question must depend upon the facts and circumstances of each case. The Court has to consider the nature and ordinary course of business and the objects for which the ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... treated as a capital expenditure. In other words, such expenditure is revenue expenditure. There is, however, no doubt that the expenditure incurred for the acquisition of a capital asset or a right of a permanent character or a benefit or advantage of enduring nature, is a capital expenditure. If the expenditure is an integral part of the cost of acquisition of a capital asset and not an integral part of the profit earning process, such expenditure can never be treated as a revenue expenditure. (iii) Dalmia Jain & Co. Ltd. v/s. CIT (1971) 81 ITR 754 (SC) where the Apex court held where the expenditure laid out for the acquisition or improvement of a fixed assets is attributable to capital, it is a capital expenditure but if it is incurre ..... X X X X Extracts X X X X X X X X Extracts X X X X
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