2008 (1) TMI 313

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..... re lead to increase in production of sugarcane - assessee derived benefit out of this expenditure, but did not create any asset for itself – hence, tribunal is right in holding that the deduction claimed by the assessee was allowable as revenue expenditure under section 37(1)
C. N. RAMACHANDRAN NAIR and T. R. RAMACHANDRAN NAIR JJ. P. K. R. Menon and George K. George for the appellant. B. S. K .....

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..... respondent-assessee which explains the nature of contribution made. It is clear from the minutes that the amount was paid at the suggestion of the Minister to the assessee to meet the cost of expenditure incurred by the Irrigation Department for improving an irrigation canal which supplies water to an area under sugarcane cultivation. The total cost was stated to be Rs. 112 lakhs and the assessee .....

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..... il Mills P. Ltd. v. CIT [1980] 125 ITR 293 (SC), CIT v. Associated Cement Companies Ltd. [1988] 172 ITR 257 (SC), and the decision of the Bombay High Court in National Organic Chemical Industries Ltd. v. CIT [1993] 203 ITR 410. On second the Tribunal endorsed the view of the Commissioner of Income-tax (Appeals) and dismissed the Departmental appeal against which this is filed. 4. Senior counsel a .....

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..... out of the same, it is in an indirect manner. The improvement of the irrigation canal obviously will lead to increase of water supply for irrigation to the sugarcane cultivated area. This will necessarily lead to increase in production of sugarcane and there is every reason for the assessee to expect better supply of sugarcane which is its raw material and which is otherwise a scarce commodity as .....

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..... he contribution in this case is also made by the company at the suggestion of the State Minister concerned, who suggested sharing of cost by the company, as it goes to the advantage of the company in the form of better supply of sugarcane. Therefore we are of the view that the Tribunal is right in holding that the deduction claimed by the assessee was allowable as a revenue expenditure under secti .....

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