1999 (7) TMI 58

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....e admission fee of Rs. 90,000 paid by the assessee to Fractionisation Research Inc., was admissible as a revenue expenditure ?" The assessee is a public sector undertaking and derives income for supply of technical know-how to various concerns in India and abroad. It also undertakes turn key projects in India and abroad. During the previous year, ended on March 31, 1972, and relevant to the assessment year 1972-73, the assessee paid Rs. 90,000 to Fractionisation Research Inc., as initial admission fee for its membership and claimed it as revenue expenditure. The said organisation is a co-operative research organisation and supplies to its members information concerning mathematical models which can be used for rational designing of vapou....

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....nsideration is whether the payment of membership fee to the aforenoted organisation is revenue or capital in nature, for it has not been disputed by the Revenue that the payment was for the purposes of the assessee's business. The question whether an expenditure is capital or revenue in nature is a vexed question, because the line of demarcation between the two is very thin. It has not been possible to lay down any single or exhaustive test as infallible or any single criterion as decisive for determination of the question. However, attempts have been made from time to time to outline some broad factors to be taken into consideration to distinguish capital from revenue expenditure. One rough and ready test, which is usually being followed, ....