https://www.taxtmi.com/caselaws?id=276594 Compensation paid to cancel proposed machinery purchases was treated as capital expenditure because it related to the acquisition or abandonment of a capital asset, not to the ordinary operations of the business. The controlling test was whether the outlay was connected with the means of carrying on the business or with its actual carrying on; only the latter is revenue in nature. On the facts, the cancellation payments were made to avoid liability arising from the proposed acquisition of machinery, so they were capital in character and not deductible as revenue expenditure under section 10(2)(xv) of the Income-tax Act, 1922. en-us Tue, 24 Apr 1962 00:00:00 +0530 Wed, 14 Nov 2018 14:36:07 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=276594 Compensation paid to cancel proposed machinery purchases was treated as capital expenditure because it related to the acquisition or abandonment of a capital asset, not to the ordinary operations of the business. The controlling test was whether the outlay was connected with the means of carrying on the business or with its actual carrying on; only the latter is revenue in nature. On the facts, the cancellation payments were made to avoid liability arising from the proposed acquisition of machinery, so they were capital in character and not deductible as revenue expenditure under section 10(2)(xv) of the Income-tax Act, 1922. Case-Laws Income Tax Tue, 24 Apr 1962 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=276594