V.K.SINGHAL, J. - (1.)SINCE both the aforesaid cases involve identical questions of law, they are being disposed of by this common order and for the disposal of these cases, the facts of the case of Manoj Textiles v. CIT (D.B.I.T. Reference No. 65 of 1989) are being taken up.
The Income-tax Appellate Tribunal has referred the following question of law arising out of its order in respect of the assessment year 1981-82 under section 256(1) of the Income-tax Act, 1961:

Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the development charges paid to RIICO is capital expenditure?

(2.)THE brief facts of the case are that a sum of Rs. 5,338 was paid by the assessee to RIICO as development charges which was considered by the Income-tax Officer as capital expenditure as it related to the development of the land which was leased for 99 years. After taking into consideration the various clauses of the agreement, the Tribunal came to the conclusion that RIICO has made two charges on the lessees-one the lease for the land and another the development expenses incurred by them of these industrial plots. THEse development expenses have been incurred by RIICO so that the entire industrial belt is developed according to the standards fixed by it. It was further said that:
THE RIICO in the alternative could have left the development to be made by the assessee himself. In that event, the expenditure so incurred by the assessee would be definitely capital in nature though the land is a leasehold land. THErefore, what the assessee had paid for is such expenditure on development of the land which otherwise would have been incurred by him. THErefore, the development charges are clearly capital in nature. THE distinguishing feature between the present case before us and the one before the Supreme Court is that in the Supreme Court case everything including the roads were existing and what has been incurred was a further construction of the roads so that the roads remain in motorable condition. In the present case, the development of the industrial belt was carried out so that the assessee could be given the land on lease and, thus, the development could become part and parcel of the lease as such. THErefore, it is clearly a capital expenditure.

This court has considered this matter in the case of Manoj Dyeing v. CIT, 1995 212 ITR 299decided on October 14, 1992, and it has been held that the expenditure incurred is of capital nature. In these circumstances, we are of the view that the Tribunal was justified in holding that the development charges paid to the RIICO are capital expenditure.

Consequently, the reference is answered in favour of the Revenue and against the assessee. No order as to costs.