INTERNATIONAL AIRPORTS AUTHORITY Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) At the instance of assessee following question has been referred for opinion of this Court by the Income-tax Appellate Tribunal, Delhi Bench 'E' (for short the Tribunal) under Section 256 (1) of the Income-tax Act, 1961 (in short the Act):

(2.) We have heard Ms.Anjana Gosain, learned counsel for the Petitioner. She endeavoured to persuade us to remand the matter to the ITAT since certain documents had not been filed by the IAAI which would have the effect of altering the factual matrix. It is well settled that in answering a Reference the High Court must take into consideration the facts as settled before the Income-Tax Appellate Tribunal. The effort of learned counsel for the IAAI was to establish that the land in village Mangolpuri did not vest in the ownership of IAAI but with the Government of India. She further contended that the land had been trespassed upon after the acquisition of the contiguous land by the IAAI. The Order dated 30.10.1980 of the CIT (Appeals) records the submission of the counsel for the Petitioner herein that "the entire area of land had already been acquired sometime in the past by the Civil Aviation Department and the ownership and possession thereof came into the hand of the appellant some time in 1972 when it was set up and entrusted with the functions of managing or operating the International Airports in India including the Airport of Delhi." This being the factual position, recorded in the Order of CIT (Appeals). We do not see how fresh evidence can now be permitted to be led by the Petitioner to the contrary. Even if what is contended now is taken as correct in our view, it would make no appreciable difference in answering the question whether the sum of Rs.19.89 lakhs paid by the IAAI to the DDA for the removal and rehabilitation of the squatters in village Mangolpuri was in fact a capital expenditure.

(3.) Learned counsel for the Petitioner relied on Commissioner of Income-Tax vs. Auto Distributors Ltd., (1994) 210 ITR 222 in support of her contention that the said sum of Rs.19.89 lakhs was in the nature of a revenue expenditure as it was for the commercial expediency of the business of the appellant. The facts in Auto Distributors Ltd. are distinguishable in that the assessee there was in the business of taking properties on lease and thereafter sub-letting them for consideration. The sub-tenant was paid off so that a higher rental could be obtained by the assessee. It was held that this expenditure which was for improving the assessee's business prospects was a revenue expenditure. It was not a case where the capital asset of the assessee could not be put to the use for which they were acquired. The learned counsel also placed reliance on the decision of the Bombay High Court in Commissioner of Income-Tax, Bombay City-IV vs. Excel Industries Ltd., 122 ITR 995 and of the Gujarat High Court in Satyadev Chambers Pvt. Ltd. vs. Commissioner of Income- Tax, Gujarat, 117 ITR 86. In both those cases, the decision of the High Court turned on the facts. The fact situation here is not comparable with that obtaining in those decisions. On the other hand we are inclined to agree with the view taken by the Bombay High Court in Hardiallia Chemicals Ltd. vs. Commissioner of Income-Tax, 218 ITR 598 where the payment had been made "to perfect the interest of the assesse in the land or can be rid of the threat of litigation which might have delayed the handing over of vacant possession of the plot to the assessee and the establishment of the proposed factory by the assessee thereon." It was held, following the decision of the Hon'ble Supreme Court in Sitalpur Sugar Works Ltd. vs. Commissioner of Income-tax, (1963) 49 ITR (SC) 160, and V. Jaganmohan Rao vs. Commissioner of Income-tax, (1970) 75 ITR 373 that such expenditure cannot be treated as revenue expenditure.