Commissioner of Income Tax vs Govind Grah Nirman Sahakari Samiti Ltd.

On an application u/s 256(1) of the Income Tax Act, 1961, the Tribunal has referred the following question for our opinion :

"Whether, on the facts and in the circumstances of the case, the Appellate Tribunal erred in holding that the expenditure of Rs. 30,183 incurred by the assessee for development of land was a revenue nature and not of a capital nature and was therefore allowable ?"

The Income Tax Officer has disallowed Rs. 30,183 out of the aforesaid expenses on the ground that the expenses to that extent were not incidental to the activities carried on by the assessee. In appeal before the Deputy Commissioner of Income Tax (Appeals), the Deputy Commissioner of Income Tax (Appeals) has treated this amount as a capital expenditure, In appeal before the Tribunal, the Tribunal held that the expenditure incurred in developing the land, laying down pipe lines, dividing the land into small plots were required to be incurred for the purpose of carrying on the business of selling the stock-in-trade, i.e., the land after developing and dividing it into small plots.

None appeared for the assessee.

Heard learned counsel for the Revenue, Mr. Singhi.

The facts found by the Tribunal that the land which has been developed and the expenses which are incurred in developing the land, that land has been treated and found by the Tribunal as stock-in-trade.

In view of the finding of the Tribunal, no interference is called for in the order of the Tribunal.

In the result we answer the question that the Tribunal has not committed any error in allowing the expenditure of Rs. 30,183 as revenue expenditure. The reference so made stands disposed of accordingly.