Business expenditure on concessional pesticides for cane growers was revenue deductible where it advanced the assessee's commercial interest.

Expenditure incurred by a sugar mill in supplying pesticides to sugarcane growers at concessional rates was held to be revenue in nature because it was directly connected with improving the growth and yield of sugarcane, the assessee's basic raw material. The absence of any legal obligation to make the supply did not change its business character, and the record showed no extra-commercial consideration. The outlay was therefore deductible in computing business income, with the issue answered in favour of the assessee and against the Revenue.

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Issues: Whether the expenditure incurred by the assessee-society on supply of pesticides to sugarcane growers at concessional rates was revenue expenditure deductible in computing business income.

Analysis: The assessee was engaged in running a sugar mill and depended on sugarcane as its basic raw material. Supplying pesticides at concessional rates to sugarcane growers was undertaken to promote the growth and yield of sugarcane and thereby advance the assessee's own commercial interest. The expenditure was directly connected with the business, and the fact that there was no legal obligation to supply pesticides did not make the outlay any the less business-related. The record disclosed no extra-commercial consideration.

Conclusion: The expenditure was revenue in nature and deductible. The question was answered in favour of the assessee and against the Revenue.

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