TMI Blog1975 (10) TMI 15X X X X Extracts X X X X X X X X Extracts X X X X ..... building at Rupsa was an admissible business expenditure ? " Assessee is a rice mill. The year of assessment is 1963-64. Assessee claimed deduction of a sum of Rs. 12,137 as an item of business expenditure and states that this sum had been given for construction of a primary health centre building at Rupsa where the mill was located. The Income-tax Officer disallowed the claim on the ground that it was a donation for the benefit of the local public in general and could not amount to a revenue expenditure of the assessee. Assessee challenged the Income-tax Officer's decision in appeal before the Appellate Assistant Commissioner. The first appellate authority was of the view that the expenditure for the construction of the building of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e by the assessee was both for the general public and the employees of the mill. We have been told that the original of the certificate has been filed with the Appellate Assistant Commissioner. Since the employees of the mill were entitled to have the benefit of the hospital for medical treatment we consider that the decision relied on by the Appellate Assistant Commissioner in the case of Dewan Sugar General Mills Pvt. Ltd. v. Commissioner of Income-tax has no relevance to the facts of the present case. The concept of ' business expenditure ' is wider than has been understood by the Appellate Assistant Commissioner inasmuch as any expenditure even remotely related to the business would be a business expenditure which is required to be in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ...... 2. Expenditure may be treated as properly attributable to capital when it is made not only once and for all, but with a view to bringing into existence an asset or an advantage for the enduring benefit of a trade ...... The expressions ' enduring benefit ' or ' of a permanent character ' were introduced to make it clear that the asset or the right acquired must have enough durability to justify its being treated as a capital asset. 3. Whether, for the purpose of the expenditure, any capital was withdrawn, or, in other words, whether the object of incurring the expenditure was to employ what was taken in as capital of the business. Again, it is to be seen whether the expenditure incurred was part of the fixed capital of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ew to produce the profits it is a revenue expenditure. If any such asset or advantage for the enduring benefit of the business is thus acquired or brought into existence it would be immaterial whether the source of the payment was the capital or the income of the concern or whether the payment was made once and for all or was made periodically. The aim and object of the expenditure would determine the character of the expenditure whether it is a capital expenditure or a revenue expenditure. The source or the manner of the payment would then be of no consequence. It is only in those cases where this test is of no avail that one may go to the test of fixed or circulating capital and consider whether the expenditure incurred was part of the fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t was examining a claim of deduction raised by the assessee--a sugar mill in respect of amounts paid by way of contribution for the construction and development of roads between the various sugarcane producing centres and the sugar factory of the assessee. The roads were property of the Government and even after improvement, title vested in the Government. The court approved the tests laid down by it in Cement Company's case (Assam Bengal Cement Co. Ltd. v. Commissioner of Income-tax ) and came to hold that the expenditure for repair of the roads was a revenue expenditure. A Bench of the Madras High Court in the case of Commissioner of Income-tax v. T. V. Sundaram Iyengar Sons (P.) Ltd. was examining the tenability of the assessee's cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion to meet the costs of erection 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 assessee had obligation to maintain a hospital or meet the expenses on treatment. Taking an overall picture of the matter, the Tribunal recorded the finding that, in the facts of the case, it was business expenditure. We are not inclined to take a different view. Our answer to the question referred, therefore, is : On the facts and in the circumstances of the case, the amount of Rs. 12,137, donated by the assessee to the Collector, Balasore, for the construction of the primary health centre building at Rupsa is an admissible revenu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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