9911796707
TMI Blog1994 (12) TMI 9X X X X Extracts X X X X X X X X Extracts X X X X ..... rother one E. F. Mehta were carrying on business at Bombay in partnership under the firm name of F. D. Mehta and Co., each having an equal share. This partnership was entered into on December 22, 1966. The business of the firm, F. D. Mehta and Co., comprised two concerns-one, a departmental store in the name of "Great Western Stores" and the other, a unit engaged in the manufacture of chocolates, etc., in the name of "Dr. Writers". Both these concerns were situated in the same premises. In or around the year 1968, certain disputes arose between the two partners which were referred to arbitration. As per the arbitration award, Mr. E. F. Mehta retired from the partnership with effect from December 31, 1971, on settlement of his claim at Rs. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the purpose of business was in the nature of capital expenditure and, as such, no part of it was allowable as a deduction under the provisions of section 37(1) of the Act. The Tribunal, therefore, set aside the order of the Appellate Assistant Commissioner and upheld the order of the Income-tax Officer. Hence, this reference at the instance of the assessee. Mr. F. B. Andhyarujina, learned counsel for the assessee, submitted before us that the payment of the sum of Rs. 1,07,767 was made to Mr.E. F. Mehta, for preserving and maintaining the business and preventing its disruption and hence, it was in the nature of revenue expenditure. He further submitted that as a result of the disputes between Mr. E. F. Mehta and the assessee, the business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iture is often very thin and hazy. None of the tests evolved from time to time to determine what is attributable to capital and what to revenue is either exhaustive or of universal application. Each case depends on its own facts. To decide, therefore, on which side of the line the expenditure falls, it is necessary to look at the nature of the business, the nature of the expenditure and the nature of the right acquired. If it is incurred by the assessee for the purpose of creating, curing or completing his title to capital, it must be regarded as capital expenditure. But, if it is for the purpose of protecting his business, it would be considered as revenue expenditure. Moreover, it is the true nature of the expenditure that is relevant and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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