High Court Of Delhi
International Airports Authority Of India vs. CIT
Section 37(1)
Asst. Year 1977-78
Arijit Pasayat, C.J. & D.K. Jain, J.
IT Ref. No. 37 of 1983
15th October, 2001
Counsel Appeared
None, for the Petitioner : Mrs. Prem Lata Bansal, for the Respondent
JUDGMENT
ARIJIT PASAYAT, C.J. :
At the instance of assessee following question has been referred for opinion of this Court by the Tribunal, Delhi Bench ‘E’ (for short the Tribunal), under s. 256(1) of the IT Act, 1961 (in short the Act) : “Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the expenditure of Rs. 19.89 lakhs was a capital expenditure as it gave the assessee an advantage of enduring nature ? Dispute relates to asst. yr. 1977-78.
2. Factual background in nutshell is as follows. Assessee, a Government corporation was formed on 1st April, 1972, under the Act of Parliament to take over the airports in metropolitan towns, including Palam Airport at Delhi. During the relevant assessment year assessee paid Rs. 19.89 lakhs to Delhi Development Authority (in short ‘the DDA’) for development of an alternative site for the residence of Mangolpuri villagers who were to be evicted as their lands acquired for extention of international airport at Delhi. As the said villagers were not vacating the land, a scheme was finalised for developing alternative site for the said villagers. The AO held that the dispute regarding vacation of land had been continuing even before Delhi International Airport was vested in the assessee- corporation and since the time when the said airport was under the authority of Ministry of Tourism and Civil Aviation. It was held that the expenditure is question was incurred to facilitate physical control of the assessee over the land and for the purpose of providing alternative accommodation to the residents of the village by the DDA by constructing small houses for them on the alternative site and the expenditure was thus in connection with the acquisition and physical control. It was concluded that the assessee was to have an enduring benefit from the land acquired for the purpose of extension of international airport at Delhi. Matter was carried in appeal by the assessee before the Commissioner of Income-tax (Appeals) [in short ‘the CIT(A)’], who held that the AO’s action was justified. In further appeal, Tribunal upheld the orders of the authorities below and observed that there was no evidence to show that the assessee or its predecessor had already acquired the village site. On the contrary, circumstantial evidence like underground tunnel for use of villagers as passage would clearly go to show that the villagers were legally entitled to stay in the village site and had easementary right of passage over the runway owned by the assessee-corporation. Further, the villagers claimed title by adverse possession. Accordingly it was held that the expenditure incurred for removal of the villagers and resettling them at another site was a capital expenditure. On being moved by the assessee for reference, question as set out above has been referred for opinion of this Court.
3. We have heard learned counsel for the Revenue. There is no appearance on behalf of assessee in spite of notice. Learned counsel for the Revenue submitted that the Tribunal has analysed the factual position and has come to hold that the expenditure incurred resulted in bringing into existence an enduring benefit and, therefore, was rightly held to be capital in nature.
4. In V. Jaganmohan Rao vs. CIT (1970) 75 ITR 373 (SC) : TC 17R.1159 it was held that where money is paid to perfect a title or as consideration for getting rid of a defect in the title or a threat of litigation the payment would be a capital payment and not a revenue payment. In Sitalpur Sugar Works Ltd. vs. CIT (1963) 49 ITR 160 (SC) : TC 16R.1376 it was held that where expenditure was incurred by the assessee for shifting the factory from one place to another to improve the business, same was capital expenditure in nature. Similar view was also expressed by the Bombay High Court in Hardiallia Chemicals Ltd. vs. CIT (1996) 218 ITR 598 (Bom) : TC S17.1821.
5. Above being the position, the conclusions of the authorities below and the Tribunal are in order. We answer the question referred in the affirmative, in favour of the Revenue and against the assessee.
The reference stands disposed of.
[Citation : 254 ITR 657]
