The Expenditure incurred in relation to new plant which was still un-constructed was not revenue expenditure

Last updated: 20 March 2012

Court :
INCOME TAX APPELLATE TRIBUNAL

Brief :
It would be appropriate to give a brief background of the case before we proceed to deal with the miscellaneous application. The revenue in the ground No.6 had raised dispute regarding deletion of addition by CIT(A) in relation to expenditure incurred on construction of access road to the factory and laying of 132 KV electric transmission line in relation to Birla Periclase Plant. The Birla Periclase Plant was a new line of business. The assessee argued that it was a multi-product and well diversified company having several units in which there was complete interconnection, interlacing, interdependence and unity of control and therefore, the new unit was part of the existing business. The AO however disallowed the expenditure as capital expenditure. In appeal, the CIT(A) after observing that the assessee was not owner of the approach road and also after referring to some judgments allowed the claim of the assessee aggrieved by which, revenue filed appeal before the Tribunal.

Citation :
M/s. Aditya Birla Nuvo Ltd.(formerly Indian Rayon and Industries Ltd.)A-4, Aditya Birla Centre S.K. Ahire Marg, Worli Mumbai-400 030.PAN No.: AAACI 1747 H (Applicant) Vs.Asstt. Commissioner of Income Tax - 3(2)Mumbai.(Respondent)