Commissioner of Income Tax vs Janak Steel Tubes (P.) Ltd.

Gokal Chand Mital, J.—The assessee is a private, limited company and undertakes manufacturing of pipes and tubes. The assessee, along with three other pipe manufacturing companies, constructed a railway platform at a grid siding at Hissar for carrying out its business activities in a profitable and advantageous manner. The assessee-company had contributed Rs. 43,333 in doing so. In the relevant assessment year 1981-82, the assessee claimed the amount of Rs. 43,333 as revenue expenditure. The Income Tax Officer disallowed the same on the ground that it was capital expenditure. The assessee failed before the Commissioner of Income Tax (Appeals), but succeeded before the Tribunal. In this background, the following question has been referred for opinion :

"Whether, on the facts and in the circumstances of the case, the Tribunal has been right in law in allowing an'' expenditure of Rs. 43,333 for the construction of a railway platform as revenue expenditure ?"

On a consideration of the matter, we are of the opinion that the referred question deserves to be decided in favour of the assessee in view of the two decisions of the Supreme Court and one of this court. In L.B. Sugar Factory and Oil Mills (P) Ltd., Pilibhit Vs. Commissioner of Income Tax , U.P., Lucknow, , the Supreme Court allowed the deduction of the contribution made by the assessee to meet the cost of construction of a road after recording a finding that the road was advantageous to the business of the assessee as it facilitated the transport of sugarcane to the factory and the outflow of manufactured sugar from the factory to the market centres, and the expenditure was considered on revenue account In Commissioner of Income Tax, Bombay City-I, Bombay Vs. Associated Cement Companies Ltd., Bombay, , the Supreme Court allowed the deduction as revenue expenditure of an amount spent to provide water pipe lines and electrical facilities to the municipality as the assessee secured the advantage by incurring the expenditure. Similarly, this court, in Commissioner of Income Tax Vs. Panbari Tea Company Limited, , allowed deduction of the amount paid to the Electricity Board against the charges for laying service lines, etc., as revenue expenditure. On behalf of the R.J. Trivedi (HUF) Vs. Commissioner of Income Tax, and Indian Explosives Ltd. Vs. Commissioner of Income Tax, have been cited. Both these decisions are distinguishable on facts. If they can be read to mean that they are applicable to the facts of the case, then we are of the opinion that they do not lay down the correct law in view of the aforesaid Supreme Court decisions. Accordingly, we prefer to follow the Supreme Court decisions and the decision of this court in coming to the conclusion that the amount spent by the assessee on the construction of a railway platform was for carrying on its business activities in a profitable way which was advantageous to the assessee and the same has rightly been allowed as revenue expenditure. Hence, we answer the referred question in favour of the assessee, in the affirmative.