TMI Blog1998 (8) TMI 60X X X X Extracts X X X X X X X X Extracts X X X X ..... At the instance of the Revenue, the Income-tax Appellate Tribunal referred the following question relating to the assessment year 1986-87 for the opinion of this court : "Whether, on the facts and in the circumstances of the case, the expenditure incurred for water treatment plant and fume extraction plant is capital in nature ?" The facts, in brief, are that the assessee---a limited company-- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... antity of water the assessee dug wells. But the well water was also found to be salty. Hence they installed the water treatment plant for getting pure water with an intention to improve the functioning of the factory. This did not in any way enhance the production of steel... The fume extraction plant also did not lead to any increase in the volume of production. It was installed to ward off healt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t........ There is also no single definitive criterion which, by itself, is determinative as to whether a particular outlay is capital or revenue. The 'once for all' payment test is also in conclusive. What is relevant is the purpose of the outlay and its intended object and effect, considered in a common sense way having regard to the business realities. In a given case, the test of 'enduring b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... capital or revenue in nature. The Supreme Court observed as under : "Even after the agreement, the product continued to be penicillin and the agreement with Meiji stipulated the supply of the 'most suitable subcultures' evolved by Meiji for purposes of augmentation of the yield of penicillin ...... The mere improvement in or updating of the fermentation-process would not necessarily be inconsis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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