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TMI Blog2022 (6) TMI 1202X X X X Extracts X X X X X X X X Extracts X X X X ..... eographical Report, the location of deposit can be identified. Further, the Tribunal noted that the report gives the idea of the nature of deposit and whether mining activity can be carried on in the location. Thus, ultimately the Tribunal agreed with the assessee s stand. However with regard to the claim of the additional depreciation at 15%, the Tribunal did not agree with the assessee. However, the assessee is not an appeal as against such finding Additions on expenses on Road belonging to Zilla Parishad - HELD THAT:- It cannot be disputed by the revenue that by upgrading/ constructing the link-road from the mine to the railway station, the assessee stands benefitted as the transportation of coal which has been mined, can be transported more efficiently and profitably. Further, the road is a public road and the assessee is not the owner of the road and the road was upgraded/ constructed not exclusively by the assessee but the assessee had made contribution for doing the upgradation/ construction work and the remaining contribution was made by the Zilla Parishad. Therefore, the tribunal agreed with the assessee and dismissed the cross-objection filed by the revenue The ro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appeal was admitted on 19th June, 2012 on the following substantial questions of law : i) Whether on the facts and in the circumstances of the case the learned Tribunal was justified in law in deleting the addition of Rs. 66,00,000/- on account of depreciation on Geographical Report ? ii) Whether on the facts and in the circumstances of the case the learned Tribunal was justified in law in directing to allow depreciation on Geographical Report as intangible asset and by not considering expense on Geographical Report under Section 35E of the Income Tax Act, 1961? iii) Whether on the facts and in the circumstances of the case the learned Tribunal was justified in law in deleting the additions on expenses on Road belonging to Zilla Parishad amounting to Rs. 3,57,45,560/- ? 2. Two issues arise for consideration in the case on hand. Firstly, whether the Geographical Report is only a document and not an asset and no deduction is permissible under Section 35E (2) of the Act. This issue will cover substantial questions of law No. 1 and 2. The second issue is whether the Tribunal was correct in deleting the additions on the expenses incurred by the assessee for develop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... note of the fact that he expenses incurred for developing road was wholly and exclusively for the purpose of the business of a company and accordingly held the same to be allowable as a deduction. Accordingly, the appeal filed by the assessee was allowed to the extent indicated. The revenue by way of this appeal seeks to restore the order passed by the Assessing Officer. In order to appreciate the correctness of the stand taken by the Tribunal, we directed the copy of the Geographical Report to be placed before us. The learned Advocate appearing for the respondent assessee filed copy of the paper book which was filed before the Tribunal in which the Geographical Report was appended. On a perusal of the report, we find it is a very elaborate report and contains 7 chapters, the first of which being introduction, the second geology, the third geological structure, fourth coal seams, fifth description and quantity of coal seams, sixth research and seventh environmental aspects. The report is a highly technical report and we find that the Tribunal had rightly appreciated the scope of the report. Huge expenditure had been incurred by the assessee to acquire the report as the report is th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ans, processing data and other literature falls within the definition of plant . Counsel for the assessee urged that the expression plant should be given a very wide meaning and reference was made to a number of decisions for the purpose of showing how quite a variety of articles, objects or things have been held to be plant . But it is unnecessary to deal with all those cases and a reference to three or four decisions, in our view, would suffice. The classic definition of plant was given by Lindley L.J. in Yarmouth v. France [1887] 19 QBD 647, a case in which it was decided that a cart-house was plant within the meaning of Section 1(1) of the Employers Liability Act, 1880. The relevant passage occurring at page 658 of the Report runs thus: There is no definition of plant in the Act: but in its ordinary sense, it includes whatever apparatus is used by a businessman for carrying on his business,- not his stock-in-trade which he buys or makes for sale; but all goods and chattels, fixed or movables, live or dead, which he keeps for permanent employment in his business. In other words, plant would include any article or object fixed or movable, live or dead, us ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... will be difficult to resist the conclusion that these documents as constituting a book would fall within the definition of plant . It cannot be disputed that these documents regarded collectively will have to be treated as a book , for, the dictionary meaning of that word is nothing but a a number of sheets of paper, parchment, etc., with writing or printing on them, fastened together along one edge, usually between protective covers; literary of scientific work, anthology, etc., distinguished by length and form from a magazine, tract etc. (vide Webster s New World Dictionary). But apart from its physical form, the question is whether these documents satisfy the functional test indicated above. Obviously, the purpose of rendering such documentation service by supplying these documents to the assessee was to enable it to undertake its trading activity of manufacturing theodolites and microscopes and there can be no doubt that these documents had a vital function to perform in the manufacture of these instruments: in fact it is with the aid of these complete and up-to-date sets of documents that the assessee was able to commence its manufacturing activity and these documents real ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fitably. Further, the road is a public road and the assessee is not the owner of the road and the road was upgraded/ constructed not exclusively by the assessee but the assessee had made contribution for doing the upgradation/ construction work and the remaining contribution was made by the Zilla Parishad. Therefore, the tribunal agreed with the assessee and dismissed the cross-objection filed by the revenue. The decision of the Hon ble Supreme Court in Sugar Factory Oil Mills (P.) Ltd. Versus CIT, U.P. 1980 125 ITR 293 will clearly support the case of the assessee. In the said case, the Court found that the roads under the scheme were undoubtedly advantageous to the business of the said assessee as they facilitated the transport of sugarcane to the factory and the outflow of manufactured sugar from the factory to the market centres, and therefore, it facilitated the business operations of the said assessee and enabled the management to conduct the assessee s business in a more efficient and profitable manner. The operative portion of the decision read as follows: But the position is different when we come to the second item of expenditure of Rs. 50,000. There the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... good reason (in the absence of special circumstances leading to an opposite conclusion) for treating such an expenditure as properly attributable not to revenue but to capital. This test enunciated by Lord Cave L.C. is undoubtedly a well-known test for distinguishing between capital and revenue expenditure, but it must be remembered that this test is not of universal application and, as the parenthetical clause shows, it must yield where there are special circumstances leading to a contrary conclusion. The non-universality of this test was emphasized by Lord Radcliffe in Commissioner of Taxes v. Nchanga Consolidated Copper Mines Ltd. [1965] 58 ITR 241 (PC), where the learned Law Lord said in his highly felicitous language that it would be misleading to suppose that in all cases securing a benefit for the business would be, prima facie, capital expenditure, so long as the benefit is not so transitory as to have no endurance at all . No it is clear on the facts of the present case that by spending the amount of Rs. 50,000, the assessee did not acquire any asset of an enduring nature. The roads which were constructed around the factory with the help of the amount of Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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