This court heard an income tax appeal where the appellant challenged the Tribunal's treatment of certain expenses as revenue expenditure. The court found that a similar issue was already dismissed and the remaining findings of fact needed no interference.
The appeal is dismissed.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
INCOME TAX APPEAL (Lodg)NO.921 OF 2006
The Commissioner of Income Tax-5...Appellant
vs.
M/s.Essar Oil Limited....Respondent.
Mr.Sureshkumar, for appellant.
Mr.Soli Dastoor, Sr.Advocate with N.Shah &
A.K.Jasani, for Respondent.
CORAM: D.K.DESHMUKH & J.P.DEVADHAR, JJ.
DATED: 16th October,2008.
P.C.:-
1.The commissioner of income tax has raised
following substantial questions of law:-
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(a)The substantial question of law
arises in the present appeal is regarding
the correct interpretation of Section and
other sections of the Income-tax Act,1961
and whether in the facts and in the
circumstances of the case and in law, the
Hon'ble Tribunal was right in treating the
expenses incurred by the assessee for the
issuance of convertible debentures entirely
revenue in nature?
(b)The second substantial question of
law arises in the present appeal is
regarding the correct interpretation of
section and other sections of the Income-tax
Act,1961 and whether in the facts and in the
circumstances of the case and in law, the
Hon'ble Tribunal is justified in holding
that the preliminary expenses incurred by
the assessee prior to the commencement of
its business activity as a revenue
expenditure ?
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2.As regards the first question is concerned,
the Counsel on both the sides agree that the similar
question raised in Income Tax appeal no.541 of 2008
“C.I.T. Vs. M/s.Siltap Chemicals Ltd, has been
dismissed by this Court on 30.9.2008.
2.As regards the second question is concerned,
the finding recorded by the Tribunal is that the
assessee is engaged in the business of operation of
rigs for extraction of oil and undertaking other oil
related activities. It is further recorded by the
Tribunal that in the interest of assessee's business
and in continuation of the business carried on by it,
the assessee had to explore the chances of
development in the field of oil exploration for which
it had to submit itself for bidding and tenders. The
tribunal has held that submitting tenders and bids in
the field of oil exploration is a highly
sophisticated technical task for which the assessee
company had to incur substantial amount of
expenditure before submitting its bid. If the
assessee is not successful in obtaining bid, such
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expenditure is allowable as revenue expenditure. The
Tribunal has held that merely because the assessee
failed to secure a bid, the expenditure cannot be
disallowed. The finding recorded by the tribunal is
finding of fact. No question of law arises. Appeal is
dismissed.
2 issues framed by the court
Whether the Tribunal was right in treating expenses for issuance of convertible debentures as revenue expenditure?
Whether preliminary expenses incurred prior to commencement of business activity are allowable as revenue expenditure when bid fails?
Colour shows how this judgement treated each authority
C.I.T. Vs. M/s.Siltap Chemicals LtdFollowed¶2
Income Tax appeal no.541 of 2008 C.I.T. Vs. M/s.Siltap Chemicals Ltd
1 provisions across 1 enactments
Commissioner of Income Tax-5
M/s.Essar Oil Limited
D.K.Deshmukh
J.P.Devadhar
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court