P.V.B. Rao, Vice President -
(1.) THESE are four appeals-two by the assessee and the other two by the revenue, involving some common issues. We, therefore, propose to dispose of all the four appeals by a composite order.
IT Appeal No. 1812 (Delhi) of 1981 - Assessment Year 1974-75:
(2.) The assessee is carrying on the business of publishing a daily newspaper which has substantial circulation. The assessee-company was functioning from 1937 in a rented building in North Block, Connaught Circus, New Delhi. It belonged to the Life Insurance Corporation of India (LIC). In view of the expansion of the activities, it was found that the accommodation was not sufficient. Further, in accordance with the lease agreement entered into with the LIC of India, the company had to vacate the rented premises by 30-9-1969 and as there was no provision for further extension of time, it was proposed that a building should be constructed in 18-20, Kasturba Gandhi Marg, New Delhi for housing the press of the assessee-company. At this stage, it might be relevant to mention that the LIC of India agreed to advance a sum of Rs. 50 lakhs to the assessee-company for the construction of the building. There was a deed of mortgage executed by the assessee in favour of LIC of India in respect of the loan of Rs. 50 lakhs. This mortgage deed executed by the assessee is dated 26-5-1969. Clause 14(G) of the deed mentions:
That the Mortgager undertakes to vacate the entire portion admeasuring about 38,008 square feet occupied by it at present in Bombay Life Building at Connaught Circus, New Delhi, as tenant of the Corporation as soon as the proposed multi-storeyed building at 18-20, Curzon Road, New Delhi, has been completed.
It, therefore, appears that though the lease expires, the LIC agreed to continue the lease in favour of the assessee till the new building was completed. As soon as the building was completed, that is, sometime in the accounting year relevant to the assessment year 1974-75, the assessee started shifting its plant and machinery from the old premises to the new premises. The assessee-company being a publisher of a daily newspaper did not want to stop its publication, perhaps even for a day and planned shifting of plant and machinery with the help of foreign technicians. No doubt foreign technicians were brought to India with the approval of the Government of India. Thus, the assessee incurred expenditure in connection with the shifting as follows:
Rs. 2,24,534 for the assessment year 1974-75
Rs. 5,56,064 for the assessment year 1975-76.
This expenditure was claimed by the assessee as a deduction out of its business income.
The ITO as well as the Commissioner (Appeals) disallowed the expenses claimed for shifting on the ground that the expenses incurred for the shifting of the premises cannot be allowed and in that connection they relied on the decision of the Supreme Court in the case of Sitalpur Sugar Works Ltd. v. CIT  49 ITR 160. The assessee's argument based on the Board's Circular No. 22 of 1943, dated 23-6-1943 has also been rejected on the ground that that circular has no application to the facts of the case. The Commissioner (Appeals) has recorded the findings as under:
(i) the rented premises at Connaught Circus suffered from various disadvantages and inconveniences in the carrying on of the assessee's expanded and extending business ;
(ii) the real object of constructing a new accommodation at Kasturba Gandhi Marg and shifting of the press, machinery and offices to the new premises was to:
(a) set up the concern with greater advantages than it had in the previous set up,
(b) to put up its press machinery and office, i.e., its business apparatus, in a better shape so that it might produce larger profits for an enduring period in the future;
(iii) the expenditure in shifting to a better premises produced an advantage which enabled the assessee's business to prosper and which could be expected to last for ever; and
(iv) the expenditure thus related to the whole structure and framework of the assessee's profit making apparatus.
(3.) THE learned counsel for the assessee, Mr. Vaish, reiterated the, arguments advanced by him before the Commissioner (Appeals). He particularly pointed out that the decision of the Supreme Court in the case of Sitaipur Sugar (supra) cannot apply to the facts of this case as, according to him, the assessee had to shift because its lease expired and that the lessor advanced money with the specific understanding that the assessee would quit the premises and shift to its newly constructed building. It is also pointed out that the decision of the Supreme Court was mainly based on the fact that there was an enduring advantage in that case on account of shifting, whereas, there was no enduring advantage in the instant case. It was no doubt felt, Mr. Vaish pointed out, that the premises became rather cramped in view of the expansion already achieved and that reason was only incidental and the main reason which prompted the assessee to shift its own building was that it had to vacate on account of the expiry of the lease. Mr. Vaish also contended that the assessee had to incur the expenditure as it would have incurred substantial loss had it closed its daily publication of newspaper even for a day.
THE above argument of Mr. Vaish was refuted by Mr. Nagrajan, the learned departmental representative. In his usual simple and lucid style, Mr. Nagrajan pointed out that the assessee itself admitted that its activities expanded and, therefore, it was not able to continue its work in the old premises and as such the ratio of the decision in the case of Sitalpur Sugar (supra) squarely applies to the facts of the case and the assessee cannot get the benefit of deduction of the shifting charges.;