COMMISSIONER OF INCOME TAX vs. DELHI STATE CIVIL SUPPLIERS CORP LTD

IN THE HIGH COURT OF DELHI AT NEW DELHI . 9. . ITA 909/2010 . COMMISSIONER OF INCOME TAX ..... Appellant Through: Mr. N.P. Sahni, Adv. . versus . DELHI STATE CIVIL SUPPLIERS CORP LTD ..... Respondent Through: None . CORAM: HON'BLE THE CHIEF JUSTICE HON'BLE MR. JUSTICE MANMOHAN . O R D E R 23.07.2010 . The present appeal preferred under Section 260A of the Income Tax Act, 1961 (for brevity ?the Act?) is directed against the order dated 25.3.2009 passed by the Income Tax Appellate Tribunal (for short ?the tribunal?) in ITA No. 2778/DEL/06 pertaining to assessment year 2003-04. The singular question that arises for consideration in this appeal is whether the tribunal was justified in allowing the deduction that was claimed by the assessee towards revenue expenditure on the foundation that he has spent Rs.95.3 lacs because of a notification issued by the Government to collect Rs.5/- on sale of bottle of country made liquor. The tribunal in paragraph 7 has held thus: ITA 909/2010 Page 1 of 3 ?7. We have duly considered the rival contentions and gone through the record carefully. The business of assessee is not to construct the flyover and pedestrian path. Its business is sale of country made as well as IMFL liquor in the national capital territory of Delhi. For this purpose it is required to take a license from the Govt. of Delhi. The Govt. has directed the assessee to collect Rs.5/- on sale of per bottle of country made liquor. Thus its licence is subject to the conditions imposed by the Govt. In a way collection of Rs.5/- on each bottle of country made liquor sold by the assessee is a levy which is direct related to its business. The amount of Rs.95.3 lac collected by the assessee is by virtue of the Govt.?s notification and has been collected in the shape of levy. This is altogether immaterial for the assessee as to how this amount will be incurred by the Delhi Govt. As far as contention of the Ld. DR that this amount will be incurred on construction of flyover and pedestrian path. Therefore, had to be treated as a capital in nature is concerned we are of the opinion that assessee is not required to construct such facilities. Therefore facts are quite distinguishable on this aspect. In the case of . . DTandTDC this argument was raised but that was rejected by the Tribunal. There also the amount collected as per the Govt. notification was carved out separately and was claimed as a deduction for running the business of sale of liquor. The tribunal held that expenses is of revenue in nature but it will be allowed to the assessee as and when such expenses was actually incurred on construction of the infrastructure facilities in the shape of flyovers and pedestrian path. In the present case this expenses is an essential element for running its business. The AO himself did not disallow the expenses even in a scrutiny assessment in asstt. year 2001-02 and 2002-03. Similarly disallowance was made in 2004-05 stands deleted by the CIT(A) and the order has been upheld by the Tribunal. Taking into consideration all these aspects we do not find any merit in this appeal. It is dismissed.? . ITA 909/2010 Page 2 of 3 In our considered opinion, the decision of the tribunal is absolutely impeccable in view of the fact that the concept of capital expenditure does not attract to a case of this nature. In the result, the appeal, being devoid of merit, stands dismissed in limine. . . CHIEF JUSTICE . . . MANMOHAN, J JULY 23, 2010 pk . . . . . . . . . . . . . . . . . . . ITA 909/2010 Page 3 of 3