TMI Blog1971 (7) TMI 18X X X X Extracts X X X X X X X X Extracts X X X X ..... cost of construction of those roads. The assessee also paid various sums of money, in the years relevant to the assessment years 1957-58 to 1959-60, towards the cost of construction of roads under the same scheme. In all these years, the assessee claimed that, as it was a manufacturer of sugar and its business entirely depended on the development of sugarcane and its transportation, the expenses in question were incurred in furtherance of its trade and should be allowed as deduction under section 10(2)(xv) of the Act. In respect of the assessment years 1957-58 and 1959-60 the Tribunal, by its order dated April 11, 1963, rejected the contention raised by the assessee. Following that decision, the assessee's claim for the deduction of Rs. 14,333 in respect of the assessment year 1961-62 was also rejected. The assessee made application for referring the questions involved in the cases in respect of the assessment years 1957-58 to 1959-60 and 1961-62 to this court for opinion. The Tribunal accepted the request made by the assessee and referred the afore-mentioned question for the opinion of this court in respect of all the afore-mentioned assessment years. In this court the reference ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed counsel, if the test as laid down by the Supreme Court in the afore-mentioned cases is applied to the facts of the present case, the expenditure in this case should also be regarded as revenue expenditure admissible as deduction under section 10(2)(xv) of the Act. He also relied upon certain observations made by this court in the case of Security Printers of India (P.) Ltd. v. Commissioner of Income-tax, in which the question that arose for consideration was whether the expenditure incurred by an assessee in respect of foreign tour undertaken by its agent to acquaint himself with new and modern techniques was revenue expenditure. This court observed that such an expenditure was incurred only with a view to earn greater profits in a competitive market and not to acquire a new asset. Learned counsel contended that, in the instant case also by incurring the expenditure, no new asset was acquired by the assessee. Contribution for developing the roads in the area was made so that cane may be transported to the factory in a more convenient manner and the assessee may be able to earn greater profits. The expenditure in question was, therefore, revenue expenditure. Learned counsel ref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e are unable to accept the same. Relevant portion of section 10 of the Income-tax Act, 1922, reads as follows : " (1) The tax shall be payable by an assessee under the head ' profits and gains of business, profession or vocation ' in respect of the profits and gains of any business, profession or vocation carried on by him. (2) Such profits or gains shall be computed after making the following allowances, namely: ..... (xv) any expenditure (not being an allowance of the nature described in any of the clauses (i) to (xiv) inclusive, and not being in the nature of capital expenditure or personal expenses of the assessee) laid out or expended wholly and exclusively for the purpose of such business, profession or vocation." In the case of Tata Hydro-Electric Agencies Ltd. v. Commissioner of Income-tax, their Lordships of the Privy Council observed: " What is money wholly and exclusively laid out for the purposes of the trade is a question which must be determined upon the principles of ordinary commercial trading. It is necessary, accordingly, to attend to the true nature of the expenditure, and to ask oneself the question, is it a part of the company's working expenses; is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t with a view to bringing into existence an asset or an advantage for the enduring benefit of a trade, then there is very good reason (in the absence of special circumstances leading to an opposite conclusion) for treating such an expenditure as properly attributable not to revenue but to capital." This observation also shows that money spent not only for acquisition of a tangible asset but also for the acquisition of an advantage for the enduring benefit of the trade can be considered to be capital expenditure. The Supreme Court, in the case of Assam Bengal Cement Co. v. Commissioner of Income-tax observed that : " If the expenditure is made for acquiring or bringing into existence an asset or advantage for the enduring benefit of the business it is properly attributable to capital and is of the nature of capital expenditure." This decision of the Supreme Court also shows that it is not necessary that before an expenditure can be classed as capital expenditure it must result in the acquisition of some tangible asset. Even if some advantage for the benefit of trade as, a whole is derived by making that expenditure, it will be an expenditure of capital nature. The observatio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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