TaxTMI 
TaxTMI 
2005 (5) TMI 31
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....or dealership of OTC had resulted in a direct and substantial personal benefit to the assessee in his existing business of trading in shares/securities was allowable as revenue expenditure?" The assessee incurred expenses of Rs. 4,27,500 on account of OTC membership and annual fee and claimed it to be revenue expenditure. The break-up of these expenses is as follows: -------------------------------------------------- "(i) Rs. 50,000 one-time non-refundable fee; (ii) Rs. 2,50,000 one-time non-refundable admission fee for dealership; (iii) Rs. 5,000 annual fee from September,1993 to August, 1994; (iv) Rs. 1,00,000 one-time non-refundable fee for permitted securities to be traded; (v) Rs. 12,00....
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....r of Income-tax (Appeals) the assessee as well as the Revenue preferred appeals before the Tribunal, which, by the impugned order rejected them. The issue involved is whether the assessee can obtain the dealership or acquire a right to trade on the permitted securities with the OTC Exchange without depositing a non-refundable admission fee and a one-time non-refundable admission fee for dealership. Pursuant to the applications of the assessee, the OTC Exchange of India asked it to make the payment of permitted securities fees. An amount of Rs. 50,000 was payable along with the application; after completion of procedural formalities, and upon being found eligible, an applicant like the appellant-assessee was to deposit a non-refundable amo....
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....resulted in creation of an asset of "an enduring nature". In the judgment reported as Empire Jute Co. Ltd. v. CIT [1980] 124 ITR 1, the Supreme Court, after considering various aspects of the issue, held as follows: "The decided cases have, from time to time, evolved various tests for distinguishing between capital and revenue expenditure but no test is paramount or conclusive. There is no all embracing formula which can provide a ready solution to the problem; no touchstone has been devised. Every case has to be decided on its own facts, keeping in mind the broad picture of the whole operation in respect of which the expenditure has been incurred. But a few tests formulated by the courts may be referred to as they might help to arrive a....
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....is only where the advantage is in the capital field that the expenditure would be disallowable on an application of this test. If the advantage consists merely in facilitating the assessee's trading operations or enabling the management and conduct of the assessee's business to be carried on more efficiently or more profitably while leaving the fixed capital untouched, the expenditure would be on revenue account, even though the advantage may endure for an indefinite future. The test of enduring benefit is therefore not a certain or conclusive test and it cannot be applied blindly and mechanically without regard to the particular facts and circumstances of a given case. But even if this test were applied in the present case, it does not yie....
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....t with a view to produce the profits, it is a revenue expenditure. Judged by the standard of enduring benefit, we are of the opinion that the Tribunal has rightly come to the conclusion that initial membership fee paid by the assessee has to be allowed as revenue expenditure. By making payment of the initial fee, the assessee had just acquired the membership of Fractionisation Research Inc. and became eligible to receive from them information regarding mathematical models for its further development. But a mere membership did not entitle the assessee to get the said information till the prescribed subscription was paid to them from year to year." Membership and entry of a dealer in the OTC Exchange was upon payment of non-refundable depos....