TMI Blog1993 (6) TMI 46X X X X Extracts X X X X X X X X Extracts X X X X ..... e, the Tribunal was right in law in holding that the sum of Rs. 39,858 expended by the assessee for stamp duty and other registration expenses in respect of the lease deeds executed by the Government of Kerala in its favour is not an allowable revenue expenditure ?" The respondent is the Revenue. We are concerned with the assessment year 1972-73. The assessee is a company fully owned by the Government of Kerala. It is engaged in the business of plantation. The land required for plantation activities carried on by the assessee-company is generally provided by the Government of Kerala on leasehold right. proper lease agreement is executed between the assessee and the Government. During the accounting period relevant to the assessment year 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t-assessee, Mr. Vellappally, and also counsel for the respondent-State, Senior Government Pleader, Mr. V. C. James. Counsel for the assessee contended that the Appellate Tribunal was in error in solely relying upon the decision of the Allahabad High Court in United Commercial Corporation v. CIT [1970] 78 ITR 800, which stressed the obtaining of enduring benefit as conclusive or decisive to hold that the expenditure is a capital expenditure. It was argued that, in the light of the recent decisions of the Supreme Court in Empire Jute Co.'s case [1980] 124 ITR 1, Associated Cement Companies Ltd.'s case [1988] 172 ITR 257 (SC) and Alembic Chemical Works Co. Ltd.'s case [1989] 177 ITR 377 (SC), even if the expenditure is incurred for obtaining ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ), Bank of India's case [1987] 168 ITR 731 (Bom), Richardson Hindustan Ltd.'s case [1988] 169 ITR 516 (Bom) and Sri Krishna Tiles and Potteries Madras (P.) Ltd.'s case [1988] 173 ITR 311 (Mad) to contend that the expenses incurred towards stamp duty, adjudication fee and registration fee in respect of lease deeds covering lands leased to the assessee by the Government for plantation should be treated as revenue expenditure. On the other hand, counsel for the Revenue contended that, admittedly, the assessee has obtained an enduring benefit by obtaining the lease deeds and any expenses incurred in connection therewith should be treated as capital expenditure. Stress was laid on the following decisions: United Commercial Corporation's case [ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee's business to be carried on more efficiently or more profitably, while leaving the fixed capital untouched, the expenditure should be held to be on revenue account, even though the advantage may endure for an indefinite future. The test of 'enduring benefit" has been held to be not a decisive or conclusive test ; it cannot be applied blindly and mechanically. The question must be viewed in the larger context of business necessity or expediency. If the expenditure is so related to the carrying on or the conduct of the business, it may be regarded as an integral part of the profit-earning process and not for acquisition of an asset or of a right of a permanent character. It has also been held that there is a dichotomy between profi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a High Courts, while rendering the decisions in United Commercial Corporation v. CIT [1970] 78 ITR 800 (All), Gobind Sugar Mills Ltd. v. CIT [1979] 117 ITR 747 (Cal) and Hotel Rajmahal v. CIT [1985] 152 ITR 218 (Kar), had not the advantage of the liberal and pragmatic approach made by the Supreme Court in the three recent decisions which we have referred to above. We concur with the decisions of the Bombay and Madras High Courts referred to above. We respectfully dissent from the decisions of the Allahabad, Calcutta and Karnataka High Courts in United Commercial Corporation v. CIT [1970] 78 ITR 800 (All), Gobind Sugar Mills Ltd. v. CIT [1979] 117 ITR 747 (Cal) and Hotel Rajmahal v. CIT [1985] 152 ITR 218 (Kar). In our view, they are not in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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