TMI Blog1981 (9) TMI 102X X X X Extracts X X X X X X X X Extracts X X X X ..... e reproduced. The assessees run their factories in what is called the Sembiam Estate, which is the property of a company called the Simpson General Finance Co. Ltd. The said company incurred expenditure for black topping of the road in the estate from time to time. There was an agreement dated September 25, 1968, between the said company and M/s. Wheel Rim Company of India Ltd., one of the companies carrying on business in the Sembiam Estate. The agreements with the other companies having their factories in the estate stood in the same pattern. A similar expenditure had been incurred in the year 1963, and it was allowed by the AAC. As far as this year was concerned, a sum of Rs. 3,50,000 was the expenditure which was allocated among the several companies working in this estate. In the case of M/s. Tractors and Farm Equipments Ltd., the amount allocated was Rs. 80,500. In the case of Bimetal Bearings Ltd., the amount was Rs. 26,900 and in the case of Addison Paints Chemicals Ltd., it was Rs. 36,750. In the assessment made on the several assessees for the assessment year 1969-70, and in the case of Bimetal Bearings Ltd., for the assessment year 1971-72, the assessees claimed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o its factories and was, therefore, incurred for running the business or working it with a view to producing profits without the assessee gaining any advantage of an enduring benefit to itself. This case would support the assessee's claims. In Travancore-Cochin Chemicals Ltd. v. CIT [1977] 106 ITR 900 (SC), a similar question arose on the following facts: The assessee, a manufacturer of chemicals, was receiving and despatching through lorries materials required for and produced in its factory situated in an area which was not served by good roads. Along with three other public undertakings the assessee approached the Kerala Govt. for laying a new road to that area. The Government bore the cost of acquisition of the land and 25 per cent. of the cost of construction of the road. The total cost of construction came to Rs. 1,04,500, of which the assessee's share came to Rs. 26,100. In considering the deductibility of this amount, the Supreme Court held that by having the new road constructed for the improvement of transport facilities, the assessee acquired an enduring advantage for its business and the expenditure incurred by the assessee was of a capital nature. The present case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x Act, 1922. " (the underlining is by us). Regarding the sum of Rs. 50,000, the Supreme Court referred to the facts and several other decisions including the one in Lakshmiji Sugar Mills' case [1971] 82 ITR 376 (SC) and Travancore-Cochin Chemicals' case [1977] 106 ITR 900 (SC). After referring to a passage from Lakshmiji Sugar Mills' case, at p. 379, their Lordships pointed out that these observations were directly applicable to the case before them and that on the analogy of that decision the sum of Rs. 50,000 was contributed for running the business and working it with a view to, produce the profits without the assessee getting any advantage of enduring benefit to itself. The decision in Travancore-Cochin Chemicals' case was distinguished and at p. 300, after referring to the observations in Travancore-Cochin Chemicals' case, at p. 904, it was held that Lakshmiji Sugar Mill's case must be confined to the peculiar facts of that case. Their Lordships pointed out thus: " We would make the same observation in regard to the decision in Travancore Cochin Chemicals' case [1977] 106 ITR 900 (SC), and say that that decision must be confined to the peculiar facts of that case, because ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 977] 106 ITR 900 (SC) would clearly go out of the field of our consideration even apart from the doubt cast by the Supreme, Court in the latest case, because that decision dealt with the construction of a new road for which the contribution was made. Construction of new road would produce a new asset. Wherever there is either a direct expenditure or a contribution by way of reimbursement for black topping of the road already laid out, as in the case of painting a house, the expenditure cannot but be of a revenue nature. There is no question of any asset brought into existence or even an enduring benefit. The expenditure does not bring in any enduring benefit just as a fixed capital does. It is this aspect which was pointed out by Lord Radcliffe in Commr. of Taxes v. Nchanga Consolidated Copper 'Mines Ltd. [1965] 58 ITR 241 (PC), where he observed that it would be misleading to suppose that 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 ". As pointed out by the Supreme Court in Empire jute Co. Ltd. v. CIT [1980] 124 ITR 1 (SC) at p. 10 : " It is not every advan ..... X X X X Extracts X X X X X X X X Extracts X X X X
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