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TMI Blog1971 (8) TMI 13X X X X Extracts X X X X X X X X Extracts X X X X ..... is at New Delhi. During the accounting period relating to the assessment year 1956-57, sums of Rs. 75,000 and Rs. 37,500 were paid by the assessee to the Cane Development Council of the Sugarcane Department of the Government of Uttar Pradesh by way of contribution for road development between the various sugarcane producing centres and the sugar factories of the assessee. The revenue authorities found that these contributions were intended to be applied for the construction and development of roads between the sugarcane producing centres and the sugar mills and held that these amounts constituted capital expenditure and could not be allowed as an admissible deduction while computing the total income of the assessee. The Appellate Tribunal u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilding roads of its own it would be capital expenditure. The High Court could see no difference if expenditure was incurred under compulsion or even without compulsion if the roads were built for facilitating transportation and improving the business and the flow of supply to and from the factories of the assessee. We are unable to agree with the reasoning or the conclusion of the High Court. The general principles governing the determination of the question whether an expenditure is in the nature of capital or revenue expenditure are well known. Where expenditure is incurred while the business is being carried on and not for its extension or for the substantial replacement of its equipment the position would be as follows: " If the expen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t not so much to bring about any asset or advantage of enduring benefit to itself but it was incurred for its efficient and convenient running and therefore it was of revenue nature. This case has been sought to be distinguished on behalf of the revenue on the ground that the expenditure was incurred only to meet the expense of the repair and no asset or advantage of an enduring benefit accrued or resulted to the assessee. This distinction does not appear to be sound because in the diverse nature of business operations it is difficult to lay down a test which would apply to all situations. The criteria has to be applied from the business point of view and on a fair appreciation of the whole situation. In the present case, apart from the ele ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the business of the club was to run race meetings on a commercial scale for which it was necessary to have races of a high order. For the popularity of races and to make its business profitable it was necessary for the club to have jockeys of requisite skill and experience in sufficient numbers. It was for that purpose that the school had been started for training Indian jockeys. If there had not been sufficient number of Indian jockeys the interest of the club would have suffered. Therefore, the expenditure incurred on running the school must be regarded as having been wholly and exclusively laid out for the purpose of the business of the club. Emphasis was laid on the principle that in order to justify a deduction it must be for rea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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