2000 (11) TMI 67

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....est of Rs. 73,449 paid by the assessee can be said to be the capital expenditure not deductible in the computation of the assessee's business ? " The factual position, as indicated in the statement of case, is as follows : The assessee is a public limited company, which was at the relevant point of time, that is, for the assessment year 1971-72 carrying on the business of manufacture and sale of razor blades. The Directorate of Industries had allotted a factory shed No. 34 in Okhla Industrial Estate to the assessee in March, 1957, on rental basis. In 1970, the assessee acquired another factory shed No. 36 in the same industrial estate. Thereafter, the Directorate of Industries offered both sheds to the company on hire purchase basis f....

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....sale on the instalments under the hire-purchase scheme for the previous period, that is, September 1, 1962, to July 31, 1969. The amount, thus, paid in respect of the unexpired interest of both the sheds was debatable to the profit and loss account and was allowable as a deduction. Reliance was placed on the decisions of the apex court in Bombay Steam Navigation Co. (195.3) P. Ltd. v. CIT [1965] 56 ITR 52 and State of Madras v. G. J. Coelho [1964] 53 ITR 186. The Appellate Assist ant Commissioner accepted the stand of the assessee and held that the amount of Rs. 73,449 was allowable as business expenditure. The matter was carried before the Tribunal by the Revenue. The Tribunal upheld the Appellate Assistant Commissioner's conclusions, inte....

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....s "capital" or "revenue" in nature has come up before the courts on various occasions and the distinction has often been said to be very thin. It is not easy ordinarily to evolve a test for ascertaining whether in a given case expenditure is capital or revenue. It would depend upon the factual scenario for determination of the question. To consider whether expenditure is revenue expenditure what is required to be considered is the nature and the objects for which the expenditure is incurred in the ordinary course of business. The question whether a particular expenditure is revenue expenditure incurred for the purpose of the business has to be viewed in the larger context of business necessity and expediency. If the outgoing or expenditure ....