Capital versus revenue test: staircase replacement was treated as revenue expenditure, not capital outlay.

Expenditure incurred to replace an old wooden staircase with a reinforced concrete staircase was treated as revenue expenditure because the governing test is whether the outlay creates a capital asset or secures an enduring advantage of a capital nature. Applying that distinction, the replacement of a more durable article for business use did not amount to acquisition of a capital asset in the relevant sense, and the expenditure remained allowable as revenue expenditure.

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Issues: Whether the expenditure incurred for replacement of a staircase was capital expenditure or allowable as revenue expenditure.

Analysis: The replacement of the old wooden staircase with a reinforced concrete staircase was examined in the light of the settled distinction between capital and revenue expenditure. The controlling test applied was whether the expenditure brought into existence a capital asset or conferred an enduring advantage of a capital nature. The Court followed its earlier view that expenditure incurred for the purposes of business does not become capital merely because a new and more durable article is substituted, if no capital asset of an enduring character is acquired in the relevant sense.

Conclusion: The expenditure was not capital expenditure and was allowable as revenue expenditure.

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