Case Law Details
Rudraksh Detergent & Chemicals Pvt Ltd. Vs ACIT (ITAT Rajkot)
Controversy before us relates whether the expenses incurred by the assessee on the road construction amounts to capital expenditure in the given facts and circumstances. There is no ambiguity that the assessee shall gain the benefit out of the road expenses incurred by it. But the benefit is in the nature of smooth and efficient running of the business. As such the benefit to the assessee, though enduring. in nature, but the same is not on capital transaction rather it directly relates to the revenue transaction of the assessee. Thus, the same i.e. road expenses cannot be categorized as capital in nature. Besides the above, we also note that there is not coming any fixed assets into existence out of such expenditure. Thus in the absence of any fixed assets, we are of the view that the impugned expenses cannot be treated as capital in nature.
It seems to us that the assesse is not enjoying any benefit of enduring nature out of the expenditures discussed above. Hence, we set aside the finding of the learned CIT (A) and direct the AO to delete the addition made by him.
FULL TEXT OF THE ORDER OF ITAT RAJKOT
The captioned appeal has been filed at the instance of the assessee against the order of the Ld. Commissioner of Income Tax (Appeals)-3 (in short the Ld. CIT(A)), Rajkot dated 27/01/2020 arising in the matter of assessment order passed under Section 143(3) of the Income Tax Act, 1961 (here-in-after referred to as “the Act”) relevant to the Assessment Year 2011-12.
Please become a Premium member. If you are already a Premium member, login here to access the full content.
