D.C.I.T., Circle-10, Kolkata, Kolkata V. M/s Ramuk Scan Investment Pvt.Ltd., Kolkata

ITA 2763/KOL/2013

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 9425 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 1 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-02-2017
• Appeal Filed By: Department
• Bench Allotted: B
• Next Hearing Date: 20-12-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 13-12-2013
• Court: TRIBUNAL
• Assessee Lawyers: N O N E
• Keywords: Capital asset; Depreciation; Business expenditure; Source of fund; Notional interest; Commercial expediency; Revenue expenditure; Capital expenditure
• Section: 143(3); 37(1); 80G; 37

Judgement Text

1 ITA NO.2763/KOL/2013 RAMUK SCAN INV. PVT. LTD.. AY 2006-07 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: KOL KATA [BEFORE SHRI M. BALAGANESH, AM & SHRI S. S. VISWA NETHRA RAVI, JM] I.T.A NO. 2763/KOL/2013 ASSESSMENT YEAR: 2006-07 DEPUTY COMMISSIONER OF INCOME-TAX, VS. M/S. RAMUK SCAN INVESTMENT PVT. LTD. CIRCLE- 10, KOLKATA. (PAN: AACCR0626A) ( APPELLANT ) ( RESPONDENT ) DATE OF HEARING: 20.12.2016 DATE OF PRONOUNCEMENT: 03.02.2017 FOR THE APPELLANT: SHRI NICHOLAS MURMU, JCIT, SR. DR FOR THE RESPONDENT: N O N E ORDER PER SHRI M. BALAGANESH, AM : THIS APPEAL BY REVENUE IS ARISING OUT OF ORDER OF C IT(A)-XII, KOLKATA VIDE APPEAL NO. 608/XII/CIR-10/08-09 DATED 24.09.2013. ASSESSME NT WAS FRAMED BY DCIT, CIRCLE-10, KOLKATA U/S. 143(3) OF THE INCOME TAX ACT, 1961 (HE REINAFTER REFERRED TO AS THE ACT) FOR AY 2006-07 VIDE HIS ORDER DATED 18.12.2008. 2. THE FIRST ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE LD CITA IS JUSTIFIED IN DELETING THE DISALLOWANCE OF INTEREST AMOUNTING TO RS. 32,41,130/- IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 2.1. THE BRIEF FACTS OF THIS ISSUE IS THAT THE AS SESSEE HAD BEEN CARRYING ON BUSINESS IN FINANCING LOANS AND INVESTMENTS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER ASKED THE ASSESSEE REGARDING INTE REST OF RS. 32.41.130/- DEBITED TO THE PROFIT & LOSS ACCOUNT. THE ASSESSEE EXPLAINED THAT THE AFORESAID INTEREST REPRESENTED THE INTEREST CHARGED BY THE BANK IN RELATION TO THE OVE RDRAFT FACILITIES AVAILED OF BY THE ASSESSEE AGAINST ASSESSEES FIXED DEPOSIT WITH THE CONCERNED BANK. IT WAS DULY EXPLAINED BY THE ASSESSEE THAT THE CONCERNED FIXED DEPOSIT HAS BEEN MADE OUT OF THE ASSESSEES OWN FUND. IT WAS ALSO POINTED OUT BY THE ASSESSEE TO THE ASSESSI NG OFFICER THAT THE ASSESSEE HAD EARNED INTEREST ON FIXED DEPOSITS AGGREGATING TO RS. 20,25 ,490/- AND ACCORDINGLY NET INTEREST EXPENSES OF THE ASSESSEE HAD BEEN RS. 12,15,640/- ( RS. 32,41,130/- LESS RS. 20,25,490/-. THE ASSESSEE SUBMITTED THAT THE OVERDRAFT FACILITY AGAI NST THE FIXED DEPOSIT HAD BEEN UTILIZED FOR 2 ITA NO.2763/KOL/2013 RAMUK SCAN INV. PVT. LTD.. AY 2006-07 THE PURPOSE OF THE ASSESSEES INVESTMENTS IN SUBSID IARIES OF THE ASSESSEE IN THE FORM OF EQUITY SHARE CAPITAL AND ADVANCES TO RUN THE BUSINE SS OF THE SAID SUBSIDIARIES AND FOR OTHER BUSINESS PURPOSE. IT WAS SUBMITTED BY THE ASSESSEE THAT THE AFORESAID INVESTMENTS SHOULD BE CONSIDERED AS HAVING BEEN MADE IN THE COURSE OF THE ASSESSEES BUSINESS IN LOANS AND INVESTMENT. THE ASSESSING OFFICER HELD THAT INTERES T BEARING BORROWINGS HAD BEEN UTILIZED BY THE ASSESSEE IN PROVIDING LOANS TO ITS SUBSIDIAR IES AND IN MAKING INVESTMENTS IN SUCH SUBSIDIARIES. THE ASSESSING OFFICER DID NOT ACCEPT THE ASSESSEE'S BUSINESS AND DISALLOWED THE ENTIRE INTEREST OF RS. 32,41,130/-. THE ASSESSING O FFICER DID NOT ACCEPT THE ASSESSEES BUSINESS AND DISALLOWED THE ENTIRE INTEREST OF RS.3 2,41,130/-. THE ASSESSING OFFICER DID NOT TAKE INTO ACCOUNT OF THE FACT THAT THE ASSESSEE HAD EARNED INTEREST ON FIXED DEPOSITS FOR A SUM OF RS. 20,25,490/- AND THEREFORE THE ASSESSEES NET INTEREST EXPENSES HAD BEEN ONLY RS.12,15,640/- (RS. 32,41,130/- LESS RS. 20,25,490/ -). 2.2. BEFORE THE LD CIT(A), THE ASSESSEE ARGUED THA T RAMUK SCAN INVESTMENT PVT. LTD. IS OWNED BY MR. BARUN BICKY CHAKRABORTY (AN INDIAN SET TLED IN SWEDEN). THIS COMPANY FORMED FOR THE PURPOSE OF INVESTMENT IN INDIA THROU GH THIS COMPANY. MAIN SOURCE OF FUND OF RAMUK SCAN INVESTMENT PVT. LTD. IS THROUGH MR. B ARUN BICKY CHAKRABORTY. RAMUK SCAN INVESTMENT PVT. LTD. HAS INVESTED MONEY IN MERIDIAN MEDICAL RESEARCH & HOSPITAL LTD. FOR THE HEALTHCARE BUSINESS AND IN CAROLINA FOOD AND IN DUSTRIES PVT. LTD. FOR HOTEL AND RESTAURANT BUSINESS. UP TO 31.03.2006, BARUN BICKY CHAKRABORTY HAS INVESTED RS. 163.95 LACS AS EQUITY CAPITAL AND RS. 512.031ACS INTEREST FREE LOAN IN RAMUK SCAN. RAMUK SCAN HAS INVESTED RS. 390.92 LACS IN FD AND AGAINST THAT THEY HAVE TAKEN OVERDRAFT OF RS.380.40 LACS, ACCORDINGLY THEY HAVE RECEIVED RS. 20.25 LACS INTEREST ON FD AND PAID RS. 32.41 LACS ON OVERDRAFT AGAINST FD. RAMUK SCAN INVESTED IN CA ROLINA RS.79 LACS AS EQUITY CAPITAL AND RS. 260 LACS AS ADVANCE. THE ADVANCE WAS GIVEN T O CAROLINA ON SHORT TERM BASIS AS CAROLINA HAD APPLIED FOR PROJECT FINANCING LOA N WITH SYNDICATE BANK. ADVANCE GIVEN TO CAROLINA WAS FOR THE REQUIREMENT OF THE RUNNING OF BUSINESS OF CAROLINA TO START THE RESTAURANT BUSINESS AND AS SUCH THE SAME WOULD F ALL UNDER THE AMBIT OF COMMERCIAL EXPEDIENCY. THE ASSESSEE PLACED RELIANCE ON T HE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF S. A. BUILDERS LTD. VS. CIT REPORTED IN 288 ITR 1 ( SC ) IN SUPPORT OF ITS CONTENTIONS. THE ASSESSEE STATED THAT IT HAD INVESTED THE FUNDS AS SHARE CAPITAL TO ITS SUBSIDIARIES / SISTER CONCERNS M/S. MERI DIAN MEDICAL RESEARCH & HOSPITALS 3 ITA NO.2763/KOL/2013 RAMUK SCAN INV. PVT. LTD.. AY 2006-07 LIMITED AND M/S CAROLINA FOOD & INDUSTRIES PVT LTD AND ADVANCED THE FUNDS TO ITS SUBSIDIARY M/S CAROLINA FOOD & INDUSTRIES PVT LTD F OR BUSINESS PURPOSE. IT WAS PLEADED THAT THE FORMER IS ENGAGED IN HOSPITAL BUSINESS WHE REAS THE LATTER IS INVOLVED IN RESTAURANT BUSINESS. NONE OF THE FUNDS HAVE BEEN UTILIZED BY THE DIRECTORS OF THE SISTER CONCERNS FOR THEIR PERSONAL BENEFITS BUT THE SAME HAS BEEN UTILI ZED BY THE COMPANIES FOR BUSINESS PURPOSE. THUS SUCH ADVANCE QUALIFY FOR THE TEST OF COMMERCIAL EXPEDIENCY AND HENCE THE RATIO LAID DOWN BY THE HONBLE APEX COURT IN THE CA SE OF S A BUILDERS LTD IS DIRECTLY APPLICABLE TO IT. 2.3. THE LD CIT(A) OBSERVED THAT RAMUK SCAN INVEST MENT PVT LTD IS OWNED BY MR BARUN BICKY CHAKRABORTY WHO IS AN INDIAN SETTLED IN SWEDE N AND THIS COMPANY WAS FORMED FOR THE PURPOSE OF INVESTMENT IN INDIA BY THE PROMOTERS THR OUGH THIS COMPANY AND THAT THE MAIN SOURCE OF FUND OF RAMUK SCAN INVESTMENT PVT LTD IS THROUGH MR BARUN BICKY CHAKRABORTY. THE LD CITA ON PROPER APPRECIATION OF THE CONTENTIO NS OF THE ASSESSEE AND IN THE FACTS AND CIRCUMSTANCES OF THE CASE OBSERVED AS UNDER :- I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE AND THE MATERIAL PLACED ON RECORD AS ALSO THE SUBMISSIONS PUT FORTH ON BEHALF OF THE APPELLAN T COMPANY. AT THE OUTSET, THE OBSERVATION OF THE ASSESSING OFFICER THAT EXPENSE RELATED TO EXEMP T INCOME WAS DISALLOWABLE AND INTEREST FREE LOAN SHOULD HAVE BEEN CONSIDERED TO YIELD A NOTIONA L INTEREST IS NOT IN ACCORDANCE WITH THE PROVISIONS OF THE ACT. IN THE FIRST PLACE, DEDUCTIO N OF INTEREST ON BORROWED CAPITAL OR SAY ON OVER-DRAFT ACCOUNT IS NOT DEPENDENT ON WHETHER RESU LTING PROFIT IS TAXABLE OR NOT. IN CIT V. INDIAN BANK LTD., [1965] 56 ITR 77(SC), THE HON'BLE SUPREME COURT OBSERVED THAT IT WOULD NOT BE CORRECT TO SAY THAT IF A PART OF PROFITS OF A BUSINESS WAS NOT TAXABLE, NO EXPENDITURE INCURRED FOR THE PURPOSE OF EARNING THOSE PROFITS C OULD BE ALLOWED AS A DEDUCTION. THUS, WHERE A BANK UTILIZED PART OF THE DEPOSITS MOBILIZED BY I T ON INVESTMENT IN TAX FREE SECURITIES INTEREST PAID ON SUCH DEPOSITS WAS HELD TO BE DEDUCTIBLE. SE CONDLY, WHERE THE ASSESSEE-COMPANY DID NOT CHARGE ANY INTEREST ON LOAN GRANTED TO A MANAGI NG DIRECTOR OR TO A SISTER CONCERN ON BUSINESS CONSIDERATIONS, THE ASSESSING OFFICER CANN OT COMPUTE INTEREST ON NOTIONAL BASIS AND TREAT IT AS INCOME, SINCE NO PROVISION IN ACT HAS B EEN BROUGHT TO NOTICE UNDER WHICH THE INCOME-TAX AUTHORITIES ARE EMPOWERED TO INCLUDE IN THE INCOME, INTEREST WHICH WAS NOT DUE OR NOT COLLECTED. IN BAND A PLANTATIONS & INDUSTRIES L TD V. CIT [2001] 117 TAXMAN 323 (GAUHATI), IT HAS BEEN HELD THAT IF THE ASSESSEE HA S NOT BARGAINED FOR INTEREST OR HAS NOT COLLECTED INTEREST, THE INCOME TAX AUTHORITIES CANN OT FIX A NOTIONAL INTEREST AS DUE OR COLLECTED BY THE ASSESSEE. WHAT IS TO BE SEEN IN THE PRESENT CASE IS WHETHER THE APPELLANT COMPANY HAD FULFILLED THE CONDITIONS LAID DOWN UNDER SEC. 36(1) (III) OF THE ACT FOR THE CLAIM OF DEDUCTION OF INTEREST PAID ON BORROWED CAPITAL. 5.1.4. NOW, UNDER S. 36(1) (III) THREE CONDITIONS A RE REQUIRED TO BE SATISFIED TO ENABLE THE ASSESSEE TO CLAIM A DEDUCTION IN RESPECT OF INTERES T ON BORROWED CAPITAL, NAMELY, (A) THAT MONEY(CAPITAL) MUST HAVE BEEN BORROWED BY THE ASSES SEE, (B) THAT IT MUST HAVE BEEN BORROWED FOR THE PURPOSE OF BUSINESS, AND (C) THAT THE ASSES SEE MUST HAVE PAID INTEREST ON THE SAID AMOUNT AND CLAIMED IT AS A DEDUCTION: MADHAV PRASAD JATIA [1979] 118 ITR 200. 'FOR THE PURPOSE OF THE BUSINESS' : THE EXPRESSION 'FOR THE PURPOSE OF BUSINESS' OCCURRING IN S. 36(1) (III) AND ALSO IN S. 37 IS WI DER IN SCOPE THAN THE EXPRESSION 'FOR 4 ITA NO.2763/KOL/2013 RAMUK SCAN INV. PVT. LTD.. AY 2006-07 THE PURPOSE OF EARNING INCOME, PROFITS OR GAINS' OC CURRING IN S. 57(III) AND, THEREFORE, THE SCOPE FOR ALLOWED A DEDUCTION UNDER S. 36(1) (I II) OR S. 37 WOULD BE MUST WIDER THAN THE ONE AVAILABLE UNDER S.57(III): MADHAV PRAS AD JATIA V. CIT [1979] 1181TR 200. THE HON'BLE SUPREME COURT IN THE CASE OF S.A. BUILD ERS LTD. V. CIT(APPEALS) [2007] 288 ITR 1 HAS OBSERVED THAT 'IN ORDER TO DECIDE WHE THER INTEREST ON FUNDS BORROWED BY THE ASSESSEE TO GIVE AN INTEREST FREE LOAN SHOUL D BE ALLOWED AS A DEDUCTION UNDER SECTION 36(1) (III) OF THE ACT ONE HAS TO ENQUIRE W HETHER THE LOAN WAS GIVEN BY THE ASSESSEE AS A MEASURE OF COMMERCIAL EXPEDIENCY. THE EXPENDITURE MAY NOT HAVE BEEN INCURRED UNDER ANY LEGAL OBLIGATION, BUT IT IS ALLO WABLE AS BUSINESS EXPENDITURE IF IT WAS INCURRED ON GROUNDS OF COMMERCIAL EXPEDIENCY, A ND IT IS IMMATERIAL IF A THIRD PARTY ALSO BENEFITS THEREBY.' THE HONBLE COURT HEL D 'THAT THE BORROWED AMOUNT IS NOT UTILIZED BY THE ASSESSEE IN ITS OWN BUSINESS BUT HA D BEEN ADVANCED AS INTEREST FREE LOAN TO ITS SISTER CONCERN IS NOT RELEVANT. THE REV ENUE CANNOT DECIDE HOW MUCH IS REASONABLE EXPENDITURE HAVING REGARD TO THE CIRCUMS TANCES OF THE CASE'. IN THE PRESENT CASE, THERE IS NO MATERIAL AVAILABLE ON RECORD TO SUPPORT THE VIEW OF THE ASSESSING OFFICER THAT THE BORROWED FUNDS WERE USED FOR NON-BUSINESS PURPOSE. WHEREAS, THE APPELLANT HAS AMPLY DEMONSTRATED THAT THE AMOUNT OF RS.260 LACS WAS PROVIDED TO ITS SUBSIDIARY, CAROLINA FOOD AND INDUSTRIES PVT. LTD., ON SHORT TERM BASIS FOR COMMENCEMENT OF ITS BUSINESS AS A MEASURE OF COMMERCIAL EXPEDIENCY. THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT IS APPLICABLE TO THE FACTS OF THE APP ELLANT'S CASE. IN THE CASE, THE APPELLANT HAS INVESTED THE FUNDS AS SHARE CAPITAL TO ITS SUBSIDIA RIES/SISTER CONCERNS, M/S. MERIDIAN MEDICAL RESEARCH & HOSPITALS LIMITED & M/S. CAROLINA FOOD & INDUSTRIES PVT. LIMITED AND ADVANCED THE FUNDS TO ITS SUBSIDIARY, M/S. CAROLINA FOOD & I NDUSTRIES LIMITED FOR BUSINESS PURPOSE. THE FORMER IS ENGAGED IN HOSPITAL BUSINESS WHEREAS THE LATTER IS INVOLVED IN RESTAURANT BUSINESS. IN KEJRIWAL ENTERPRISES V. CIT (2003) 260 ITR 341, 345 ,346(CAL), THE HON'BLE HIGH COURT HELD THAT 'UNDER SECTION 36(1) (III), INTEREST ON BORROW ED CAPITAL CAN BE ALLOWED AS A DEDUCTION IF THE BORROWED CAPITAL IS USED FOR THE PURPOSES OF BU SINESS OF THE ASSESSEE. A BUSINESS PURPOSE IS FOR THE CARRYING ON OF THE BUSINESS AND SUCH PUR POSE IN CAPACITY AS A BUSINESSMAN; THE EXPENSES MUST NOT BE OF A PRIVATE OR DOMESTIC NATUR E; THERE MUST BE NO DISHONESTY AND NO UNDER HANDS ATTEMPTS INVOLVED AT MOTIVATED DIVERSIO N OF FUNDS SO AS TO GET ON OTHERWISE UNWARRANTED DEDUCTION OF INTEREST ON BORROWED FUNDS '. IN THE FACTS OF THAT CASE, THE APPELLANT ENTERED INTO A JOINT VENTURE WITH A RUSSIAN COMPANY JUST BEFORE THE DISINTEGRATION OF THE UNITED SOVIET RUSSIA. AMOUNT WAS BORROWED FOR THE P URPOSE OF INVESTMENT IN THE NEW COMPANY TO BE FLOATED AS PER SUCH AGREEMENT. THE JO INT VENTURE FAILED DUE TO THE POLITICAL DEVELOPMENTS IN RUSSIA. INTEREST ON THE BORROWED CA PITAL WAS HELD DEDUCTIBLE UNDER SECTION 36(1) (III) OF THE ACT. IN VIEW OF THE ABOVE, CONSIDERING THE FACTS OF THE CASE, AND THE RATIO LAID DOWN IN THE DECISIONS CITED SUPRA OF THE SUPREME COURT AND JURI SDICTIONAL HIGH COURT, I AM OF THE VIEW THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN DIS ALLOWING THE ENTIRE INTEREST AMOUNT OF RS.32,41,130/- PAID BY THE APPELLANT ON THE OVER-DR AFT ACCOUNT. THE CONSEQUENT ADDITION IS DELETED. THE APPEAL OF THE APPELLANT ON THIS GROUND IS ALLOWED. 2.4. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUND :- 1. THAT IS THE FACTS AND IN LAW OF THE CASE THE L D. CIT(A) ERRED IN DELETING THE DISALLOWANCE THE INTEREST AMOUNTING RS. 32,41,130/- WHICH IS UTI LIZED BY THE ASSESSEE FOR ACQUISITION OF EQUITY SHARES OF ITS SUBSIDIARIES. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND AS PER LAW LD. CIT(A) ERRED IN ALLOWING THE INTEREST DEBITED BY THE ASSESSEE IN TH E P&L A/C THOUGH THE FUND IS UTILIZED FOR EARNING EXEMPTED INCOME (DIVIDEND) FROM THE SUBSIDI ARY COMPANIES. 5 ITA NO.2763/KOL/2013 RAMUK SCAN INV. PVT. LTD.. AY 2006-07 2.5. THE LD DR ARGUED THAT THE LD AO HAD OBSERVED THAT THE LOANS AND ADVANCES GIVEN BY THE ASSESSEE HAD INCREASED FROM RS. 1,79,34,198/- T O RS. 2,75,59,640/- DURING THE YEAR UNDER APPEAL. SIMILARLY INVESTMENTS HAD ALSO INCREASED B Y RS 40,00,000/- DURING THE YEAR UNDER APPEAL. THE ASSESSEE ON ONE HAND HAD SUFFERED INTER EST PAYMENTS ON THE LOANS BORROWED BY IT BUT ON THE OTHER HAND HAD CHOSEN TO MAKE INVESTM ENTS IN ITS SUBSIDIARIES AND ADVANCING INTEREST FREE FUNDS TO ITS SUBSIDIARY COMPANY. HE ARGUED THAT THE ASSESSEE HAD MADE ALL THESE INVESTMENTS AND LOANS AND ADVANCES OUT OF ITS OWN F UNDS IS WITHOUT ANY BASIS AS THE ASSESSEE HAD AVAILED LOAN AGAINST ITS OWN FIXED DEPOSITS AND THOSE MONIES WERE UTILIZED FOR THE PURPOSE OF INVESTMENT IN SUBSIDIARIES AND ADVANCING INTEREST FREE FUNDS. NONE APPEARED ON BEHALF OF THE ASSESSEE DESPITE ISSUANCE OF NOTICE T O THE ASSESSEE. HENCE WE PROCEED TO HEAR THE LD DR AND DECIDE THE APPEAL BASED ON MATERIALS AVAILABLE ON RECORD. 2.6. WE HAVE HEARD THE LD DR. WE FIND THAT THE LD CITA HAD ELABORATELY DEALT THE ISSUE UNDER APPEAL WHICH HAS NOT BEEN REFUTED BY THE LD D R BEFORE US. WE FIND THAT THE TEST OF COMMERCIAL EXPEDIENCY IS PROVED BEYOND DOUBT IN THE INSTANT CASE BY ADVANCING FUNDS TO THE SUBSIDIARY COMPANY. WE FIND THAT THE RELIANCE PLACED BY THE ASSESSEE ON THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF S.A.BUILDERS LTD VS CIT REPORTED IN 288 ITR 1 (SC) IS VERY WELL FOUNDED AND IS SQUARELY APPLICABLE TO THE FACTS OF THE INSTANT CASE. HENCE WE HOLD THAT THE LD CITA HAD RIGHTLY RELIED ON THE SAM E AND DELETED THE DISALLOWANCE OF INTEREST. ACCORDINGLY, THE GROUNDS 1 & 2 RAISED BY THE REVENU E ARE DISMISSED. 3. THE LAST GROUND TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE LD CITA IS JUSTIFIED IN DELETING THE ADDITION MADE IN THE SUM OF RS. 15, 02,623/- TOWARDS ASHOK NAGAR HEALTH UNIT AS MEANT FOR BUSINESS PURPOSES IN THE FACTS AN D CIRCUMSTANCES OF THE CASE. 3.1. THE BRIEF FACTS OF THIS ISSUE IS THAT THE ASS ESSEE HAD A SISTER CONCERN UNDER THE NAME AND STYLE OF MERIDIAN MEDICAL RESEARCH AND HOSPITAL LTD. WHICH RENDERED MEDIAL SERVICES. AS PER THE DISCUSSION WITH THE HON'BLE CHIEF MINIST ER OF WEST BENGAL AS REGARDS PARTICIPATION IN THE GOVERNMENT HEALTH PROGRAMMES, THE ASSESSEE HAD BEEN APPROACHED BY THE ASHOK NAGAR KALYANGAR MUNICIPALITY FOR ASSISTAN CE IN MEDICAL FACILITIES IN THE PROPOSED MUNICIPAL HOSPITAL. ON THE BASIS OF THE DISCUSSION WITH THE HON'BLE CHIEF MINISTER OF WEST BENGAL AND THE APPROACH MADE BY THE MUNICIPALITY TH E ASSESSEE PROVIDED THE MUNICIPAL HOSPITAL CERTAIN MEDICAL EQUIPMENTS HAVING AN AGGRE GATE COST OF RS. 15,02,623/- AND THE 6 ITA NO.2763/KOL/2013 RAMUK SCAN INV. PVT. LTD.. AY 2006-07 SAID SUM WAS DEBITED TO THE ASSESSEES PROFIT AND L OSS ACCOUNT AS ASHOK NAGAR HEALTH UNIT EXPENSES. ON BEING ASKED BY THE ASSESSING OFFICER T HE ASSESSEE DULY EXPLAINED AS TO THE NATURE OF EXPENSES INCURRED AND ALSO THAT FOR THE P URPOSE OF DEVELOPMENT OF HEALTH CARE BUSINESS OF THE APPELLANT'S SUBSIDIARY, SUCH TYPE O F EXPENSES HAD A GREAT IMPORTANCE. IT WAS ALSO SUBMITTED BY THE ASSESSEE THAT SINCE THE MEDIC AL EQUIPMENTS BECAME THE PROPERTIES OF THE MUNICIPAL HOSPITAL, THE EXPENSES TOWARDS THE CO ST OF MEDICAL EQUIPMENTS SHOULD NOT BE CONSIDERED AS ANY CAPITAL EXPENDITURE. IT WAS ALSO SUBMITTED BY THE ASSESSEE THAT KEEPING IN VIEW OF THE NECESSITY OF PROVIDING MEDICAL FACILITI ES TO THE PEOPLE, THE EXPENDITURE INCURRED BY THE ASSESSEE SHOULD ALSO BE LOOKED INTO AS A VER Y NOBLE CAUSE. HOWEVER, THE ASSESSING OFFICER OBSERVED THAT ACCORDING TO HIM THE ABOVEMEN TIONED EXPENSES HAD NOT BEEN INCURRED FOR THE ASSESSEES BECAUSE AND SO HE WOULD DISALLOW THE SAME. THE ASSESSING OFFICER THE ENTIRE EXPENSES AGGREGATING TO RS. 15,02,623/-. 3.2. BEFORE THE LD CITA , THE ASSESSEE ARGUED THAT THIS EXPENDITURE WAS INCURRED AS PART OF ITS CORPORATE SOCIAL RESPONSIBILITY ACTIVITY. IT W AS ALSO PLEADED THAT THE NECESSITY OF INCURRING AN EXPENDITURE SHOULD BE VIEWED FROM THE POINT OF VIEW OF THE BUSINESSMAN AND NOT FROM THE POINT OF VIEW OF THE REVENUE. RELIANC E IN THIS REGARD WAS PLACED ON THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF C IT VS DHANRAJGIRJI RAJA REPORTED IN 91 ITR 544 (SC) AND PLEADED THAT THE SAID EXPENDITURE IS SQUARELY ALLOWABLE U/S 37(1) OF THE ACT. IT WAS FURTHER PLEADED THAT WHERE THE EXPEN DITURE INCURRED WAS SUCH AS A (I) WISE, (II) PRUDENT, (III) PRAGMATIC , (IV) ETHICAL, MAN OF THE WORLD OF BUSINESS WOULD CONSCIENTIOUSLY INCUR WITH AN EYE ON PROMOTING HIS BUSINESS PROSPEC TS SUBJECT TO THE EXPENDITURE BEING GENUINE AND WITHIN REASONABLE LIMITS. IT WAS ARGUE D THAT WHERE AN EXPENDITURE WAS INCURRED SOLELY BY WAY OF A CIVIL DUTY OWED BY THE ASSESSEE TO THE SOCIETY HAVING REGARD TO THE NATURE OF HIS BUSINESS WHICH BRINGS HIM PROFITS BUT RESULT IN SOME DETRIMENT TO THE PUBLIC AT LARGE EITHER BY WAY OF HEALTH HAZARD OR ECOLOGICAL POLLUT ION OR SERIOUS INCONVENIENCE TO THE CITIZENS WITH A VIEW TO MITIGATE THE AFORESAID EVIL CONSEQUENCES AND CONSEQUENCES OF A LIKE NATURE, SUBJECT TO IT BEING GENUINE AND WITHIN REAS ONABLE LIMIT. IT WAS FURTHER PLEADED THAT THE EXPENDITURE ON ASHOK NAGAR HEALTH UNIT MUST BE TREATED AS EXPENDITURE INCURRED ON ACCOUNT OF COMMERCIAL EXPEDIENCY AS THE SAME WAS IN CURRED TO PROMOTE BUSINESS OF SUBSIDIARY COMPANY SO AS TO MAXIMIZE PROFIT , WEALT H OF SUBSIDIARY , AS WELL AS ULTIMATE WEALTH MAXIMIZATION OF THE ASSESSEE COMPANY. THE ASSESSEE FILED COPIES OF LETTERS RECEIVED 7 ITA NO.2763/KOL/2013 RAMUK SCAN INV. PVT. LTD.. AY 2006-07 FROM THE HONBLE CHIEF MINISTER AS WELL AS ASHOKNAG AR-KALYANGARH MUNICIPALITY IN SUPPORT OF THE CLAIM. 3.3. THE LD CITA DELETED THE DISALLOWANCE BY OBSER VING AS UNDER :- I HAVE CONSIDERED THE SUBMISSIONS MADE ON BEHALF OF THE APPELLANT. THE APPELLANT HAS BROUGHT ON RECORD SUFFICIENT EVIDENCE ABOUT THE UNI TY OF CONTROL AND MANAGEMENT AND INTER- RELATION OF THE BUSINESS WITH THOSE OF THE SUBSIDIA RIES IN THE CAPACITY OF A HOLDING COMPANY. THEREFORE, HAVING REGARD TO THE FACTS, I AM OF THE VIEW THAT THE EXPENDITURE HAS BEEN INCURRED BY THE APPELLANT COMPANY FOR INSTALLING MEDICAL EQU IPMENTS AND PLANT MACHINERY IN THE MUNICIPAL HEALTH UNIT IS FOR COMMERCIAL EXPEDIENCY. NOW, THE ISSUE IS WHETHER THE EXPENDITURE IS CAPITAL OR REVENUE NATURE. IN THE CASE OF CIT V. RUPSA RICE MILLS [1976] 104 ITR 249 (ORI), CONTRIBUTION TOWARDS COST OF ERECTION OF GOVT.-OWNE D PRIMARY HEALTH CENTRE NEAR FACTORY PREMISES WAS HELD TO BE ADMISSIBLE AS REVENUE EXPEN DITURE. FOLLOWING THE RATIO LAID DOWN IN THE DECISION OF THE HON'BLE ORISSA HIGH COURT, IN M Y OPINION, THE EXPENDITURE OF RS. 15,02,623/- RELATED TO ASHOK NAGAR HEALTH UNIT INCU RRED FOR PURCHASE OF EQUIPMENTS/ MACHINERIES INSTALLED AT THE UNIT IS HELD TO BE OF REVENUE NATURE FOR COMMERCIAL EXPEDIENCY. THE DISALLOWANCE AS MADE BY THE ASSESSING OFFICER I S, THEREFORE, NOT BEING JUSTIFIED, ADDITION, THE CONSEQUENT IS HEREBY DELETED. THIS GROUND OF AP PEAL IS ACCORDINGLY ALLOWED. 3.4. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUND :- 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND AS PER LAW LD. CIT(A) ERRED IN DELETING THE ADDITION MADE BY THE AO AMOUNTING TO R S. 15,02,623/- ON THE GROUND THAT THE EXPENDITURE HAS NOT BEEN INCURRED FOR THE PURPOSE O F BUSINESS BUT FOR PHILANTHROPIC PURPOSES WHICH HAS NO LINK WITH THE ASSESSEE'S BUSINESS. 3.5. THE LD DR ARGUED THAT THE EXPENDITURE INCURRE D BY THE ASSESSEE BY INSTALLING MEDICAL EQUIPMENT AT ASHOKNAGAR HEALTH UNIT IS NOT MEANT FO R THE PURPOSE OF BUSINESS OF THE ASSESSEE. HE ARGUED THAT THE ASHOKNAGAR HEALTH UNI T DOES NOT POSSESS THE EXEMPTION U/S 80G OF THE ACT AND HENCE THE ASSESSEE IS NOT ENTITL ED FOR ANY BENEFIT OF DEDUCTION THEREON. MOREOVER, THE EXPENDITURE INCURRED BY THE ASSESSEE IS CAPITAL IN NATURE AND HENCE IS SQUARELY HIT BY THE EXCEPTIONS TO THE PROVISIONS OF SECTION 37(1) OF THE ACT . NO BENEFIT WHATSOEVER WAS DERIVED BY THE ASSESSEE OUT OF INCURRENCE OF TH IS EXPENDITURE. HENCE HE ARGUED THAT THE LD AO HAD RIGHTLY DISALLOWED THE SAME. 3.6. WE HAVE HEARD THE LD DR. AT THE OUTSET, WE F IND THAT THE ASSESSEE HAD ONLY INSTALLED A MEDICAL EQUIPMENT AT THE ASHOK NAGAR HEALTH UNIT PURSUANT TO PARTICIPATION IN GOVERNMENT HEALTH PROGRAMME AND PURSUANT TO REPRESE NTATION RECEIVED FROM ASHOK NAGAR- KALYNAGARH MUNICIPALITY FOR ASSISTANCE IN MEDICAL F ACILITIES IN THE PROPOSED MUNICIPAL HOSPITAL. THOUGH THE SAID CONTRIBUTION COULD BE C ONSTRUED AS ONE DONE FOR A NOBLE CAUSE, WHAT IS TO BE SEEN IS THAT WHETHER THE SAID EXPENDI TURE COULD BE SAID TO INCURRED WHOLLY AND 8 ITA NO.2763/KOL/2013 RAMUK SCAN INV. PVT. LTD.. AY 2006-07 EXCLUSIVELY FOR THE PURPOSE OF BUSINESS OF THE ASSE SSEE. THE ASSESSEE HAD STATED THAT BY INCURRENCE OF THIS EXPENDITURE, THE SUBSIDIARY COMP ANY OF THE ASSESSEE HAS BEEN BENEFITTED AND HENCE THE SAME IS TO BE CONSTRUED AS EXPENDITUR E INCURRED ON ACCOUNT OF COMMERCIAL EXPEDIENCY. ADMITTEDLY, THE SAID EXPENDITURE IS CA PITAL IN NATURE BUT THE ASSESSEE CANNOT CLAIM DEPRECIATION ON THE SAME AS THE SAME HAS BEEN INSTALLED AT THE ASHOK NAGAR HEALTH UNIT. ONCE AN EXPENDITURE IS TREATED AS CAPITAL I N NATURE, THE SAME IS DIRECTLY HIT BY THE EXCEPTION TO THE PROVISIONS OF SECTION 37(1) OF THE ACT. FOR THE SAKE OF CONVENIENCE, THE PROVISIONS OF SECTION 37(1) OF THE ACT IS REPRODUCE D HEREUNDER:- 37(1) ANY EXPENDITURE (NOT BEING EXPENDITURE OF TH E NATURE DESCRIBED IN SECTIONS 30 TO 36 AND NOT BEING IN THE NATURE OF CAPITAL EXPENDITU RE OR PERSONAL EXPENSES OF THE ASSESSEE) LAID OUT OR EXPENDED WHOLLY AND EXCLUSIVE LY FOR THE PURPOSES OF THE BUSINESS OR PROFESSION SHALL BE ALLOWED IN COMPUTING THE INC OME CHARGEABLE UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION. WE FIND THAT THIS ISSUE IS DIRECTLY ADDRESSED BY THE DECISION OF THE HONBLE ORISSA HIG H COURT IN THE CASE OF CIT VS RUPSA RICE MILLS REPORTED IN (1976) 104 ITR 249 (ORI) WHE REIN IT WAS HELD THAT :- THE EXPRESSION 'CAPITAL EXPENDITURE' IS NOT DEFINED IN THE ACT AND THE WORDS 'IN THE NATURE OF CAPITAL EXPENDITURE' OCCURRING IN SECTION 37(1) MAK E THE MEANING OF THE EXPRESSION MORE ELASTIC IN ITS APPLICATION TO THE FACTS OF EACH CAS E. THE SUPREME COURT IN THE CASE OF ASSAM BENGAL CEMENT CO. LTD. V. COMMISSIONER OF INCOME-TA X [1955] 271 ITR 34 WAS EXAMINING WHETHER A PARTICULAR EXPENDITURE WAS 'BUSINESS EXPE NDITURE' OR 'CAPITAL EXPENDITURE'. A FULL BENCH OF THE LAHORE HIGH COURT IN THE CASE BENARSID AS JAGANNATH, IN RE [1947] 15 ITR 185 LAID DOWN THE FOLLOWING TESTS : '1.OUTLAY IS DEEMED TO BE CAPITAL WHEN IT IS MADE F OR THE INITIATION OF A BUSINESS, FOR EXTENSION OF A BUSINESS, OR FOR A SUBSTANTIAL REPLACEMENT OF EQUIPMENT........ 2.EXPENDITURE MAY BE TREATED AS PROPERLY ATTRIBUTAB LE TO CAPITAL WHEN IT IS MADE NOT ONLY ONCE AND FOR ALL, BUT WITH A VIEW TO BRINGING INTO EXIST ENCE AN ASSET OR AN ADVANTAGE FOR THE ENDURING BENEFIT OF A TRADE......... THE EXPRESSIONS 'ENDURING BENEFIT' OR 'OF A PERMANE NT CHARACTER' WERE INTRODUCED TO MAKE IT CLEAR THAT THE ASSET OR THE RIGHT ACQUIRED MUST HAV E ENOUGH DURABILITY TO JUSTIFY ITS BEING TREATED AS A CAPITAL ASSET. 3.WHETHER, FOR THE PURPOSE OF THE EXPENDITURE, ANY CAPITAL WAS WITHDRAWN, OR, IN OTHER WORDS, WHETHER THE OBJECT OF INCURRING THE EXPENDITURE WAS TO EMPLOY WHAT WAS TAKEN IN AS CAPITAL OF THE BUSINESS. AGAIN, IT IS TO BE SEEN WHETHER THE E XPENDITURE INCURRED WAS PART OF THE FIXED CAPITAL OF THE BUSINESS OR PART OF ITS CIRCULATING CAPITAL.......' THE SUPREME COURT IN ITS TURN IN ASSAM BENGAL CEMEN T CO. LTD. V. COMMISSIONER OF INCOME- TAX [1955] 27 ITR 34 STATED: 'THIS SYNTHESIS ATTEMPTED BY THE FULL BENCH OF THE LAHORE HIGH COURT TRULY ENUNCIATES THE PRINCIPLES WHICH EMERGE FROM THE AUTHORITIES. IN CA SES WHERE THE EXPENDITURE IS MADE FOR THE 9 ITA NO.2763/KOL/2013 RAMUK SCAN INV. PVT. LTD.. AY 2006-07 INITIAL OUTLAY OR FOR EXTENSION OF A BUSINESS OR A SUBSTANTIAL REPLACEMENT OF THE EQUIPMENT, THERE IS NO DOUBT THAT IT IS CAPITAL EXPENDITURE. A CAPITAL ASSET OF THE BUSINESS IS EITHER ACQUIRED OR EXTENDED OR SUBSTANTIALLY REPLACED AND THAT OUTL AY WHATEVER BE ITS SOURCE WHETHER IT IS DRAWN FROM THE CAPITAL OR THE INCOME OF THE CONCERN IS CERTAINLY IN THE NATURE OF CAPITAL EXPENDITURE. THE QUESTION, HOWEVER, ARISES FOR CONS IDERATION WHERE EXPENDITURE IS INCURRED WHILE THE BUSINESS IS GOING ON AND IS NOT INCURRED EITHER FOR EXTENSION OF THE BUSINESS OR FOR THE SUBSTANTIAL REPLACEMENT OF ITS EQUIPMENT. SUCH EXPE NDITURE CAN BE LOOKED AT EITHER FROM THE POINT OF VIEW OF WHAT IS ACQUIRED OR FROM THE POINT OF VIEW OF WHAT IS THE SOURCE FROM WHICH THE EXPENDITURE IS INCURRED. IF THE EXPENDITURE IS MADE FOR ACQUIRING OR BRINGING INTO EXISTENCE AN ASSET OR ADVANTAGE FOR THE ENDURING BENEFIT OF THE BUSINESS IT IS PROPERLY ATTRIBUTABLE TO CAPITAL AND IS OF THE NATURE OF CAPITAL EXPENDITURE. IF, ON THE OTHER HAND, IT IS MADE NOT FOR THE PURPOSE OF BRINGING INTO EXISTENCE ANY SUCH ASSET OR ADVANT AGE BUT FOR RUNNING THE BUSINESS OR WORKING IT WITH A VIEW TO PRODUCE THE PROFITS IT IS A REVEN UE EXPENDITURE. IF ANY SUCH ASSET OR ADVANTAGE FOR THE ENDURING BENEFIT OF THE BUSINESS IS THUS AC QUIRED OR BROUGHT INTO EXISTENCE IT WOULD BE IMMATERIAL WHETHER THE SOURCE OF THE PAYMENT WAS TH E CAPITAL OR THE INCOME OF THE CONCERN OR WHETHER THE PAYMENT WAS MADE ONCE AND FOR ALL OR WA S MADE PERIODICALLY. THE AIM AND OBJECT OF THE EXPENDITURE WOULD DETERMINE THE CHARACTER OF THE EXPENDITURE WHETHER IT IS A CAPITAL EXPENDITURE OR A REVENUE EXPENDITURE. THE SOURCE OR THE MANNER OF THE PAYMENT WOULD THEN BE OF NO CONSEQUENCE. IT IS ONLY IN THOSE CASES WHERE THIS TEST IS OF NO AVAIL THAT ONE MAY GO TO THE TEST OF FIXED OR CIRCULATING CAPITAL AND CONSIDER W HETHER THE EXPENDITURE INCURRED WAS PART OF THE FIXED CAPITAL OF THE BUSINESS OR PART OF ITS CI RCULATING CAPITAL. IF IT WAS PART OF THE FIXED CAPITAL OF THE BUSINESS IT WOULD BE OF THE NATURE O F CAPITAL EXPENDITURE AND IF IT WAS PART OF ITS CIRCULATING CAPITAL IT WOULD BE OF THE NATURE OF RE VENUE EXPENDITURE. THESE TESTS ARE THUS MUTUALLY EXCLUSIVE AND HAVE TO BE APPLIED TO THE FA CTS OF EACH PARTICULAR CASE IN THE MANNER ABOVE INDICATED. IT HAS BEEN RIGHTLY OBSERVED THAT IN THE GREAT DIVERSITY OF HUMAN AFFAIRS AND THE COMPLICATED NATURE OF BUSINESS OPERATIONS IT IS DIFFICULT TO LAY DOWN A TEST WHICH WOULD APPLY TO ALL SITUATIONS. ONE HAS, THEREFORE, GOT TO APPLY THESE CRITERIA ONE AFTER THE OTHER FROM THE BUSINESS POINT OF VIEW AND COME TO THE CONCLUSI ON WHETHER, ON A FAIR APPRECIATION OF THE WHOLE SITUATION, THE EXPENDITURE INCURRED IN A PART ICULAR CASE IS OF THE NATURE OF CAPITAL EXPENDITURE OR REVENUE EXPENDITURE IN WHICH LATTER EVENT ONLY IT WOULD BE A DEDUCTIBLE ALLOWANCE UNDER SECTION 10(2)(XV) OF THE INCOME-TAX ACT. THE QUESTION HAS ALL ALONG BEEN CONSIDERED TO BE A QUESTION OF FACT TO BE DETERMINE D BY THE INCOME-TAX AUTHORITIES ON AN APPLICATION OF THE BROAD PRINCIPLES LAID DOWN ABOVE AND THE COURTS OF LAW WOULD NOT ORDINARILY INTERFERE WITH SUCH FINDINGS OF FACT IF THEY HAVE B EEN ARRIVED AT ON A PROPER APPLICATION OF THOSE PRINCIPLES.' THREE MORE DECISIONS WERE CITED BEFORE US AS THROWI NG LIGHT ON THE POINT. THE FIRST IS THE CASE OF LAKSHMIJI SUGAR MILLS CO. P. LTD. V. COMMISSIONE R OF INCOME-TAX [1971] 82 ITR 376 (SC) . THE SUPREME COURT WAS EXAMINING A CLAIM OF DEDUCTIO N RAISED BY THE ASSESSEEA SUGAR MILL IN RESPECT OF AMOUNTS PAID BY WAY OF CONTRIBUTION F OR THE CONSTRUCTION AND DEVELOPMENT OF ROADS BETWEEN THE VARIOUS SUGARCANE PRODUCING CENTR ES AND THE SUGAR FACTORY OF THE ASSESSEE. THE ROADS WERE PROPERTY OF THE GOVERNMENT AND EVEN AFTER IMPROVEMENT, TITLE VESTED IN THE GOVERNMENT. THE COURT APPROVED THE TESTS LAID DOWN BY IT IN CEMENT COMPANY'S CASE (ASSAM BENGAL CEMENT CO. LTD. V. COMMISSIONER OF INCOME-TA X [1955] 27 ITR 34 (SC) ) AND CAME TO HOLD THAT THE EXPENDITURE FOR REPAIR OF THE ROADS W AS A REVENUE EXPENDITURE. A BENCH OF THE MADRAS HIGH COURT IN THE CASE OF COM MISSIONER OF INCOME-TAX V. T.V. SUNDARAM IYENGAR & SONS (P.) LTD. [1974] 95 ITR 428 WAS EXAMINING THE TENABILITY OF THE ASSESSEE'S CLAIM FOR DEDUCTION OF MONEY GIVEN FOR P URCHASE OF LAND FOR CONSTRUCTION OF HOUSES UNDER THE SUBSIDISED INDUSTRIAL HOUSING SCHEME SPON SORED BY THE STATE GOVERNMENT AND CAME TO THE CONCLUSION THAT THE EXPENDITURE WAS INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF 10 ITA NO.2763/KOL/2013 RAMUK SCAN INV. PVT. LTD.. AY 2006-07 THE BUSINESS OF THE ASSESSEE-COMPANY. RELIANCE WAS PLACED ON THE DECISION OF THE SUPREME COURT IN CEMENT COMPANY'S CASE (SUPRA) AND THE RULE IN THE ENGLISH TAX CASES IN THE CASE OF ATHERTON V. BRITISH INSULATED AND HELSBY CABLES LTD . [1925] 10 TC 155 (HL). THE LAST CASE CITED IS ONE FROM THE BOMBAY HIGH COU RT IN THE CASE OF COMMISSIONER OF INCOME- TAX V. ASSOCIATED CEMENT COMPANIES LTD. [1974] 96 ITR 650. ASSESSEE IN THIS CASE WAS A CEMENT FACTORY SITUATED OUTSIDE THE MUNICIPAL LIMIT S OF A TOWN. GOVERNMENT DECIDED TO INCLUDE THE FACTORY AREA WITHIN THE MUNICIPAL LIMITS. ASSES SEE AGREED TO PROVIDE CERTAIN AMENITIES TO THE TOWN INCLUDING PROVISION OF WATER SUPPLY AND GO VERNMENT ON ITS PART UNDERTOOK NOT TO INCLUDE THE PROPERTIES OF THE FACTORY WITHIN THE MU NICIPAL LIMIT FOR FIFTEEN YEARS SO THAT THE ASSESSEE WOULD NOT HAVE TO PAY MUNICIPAL TAXES DURI NG THAT PERIOD. ASSESSEE SPENT MORE THAN RS. 2 LAKHS IN INSTALLING PIPE LINES, ETC., WHICH B ECAME THE PROPERTY OF THE MUNICIPALITY. ASSESSEE CLAIMED THE SUMS SPENT BY IT AS REVENUE EX PENSES. ASSESSEE'S CLAIM WAS UPHELD. THE PRINCIPLE INDICATED IN THESE TESTS CERTAINLY SU PPORT THE ASSESSEE. AS FOUND HERE BY THE TRIBUNAL, THE PRIMARY HEALTH CENTRE WAS THE PROPERT Y OF THE GOVERNMENT. ASSESSEE MADE A SUBSTANTIAL CONTRIBUTION TO MEET THE COSTS OF ERECT ION IN CONSIDERATION OF THE FACT THAT A HEALTH CENTRE LOCATED NEAR THE FACTORY PREMISES WOULD PROV IDE TREATMENT TO THE AILING WORKMEN. UNDER THE STATE EMPLOYEES' INSURANCE ACT ASSESSEE HAD OBL IGATION TO MAINTAIN A HOSPITAL OR MEET THE EXPENSES ON TREATMENT. TAKING AN OVERALL PICTURE OF THE MATTER, THE TRIBUNAL RECORDED THE FINDING THAT, IN THE FACTS OF THE CASE, IT WAS BUSI NESS EXPENDITURE. WE ARE NOT INCLINED TO TAKE A DIFFERENT VIEW. OUR ANSWER TO THE QUESTION REFERRED, THEREFORE, IS: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE AMOUNT OF RS. 12,137, DONATED BY THE ASSESSEE TO THE COLLECTOR, BALASORE, FOR THE CONSTR UCTION OF THE PRIMARY HEALTH CENTRE BUILDING AT RUPSA IS AN ADMISSIBLE REVENUE EXPENDITURE. THE ASSESSEE SHALL HAVE ITS COSTS. HEARING FEE IS A SSESSED AT RUPEES ONE HUNDRED. PANDA J.I AGREE. THE FACTS IN THE INSTANT CASE ARE SIMILAR TO THAT O F THE FACTS BEFORE THE HONBLE ORISSA HIGH COURT. HENCE WE HOLD THAT THE LD CITA HAD RIGHTLY CONSIDERED THE DECISION OF THE HONBLE ORISSA HIGH COURT AND DELETED THE DISALLOWANCE OF E XPENDITURE INCURRED TOWARDS ASHOK NAGAR HEALTH UNIT. ACCORDINGLY, THE GROUND NO. 3 R AISED BY THE REVENUE IS DISMISSED. 4. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 03.02.201 7 SD/- SD/- (S.S. VISWANETHRA RAVI) (M. BALAGANESH) JUDICIAL MEMBER ACCOUNTAN T MEMBER DATED : 3 RD FEBRUARY, 2017 JD.(SR.P.S.) 11 ITA NO.2763/KOL/2013 RAMUK SCAN INV. PVT. LTD.. AY 2006-07 COPY OF THE ORDER FORWARDED TO: 1 . APPELLANT DCIT, CIRCLE-10, KOLKATA 2 RESPONDENT M/S. RAMUK SCAN INVESTMENT PVT. LTD., B -391, LAKE GARDENS, KOLKATA-45. 3 . THE CIT(A), KOLKATA 4. 5. CIT , KOLKATA DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER, ASSTT. REGISTRAR .