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TMI Blog1995 (12) TMI 387X X X X Extracts X X X X X X X X Extracts X X X X ..... en expenses in the factory compound of the company are allowable as revenue expenditure in terms of sub-s. (1) of s. 37 of the IT Act, 1961 ?" 2. Briefly stated, the facts of the case are that the applicant is public limited company. It started erection of a factory at Dewas. In the process of erection, the applicant also spent money on developing the garden in front of the factory on the open land and incurred an expenditure of ₹ 86,023. The ITO disallowed the sum of ₹ 50,000 holding it to be capital expenditure. Aggrieved, the applicant filed the appeal before the CIT(A) who confirmed the decision. The applicant then filed second appeal before the Tribunal. The second appeal was allowed only in part. The applicant did no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the wire fencing was allowable as revenue expenditure. 9. In Teksons Pvt. Ltd. vs. CIT (1979) 11 CTR (Bom) 314: (1979) 120 ITR 745(Bom) : TC 17R.1138, it was held that the expenditure incurred by the assessee for preparation of the play ground was incidental to the activities of the assessee and was a revenue expenditure allowable under s. 37(1) of the Act. 10. The test whether a particular expenditure is a capital expenditure or a revenue expenditure is of no universal application. In Kanga & Palkhivala, The Law & Practice of Income-tax Vol. 1'Edn. 1990, the learned authors observed as under : "It is now well settled as a result of numerous cases which have been noted at appropriate places that none of the tests dealt with ab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ciation of the assets or was unrelated to the business activities of the applicant-assessee. It is now popularly voiced that plantation or garden in such factory is necessary to avoid pollution of environment and create congenial atmosphere. The Tribunal disallowed the expenditure on wrong premises and in fact the order is half hearted. The Tribunal wrongly held that expenditure on garden simultaneously with machinery would not be of a revenue nature. This logic is difficult to comprehend. 13. In our view the expenditure incurred on garden in the facts and circumstances was not liable to be classified as capital expenditure or personal expenses. 14. Sec. 37(1) of the Act provides as under : "37. General.'(1) Any expenditure (no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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