INTERNATIONAL AIRPORTS AUTHORITY OF INDIA vs Commissioner of Income Tax

Arijit Pasayat, C.J.

At the instance of assessed following question has been referred for opinion of this court by the Tribunal, Delhi Bench E (hereinafter referred to as the Tribunal), u/s 256(1) of the Income Tax Act, 1961 (hereinafter referred to as the Act) .

"Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the expenditure of Rs. 19.89 lakhs was a capital expenditure as it gave the assessed an advantage of enduring nature ?"

Dispute relates to assessment year 1977-78.

Factual background in nutshell is as follows.

assessed, a government corporation was formed on 1-4-1972, under the Act of Parliament to take over the airports in metropolitan towns, including Palam Airport at Delhi. During the relevant assessment year assessed paid Rs. 19.89 lakhs to Delhi Development Authority (hereinafter referred to as ''the DDA'') for development of an alternative site for the residence of Mangolpuri villagers who were to be evicted as their lands acquired for extention of international airport at Delhi. As the said villagers were not vacating the land, a scheme was finalised for developing alternative site for the said villagers. The assessing officer held that the dispute regarding vacation of land had been continuing even before Delhi International Airport was vested in the assessed-corporation and since the time when the said airport was under the authority of Ministry of Tourism and Civil Aviation. It was held that the expenditure is question was incurred to facilitate physical control of the assessed over the land and for the purpose of providing alternative accommodation to the residents of the village by the DDA by constructing small houses for them on the alternative site and the expenditure was thus in connection with the acquisition and physical control. It was concluded that the assessed was to have an enduring benefit from the land acquired for the purpose of extension of international airport at Delhi. Matter was carried in appeal by the assessed before the Commissioner (Appeals), who held that the assessing officer''s action was justified. In further appeal, Tribunal upheld the orders of the authorities below and observed that there was no evidence to show that the assessed or its predecessor had already acquired the village site. On the contrary, circumstantial evidence like underground tunnel for use of villagers as passage would clearly go to show that the villagers were legally entitled to stay in the village site and had easementary right of passage over the runway owned by the assessed- corporation. Further, the villagers claimed title by adverse possession.

Accordingly it was held that the expenditure incurred for removal of the villagers and resettling them at another site was a capital expenditure. On being moved by the assessed for reference, question as set out above has been referred for opinion of this court.

We have heard learned counsel for the revenue. There is no appearance on behalf of assessed in spite of notice. Learned counsel for the revenue submitted that the Tribunal has analysed the factual position and has come to hold that the expenditure incurred resulted in bringing into existence an enduring benefit and, Therefore, was rightly held to be capital in nature.

In V. Jaganmohan Rao and Others Vs. Commissioner of Income Tax and Excess Profits Tax, Andhra Pradesh, it was held that where money is paid to perfect a title or as consideration for getting rid of a defect in the title or a threat of litigation the payment would be a capital payment and not a revenue payment. In Sitalpur Sugar Works Ltd. Vs. Commissioner of Income Tax, Bihar and Orissa, ) it was held that where expenditure was incurred by the assessed for shifting the factory from one place to another to improve the business, same was capital expenditure in nature. Similar view was also expressed by the Bombay High Court in Hardiallia Chemicals Ltd. Vs. Commissioner of Income Tax,

Above being the position, the conclusions of the authorities below and the Tribunal are in order. We answer the question referred in the affirmative, in favor of the revenue and against the assessed.

The reference stands disposed of.