TMI Blog2005 (5) TMI 31X X X X Extracts X X X X X X X X Extracts X X X X ..... termed as one that results in an "enduring benefit". – appeal allowed - - - - - Dated:- 26-5-2005 - Judge(s) : SWATANTER KUMAR., S. RAVINDRA BHAT. JUDGMENT The judgment of the court was delivered by S. Ravindra Bhat J.-This is an appeal under section 260A of the Income-tax Act, 1961; it is directed against the order dated January 23, 2004 passed by the Income-tax Appellate Tribunal, Delhi Bench (hereafter called "the Tribunal"). The question of law formulated in this appeal is as follows: "Whether, having due regard to the facts of the case, the expenditure on payment of one-time non-refundable fee for dealership of OTC had resulted in a direct and substantial personal benefit to the assessee in his existing business of tradi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disallowed it. The assessee preferred an appeal before the Commissioner of Income-tax (Appeals), who, after re-examination of the issue held that the assessee could not have traded without payment of non-refundable admission fee and one-time non-refundable fee for dealership. As such, the expenditure of Rs. 3,00,000 was held to be capital expenditure. The Commissioner, however, treated payment of Rs. 1,00,000 (one-time non-refundable fee for permitted securities) as revenue expenditure and restricted the addition to Rs. 3,00,000. Aggrieved by the order of the Commissioner of Income-tax (Appeals) the assessee as well as the Revenue preferred appeals before the Tribunal, which, by the impugned order rejected them. The issue involved is wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ship fee payable for access to facilities of an organization did not constitute an expenditure that resulted in "an enduring benefit". Learned counsel for the Revenue, on the other hand defended the order of the assessing authority and the Tribunal. It was submitted that without obtaining the dealership the assessee cannot trade on permitted securities segments of the exchange. Hence the admission fee was paid to obtain a right to trade or to become a dealer of the OTC Exchange of India. As such, this expenditure is of capital nature, since it constituted an expenditure that resulted in creation of an asset of "an enduring nature". In the judgment reported as Empire Jute Co. Ltd. v. CIT [1980] 124 ITR 1, the Supreme Court, after conside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at in all cases, securing a benefit for the business would be prima facie capital expenditure 'so long as the benefit is not so transitory as to have no endurance at all'. There may be cases where expenditure, even if incurred for obtaining advantage of enduring benefit, may, none the less, be on revenue account and the test of enduring benefit may break down. It is not every advantage of enduring nature, acquired by an assessee that brings the case within the principle laid down in this test. What is material to consider is the nature of the advantage in a commercial sense and it is only where the advantage is in the capital field that the expenditure would be disallowable on an application of this test. If the advantage consists merely in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 999] 239 ITR 237 (Delhi) reads as follows: "One rough and ready test, which is usually being followed, is to try to ascertain whether a particular expenditure brings about 'enduring benefit' to the assessee. In Assam Bengal Cement Co. Ltd. v. CIT [1955] 27 ITR 34, the Supreme Court 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. If, on the other hand, it is made only for running the business or working it with a view to produce the profits, it is a revenue expenditure. Judged by the standard of enduring benefit, we are of the opinion that the Tribunal has ri ..... X X X X Extracts X X X X X X X X Extracts X X X X
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