Commission for a limited business contract is revenue expenditure, not capital outlay, under the enduring benefit test.

Commission paid to procure a single shipping contract for a limited period was held to be revenue expenditure, not capital expenditure, because it was linked only to that transaction and did not create a new source of income, monopoly right, or asset of enduring character. Applying the enduring benefit test, the payment was treated as ordinary commercial outlay incurred in the course of an existing shipping, clearing and forwarding business. The expenditure was therefore allowable as a business deduction rather than an outlay for initiating or expanding the business framework.

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Issues: Whether commission paid for procuring a particular business contract was capital expenditure or revenue expenditure deductible as business expenditure.

Analysis: The payment was made only to secure one contract relating to the shipment of iron ore for a limited period and was linked to the duration of that contract. The business of the assessee was already that of a shipping, clearing and forwarding agent, and the payment did not create a new source of income, a monopoly right, or any asset or advantage of permanent character. Applying the test of enduring benefit, the expenditure was part of the ordinary commercial outlay incurred in the course of business and not an outlay for the initiation or expansion of the business framework.

Conclusion: The commission was revenue expenditure allowable as a business deduction, and the question was answered in favour of the assessee.

Ratio Decidendi: Expenditure incurred to procure a specific business transaction for a limited duration, without creating an enduring asset or permanent commercial advantage, is revenue expenditure and not capital expenditure.

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