Revenue expenditure on land development was allowable where the land was stock-in-trade and prepared for sale as plots.

Expenditure on land development, including laying pipelines and dividing land into smaller plots, was treated as revenue expenditure because the land was held to be stock-in-trade and the work was undertaken to make it saleable in the ordinary course of the business of selling developed plots. The court held that such expenditure was incidental to carrying on that business and not capital in nature. The claim was therefore allowable, and the Tribunal was upheld.

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Issues: Whether the expenditure incurred for development of land, including laying of pipelines and division of the land into small plots, was revenue expenditure or capital expenditure and therefore allowable.

Analysis: The land had been found by the Tribunal to be stock-in-trade of the assessee. The expenditure was incurred to make the land saleable as part of the business of selling developed plots, and was therefore incidental to the carrying on of that business.

Conclusion: The expenditure of Rs. 30,183 was revenue in nature and was allowable. The Tribunal was right in allowing the claim.

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