Law:

Section:

Section 37(1) of Income-tax Act, 1961 - Business expenditure - Allowability of - Assessment year 1995-96 - Assessee claimed deduction of expenditure incurred during assessment year 1993-94 for purpose of black topping on ground, repairs and levelling of platform, godowns, roads etc. as deferred revenue expenditure - Assessing Officer disallowed said claim on ground that expenditure was not incurred in relevant previous year - He further held that expenditure towards asphalting work of black topping was capital in nature as it would give enduring benefit to assessee's business - Whether since black topping on ground and levelling of platform, godowns, roads, etc. were for purpose of smooth functioning of business, it could not be considered to be an enduring benefit of capital nature - Held, yes - Whether therefore, claim of assessee was to be allowed - Held, yes FACTS The assessee claimed deduction of expenditure incurred during the assessment year 1993-94 at their leased premises for the purpose of black topping on the ground, repairs and levelling of platforms, godown, roads, etc. as deferred revenue expenditure. The Assessing Officer found that the expenses had been incurred by the subsidiary company and were transferred to the assessee's account by way of debit note. Therefore, he disallowed the expenditure on account of not having been incurred in the relevant previous year, as it was not claimed in the original return. With respect to asphalting work of black topping, the Assessing Officer held the same to be capital expenditure, as it would give enduring benefit to the container freight station. On appeal, the Commissioner (Appeals) reversed the order of the Assessing Officer. On revenue's, appeal, the Tribunal confirmed the order of the Commissioner (Appeals). On appeal: HELD The findings arrived by the Commissioner (Appeals) that the expenditure incurred in the previous year was not supported by necessary evidence and it did not make vital difference in the claim of the assessee, did not call for any interference. Further, the reasoning of the Commissioner (Appeals) that the receipt of debit note in the previous year had not been disputed by the…

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