TMI Blog1987 (3) TMI 29X X X X Extracts X X X X X X X X Extracts X X X X ..... ee in accordance with scheme sanctioned under a Government resolution dated July 25, 1963. The remaining 100 tenements would be placed in the general industrial housing pool. An amount of Rs. 1,95,000 was required to be deposited by the assessee with the Maharashtra Housing Board as its contribution. The tenements to be built for the assessee were to be allotted to its eligible workers in accordance with the procedure for allotment laid down in the latterly mentioned Government resolution. A note annexed by the assessee, which is part of the record, shows that the tenements would belong to the State Government. The Industrial Housing Colony wherein they were to be situated would be run by the State Government. The cost of the services to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contribution of Rs. 48,750 to the Maharashtra Housing Board as capital expenditure is correct in law ? " It is true that the buildings in which the tenements were situated, and the land upon which the buildings stood were not of the ownership of the assessee. We are, none the less, of the view that the assessee obtained by incurring the expenditure an advantage of an enduring nature in the capital field. This is because the assessee, by incurring the expenditure, secured the advantage of housing its employees in 100 tenements for as long a period as the buildings in which the tenements were situated stood. There is no reason but to assume that the buildings would stand for a considerable period. It must also be noted that upon ceasing to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... field that the expenditure would be disallowable on the application of this test. If the advantage consisted merely in facilitating the assessee's trading operations or enabling the management and conduct of the assessee's business to be carried on more efficiently or more profitably while leaving the fixed capital untouched, the expenditure would be on revenue account, even though the advantage might endure for an indefinite future. Mr. Mehta submitted that the expenditure incurred by the assessee in the instant case merely enabled the management and conduct of the assessee's business to be carried on more efficiently. We are unable to take this view. The advantage gained by the assessee here is not merely of an enduring nature but is al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l expediency resulted in the finding that the expenditure was incurred for the purposes of the assessee's business and was, accordingly, deductible. No question of commercial expediency arises in the matter before us. In CIT v. Singareni Collieries Co. Ltd. [1980] 121 ITR 466 (AP), the Coal Mines Labour Housing Board was constituted for the construction of low-cost houses for persons employed in coal mines. In pursuance of the scheme prepared by this Board, the assessee entered into an agreement with the Board for the construction of quarters for its labourers. According to the scheme, the buildings were required to be durable for an estimated life of 15 years and the agreement was to operate only for that period of 15 years. During this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee had made the contribution in consideration of the fact that a health centre located near the factory premises would provide treatment to the ailing workmen. Under the State Employees' Insurance Act, the assessee had an obligation to maintain a hospital for its workmen or to meet the expenses of their treatment. Taking an overall picture of the matter, the Tribunal had recorded the finding that the expenditure on the donation was a business expenditure and the Orissa High Court was not inclined to take a different view. The facts in the Orissa High Court case are substantially different from those before us. There, it was an obligation on the part of the assessee to maintain a hospital for or to meet the expenses of treatment of its emp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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