High Court Of Punjab & Haryana
CIT vs. Industrial Cables (India) Ltd.
Section 37(1)
Jawahar Lal Gupta & N.K. Sud, JJ.
IT Ref. No. 110 of 1987
8th January, 2002
Counsel Appeared
R.P. Sawhney with M.S. Guglani & N.G. Sharma, for the Revenue : A.K. Mittal, for the Assessee
JUDGMENT
JAWAHAR LAL GUPTA, J. :
The assessee/company set-up an industrial unit in a backward area. It constructed temporary quarters for the labour. It also provided a Kacha (temporary) road for the quarters. The assessee claimed that the expense was a revenue expenditure. The AO did not accept the claim. On appeal, the CIT(A) found that the construction was temporary. The entire expenditure was admissible as revenue expenditure under s. 37 of the IT Act, 1961. On appeal, the Tribunal held that the deduction had been rightly allowed by the appellate authority.
2. The Revenue filed a petition under s. 256(1) of the Act. On consideration of the matter, the Tribunal has referred the following question for the opinion of this Court. “Whether, on the facts and in the circumstances of the case the Appellate Tribunal was right in law in allowing expenditure on Kacha road linking workers quarters with factory as assessee’s revenue expenditure ?”
3. Admittedly the company had made a Kacha road. It was not an asset of an enduring nature. Thus, it was rightly treated as a revenue expenditure for the purpose of s. 37 of the Act. Even if it be treated as a capital expenditure, in view of the admitted position that it was a temporary structure, the assessee was entitled to claim 100 per cent depreciation.
In view of the above, the question is answered in the affirmative i.e., against the Revenue and in favour of the assessee.
No costs.
[Citation : 254 ITR 267]