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2019 (7) TMI 707 - HC - Income TaxNature of expenditure - contribution made by the Assessee towards the construction of the new bridge - revenue or capital expenditure - HELD THAT:- The test laid down by Lord Cave L.C. in British Insulated and Helsby Cables Ltd., [1925] 10 TC 155, 192 (HL) was to the effect that when an expenditure is made, not only once and for all, but with a view to bringing into existence an asset or an advantage for the enduring benefit of a trade, there was very good reason (in the absence of special circumstances leading to an opposite conclusion) for treating such expenditure as properly attributable not to revenue, but to capital. The Supreme Court in L.H. Sugar Factory and Oil Mills (P) Ltd [1980 (8) TMI 1 - Supreme Court] held that it was not every advantage of enduring nature acquired by an assessee that brings the case within the principle laid down in this test. If the advantage consists merely in facilitating the assessee's business operations or enabling management and conduct of the business to be carried on more efficiently or more profitably, while leaving the fixed capital untouched, the expenditure would be on revenue account, even though the advantage may endure for an indefinite future. These observations of the Supreme Court (supra) completely cover the controversy in the present case. As rightly held by the ITAT, in the present case, the contribution made by the Assessee towards the construction of the new bridge facilitated the business of the Assessee, enabling its being carried on more efficiently or more profitably and yet, at the same time, the fixed capital of the Assessee was left untouched. In the premises, the expenditure was clearly on revenue account and not on capital account, though it resulted into an advantage of enduring nature for the Assessee. It is difficult to see how EMPIRE JUTE COMPANY LIMITED VERSUS CIT [1980 (5) TMI 1 - SUPREME COURT] assists the Revenue in the present matter. Here, the Assessee, by spending for construction of the new bridge, had not acquired any property or right of permanent character the possession of which was a condition of carrying on its trade at all. What it thereby achieved was reduction of the cost of operating its profit-making apparatus. It was, thus, in the nature of expenditure as part of the process of profit earning, as explained by the Supreme Court in Empire Jute Co. Ltd. (supra). - Decided in favour of assessee.
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