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TMI Blog1984 (11) TMI 102X X X X Extracts X X X X X X X X Extracts X X X X ..... that ground allowed the said deduction. Subsequently, the audit party brought to the notice of the ITO the decision of the Supreme Court in Sitalpur Sugar Works Ltd. v. CIT [1963] 49 ITR 160, wherein the Supreme Court had held that expenses of the above category were capital in nature and not allowable as deduction. On the basis of this information, the ITO reopened the assessment under section 147(b) of the Income-tax Act, 1961 ('the Act'). He overruled the objection that the reopening was bad in law. On merits, he held that the said expenses were capital in nature and, as such, not allowable. He, accordingly, disallowed the same. The assessee went in appeal and the Commissioner (Appeals) rejected the contention against the validity of reo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pur Sugar Works Ltd.'s case, the assessee-company carried on the business of manufacturing sugar in its factory situated originally at Sitalpur. That place suffered from the ravages of floods and good quality sugarcane was not available in sufficient quantities there. The assessee, therefore, shifted the factory to Garaul and in the process of dismantling the building and machinery and transporting and erecting them at Garaul incurred an expenditure, which was claimed as revenue expenditure. The Supreme Court held that the expenditure was not incurred for the purpose of carrying on the concern but was incurred in setting up the concern with a greater advantage for the trade than it had in its previous set up. According to the Supreme Court, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eme Court squarely applies to the facts of the present case, and as such, there is no escape from the conclusion that expenses were capital in nature. 5. We do not agree with the contention of the learned representative for the assessee to the effect that decision in Sitalpur Sugar Works Ltd.'s case, was distinguishable. The distinction, which the learned representative for the assessee sought to bring about, was that in the case of Sitalpur Sugar Works Ltd., the factory was shifted with a view to improve the business and put the business in better shape, while it was not so in the present case. We are unable to agree. The trading conditions at Amravati were adverse because of the monopoly scheme of the Government. Consequently, the facto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evenue decision in India Pistons Repco Ltd. v. CIT [1983] 143 ITR 424 (Mad.) was cited, wherein relying on the decision of the Supreme Court in Sitalpur Sugar Works Ltd.'s case, it was held that expenditure incurred in dismantling the factory and re-establishing the same in a new place constituted capital expenditure. For the reasons already given, we uphold the order of the Commissioner (Appeals), confirming the disallowance of the expenses in question. 6. At the time of the original assessment, the advance tax paid by the assessee exceeded the tax determined as payable and, consequently, the assessee had been granted interest under section 214 of the Act. On reassessment, the tax payable was determined at Rs. 24,864, which was more than ..... X X X X Extracts X X X X X X X X Extracts X X X X
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