Barbed wire fencing expenditure treated as revenue where it only secured premises and facilitated efficient business operations.

Barbed wire fencing expenditure for factory premises was treated as revenue expenditure because it was incurred to secure and regulate the business premises and facilitate smooth operations, without bringing into existence an asset in the capital field or altering fixed capital. Applying the commercial test, the relevant enquiry is whether the outlay creates a capital advantage or merely enables efficient conduct of business; a mere enduring benefit is not decisive. The expenditure was therefore allowable as revenue in nature.

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Issues: Whether the expenditure incurred on barbed wire fencing of the factory premises was revenue expenditure or capital expenditure.

Analysis: The expenditure was incurred to secure and regulate the factory and to facilitate smooth and efficient running of the business. The fencing was not shown to be an asset in the capital field, and the mere fact that some advantage might endure for some time did not by itself make the outlay capital in nature. Applying the commercial test, the relevant enquiry was whether the expenditure brought into existence an advantage in the capital field or only facilitated the business operations while leaving the fixed capital untouched.

Conclusion: The expenditure was revenue in nature and allowable as such.

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