TMI Blog1969 (7) TMI 12X X X X Extracts X X X X X X X X Extracts X X X X ..... following question of law has been referred to the High Court for its opinion, under section 256(1) of the Income-tax Act, 1951: " Whether, in the facts and circumstances of the case, the Tribunal was right in holding that the compensation paid to ex-operators for taking over their bus routes was expenditure of capital nature?" The facts, on the basis of which the reference has been made, hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ken over by the assessee-company. The total compensation paid was distributed over the three years and the amount paid has been mentioned in the order of reference. The amount so paid by way of compensation was claimed by the assessee-company as amounting to "revenue expenditure" and accordingly deduction was sought under section 10(2)(xv) of the Income-tax Act, 1922. This amount was consistently ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iture. It is now well settled that it is difficult to lay down exhaustive tests which will demarcate the field between the two types of expenditure, capital and revenue. It would depend upon the facts and circumstances of each case. One test is however clear, that is, if the expenditure relates to the domain of running the business concern, then, ordinarily, it would be revenue expenditure. If, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny competition from outsiders within the area." The aforesaid principle applies, in terms, to the present case. The assessee-company acquired the unexpired permits and thereby got rid of competition from private operators who were on the field prior to the acquisition. The investment was clearly one of a capital nature. The Tribunal correctly answered the question of law. We would accordingly ..... X X X X Extracts X X X X X X X X Extracts X X X X
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