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TMI Blog1973 (10) TMI 5X X X X Extracts X X X X X X X X Extracts X X X X ..... ed industrial housing scheme sponsored by the State Government. The assessee claimed that this amount was an allowable deduction as a revenue expenditure under section 10(2)(xv) of the Indian Income-tax Act, 1922. Before the Income-tax Officer the assessee claimed that there was no acquisition of any capital asset on the ground that though the company paid the amount to the owners of the land, the conveyance was executed in the name of the District Collector, Madurai. It was also contended that the amount was spent to provide quarters for the company's workers in order to get their maximum service to improve the company's business and that, therefore, it is an allowable deduction under section 10(2)(xv). The Income-tax Officer disallowed the claim in the view that the expenses incurred towards providing quarters to the assessee's employees surely gives the company a perennial advantage and the fact that the land was purchased in the name of the District Collector will not change the capital nature of the transaction. The Appellate Assistant Commissioner was also of the view that the advantage derived by incurring this expenditure is clearly of a permanent nature as it would result ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sted the Tribunal to refer the following two questions : "1. Whether the Tribunal's conclusion that the expenditure was incurred wholly and exclusively for the purposes of the business is based on a reasonable view of the facts of the case? and 2. Whether the conclusion of the Tribunal that the expenditure neither resulted in acquisition of a capital asset nor in bringing in any benefit or any enduring benefit to the assessee is based on a reasonable view of the facts and circumstances of the case?" But the Tribunal considered that the question referred would cover the point in issue. Thereafter, revenue filed T.C.P. No. 5/69 under section 66(2). This court by an order dated February 14, 1969, dismissed that petition holding that the question already referred to this court in T.C. No. 94/68 covers the other two questions as well and which are only aspects of the question that has been referred. Under section 10(2)(xv) of the Indian Income-tax Act, 1922, any expenditure not being in the nature of a capital expenditure laid out or expended wholly and exclusively for the purpose of the business, shall be deducted in computing the profits and gains of the business. There could be n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ture as properly attributable not to revenue but to capital." The Supreme Court considered this question in detail in Assam Bengal Cement Co. Ltd. v. Commissioner of Income-tax , and the following passage in that judgment may be usefully quoted : "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. If on the other hand it is made not for the purpose of bringing into existence any such asset or advantage but for running the business or working it with a view to produce the profits it is a revenue expenditure. If any such asset or advantage for the enduring benefit of the business is thus acquired or brought into existence it would be immaterial whether the source of the payment was the capital or the income of the concern or whether the payment was made once and for all or was made periodically. The aim and object of the expenditure would determine the character of the expenditure whether it is a capital expenditure or a revenue expenditure. The source or the manner of the payment would then be of no consequence. It is o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... kers the assessee will be able to keep them contented over any length of period and that in any case it would depend upon the part played by the assessee in providing accommodation for the workers. The Tribunal also pointed out that under the scheme of the Government, as seen in the press note No. 1 dated August 22, 1958, an agreement was reached between the representatives of the employers and the employees and the Government that each employer in this State employing one thousand or more workers will as a minimum programme provide houses for four per cent. of his employees excluding those already housed by the employer and proceed at the same rate every year thereafter. The provision of housing for 50 per cent. of the employees should be the maximum expected of any employer. The Tribunal considered that this creates an obligation on the assessee to incur similar expenditure every year and, therefore, it could not be stated that the expenditure incurred by the assessee in this case had been incurred once and for all the time. The Tribunal also relied on the fact that the expenditure in question works out only to about one per cent. of the total income of the assessee-company for t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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