SHREYANS INDUSTRIES LTD. Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) LEAVE granted.

(2.) APPELLANT is running a paper mill at Ahmedgarh in District Sangrur, Punjab. It is engaged in the business activity of manufacturing paper.

(3.) THE main controversy which arises for determination in this civil appeal is whether an amount of Rs. 70,79,862 incurred by the appellant on construction of open drain for disposal of effluents is revenue expenditure, as claimed by the appellant. According to the department the expenditure was on capital account, particularly, when the appellant has debited the building account to the extent of Rs. 70,79,862. It may also be noted that Commissioner (Appeal) as well as the Tribunal held that the expenditure incurred was on revenue account. However, aggrieved by the decision of the Tribunal the matter was carried by the department in appeal to the High Court. Before the High Court the department submitted that the following substantial question of law be framed: