Revenue expenditure for partner's foreign management studies allowed where the outlay improved business efficiency without creating a capital asset.

Expenditure incurred by firms to send a partner abroad for MBA and management accounting studies was treated as revenue expenditure because it was undertaken under a written business arrangement to improve management and accounting skills and enhance professional services. The contractual commitment for post-study service showed a commercial purpose, and the outlay facilitated business efficiency without creating a capital asset. Any incidental personal benefit to the partner did not change the business character of the expense. The expenditure was therefore allowable as business expenditure, and the Revenue's appeal failed.

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Issues: Whether the expenditure incurred by the firms on sending a partner abroad for MBA and management accounting studies was allowable as revenue expenditure, or whether it was capital or personal expenditure.

Analysis: The expenditure was incurred under a written business arrangement intended to equip the firm with better management and accounting skills for improved professional services. The partner had already been admitted to the course and the firms secured a contractual commitment for service after completion of studies, showing a commercial purpose. Even if the advantage was of some enduring nature, it did not fall in the capital field because it facilitated the business operations and improved the efficiency of the firms without bringing into existence a capital asset. The fact that the partner incidentally benefited personally did not alter the business character of the outlay.

Conclusion: The expenditure was revenue in nature and was allowable as business expenditure; the Revenue's appeal failed.

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