one of the factories of the assessee was situated at shahabad which is number in the state of karnataka but was at the relevant time forming part of the then state of hyderabad.
on an appeal by the companypany the appellate asstt.
the assessment year in question is the year 1959 60 and the companyresponding previous year was ended on 31st july 1958.
the assessee company was to be the owner of the pipelines installations and other accessories pertaining to the water supply lying within the companypanys premises and on the land a little outside the premises.
under the agreement the assessee initially agreed to supply certain quantity of water to the shahabad town at a companycessional rate and for the purpose of such supply the assessee companypany was to undertake and companyplete at its own cost the water supply scheme for the town and village involving laying of the main water pipelines.
these pipelines installations etc.
it also agreed to concrete free of charge the existing main road from the factory upto the railway station via the main bazar.
the income tax appellate tribunal passed an order directing the income tax officer to scrutinize the expenditure and allowed the deduction of the expenditure to the extent that it did number result in the companypany becoming the owner of any asset.
the question referred to the companyrt for consideration was as follows whether on the facts and in the circumstances of the case the expenditure of rs.209459 or any portion thereof incurred by the companypany in the accounting period relevant to the assessment period 1959 60 was allowable as deduction in determining the profits of the companypany for the assessment year 1959 60.
under clause 23 in companysideration of the assessee companypany having agreed to provide these amenities supply and services the govt.
from the judgment and order dated 15.11.1973 of the bombay high companyrt in income tax reference number 15 of 1964.
the relevant facts are as follows the assessee the associated cement companypanies limited has a chain of factories manufacturing cement all over the country.
during the relevant previous year the only work done was with respect to provision of water supply to the said town and village.
had to be maintained by the minicipal companymittee in future.
the income tax officer disallowed this amount holding that it was a capital expenditure on the basis that as a result of this expenditure the companypany derived an advantage of an enduring nature namely that it would number have to pay municipal taxes for a period of fifteen years.
the revenue preferred an appeal to the income tax appellate tribunal.
civil appellate jurisdiction civil appeal number 512 nt of 1975.
in the judgment appealed against the learned judges have referred to the dictum of viscount cave l.c.
in september 1956 the government of hyderabad had decided to include the area on which the said factory at shahabad was situated within the municipal limits of the shahabad town municipality.
misra for the respondents.
the judgment of the companyrt was delivered by kania j. this is an appeal on a certificate given under section 66 a ii of the indian income tax act 1922 against a judgment and order of a division bench of the bombay high companyrt.
according to the assessee a sum of rs.209459 was spent during the year of account under this agreement and this amount pertained to the laying of pipelines installations and accessories of which the shahabad municipality became the owner under the agreement and this amount was claimed as a deduction.
the shahabad municipal companymittee was to take over possession of the remaining pipelines installations and accessories and it was declared to be the owner thereof.
dua and ms.
the judgment against which the appeal is directed was rendered on a reference under section 66 1 of the indian income tax act 1922.
of hyderabad undertook number to include any of the properties of the companypany companyprising the cement factory the main workshop the housing companyony quarries and the limestone bearing lands within the limits of the shahabad minicipality or the village panchayat or like body for a period of fifteen years from the date of the agreement.
the only ground on which the claim of the assessee for deduction of the said expenditure under section 10 2 xv of the indian income tax act was resisted that it was capital expenditure.
the appeal is preferred by the commissioner of income tax and the assessee the associated cement companypanies limited is the respondent.
a. subhashini for the appellant.
verma and d.n.
c. manchanda k.c.
harish salve mrs.
