Business facilitation expenditure on a railway platform was treated as revenue expenditure and allowed as a deduction.

Expenditure incurred by an assessee, jointly with other industrial concerns, for constructing a railway platform to facilitate transport and improve manufacturing operations was treated as revenue expenditure. The arrangement secured an immediate commercial advantage and made the business more profitable and convenient, but did not create a capital asset belonging to the assessee in the ordinary sense. Applying the principle that spending incurred to facilitate business operations and obtain commercial advantage is allowable as revenue expenditure, even if the benefit endures for some time, the amount was rightly allowed as a deduction.

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Issues: Whether the contribution made by the assessee towards construction of a railway platform for facilitating its business operations was revenue expenditure or capital expenditure.

Analysis: The expenditure was incurred by the assessee, along with other industrial concerns, to secure a facility that made the transport and conduct of its manufacturing business more profitable and advantageous. The arrangement did not bring into existence a capital asset belonging to the assessee in the ordinary sense, but was an outlay made to obtain an immediate business advantage. The conclusion was supported by the principle that expenditure incurred to facilitate business operations and secure commercial advantage is allowable as revenue expenditure, even where the benefit may endure for some time.

Conclusion: The amount spent on construction of the railway platform was revenue expenditure and was rightly allowed as a deduction.

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