GOVINDAN NAIR J. - The Income-tax Appellate Tribunal, Madras Bench, has referred the following questions for our decision :
'(1) Whether, on the facts and circumstances of the case, the disallowance of the sum of Rs. 2,625 as capital expenditure is justified in law
(2) Whether, on the facts circumstances of the case, the assessee is entitled to the deduction of the sum of Rs. 2,625 in the computation of his total income under section 10 of the Act ?'
The amount admittedly has been expended for reclaiming a piece of land over which licence has been granted to the assessee to install a petrol pump by the Burmah Shell Oil Distributing Company. It cannot be said that the improvements that have been effected on the land consisting of filling up the ditches and raising the land and of constructing a wall are not of a capital nature. Even so, it is suggested that, because the assessee had only leave and licence over the land, the rule that expense in the nature of capital expenditure should not be deducted in computing the assessable income should not be applied. We are unable to accept this contention. The changes effected were of an enduring nature and the conclusion reached by the assessing authorities that the money was expended for capital purposes is correct. We, therefore, answer the first question referred to us in the affirmative, that is, in favour of the department and against the assessee. In view of our answer to question No. (1) question No. (2) cannot arise and it is so agreed.
This income-tax referred case is ordered on the above terms. There will be no order as to costs.