2006 (12) TMI 135

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....ENT 1. The following question of law has been referred for the opinion of this court by the Income-tax Appellate Tribunal, Chandigarh Bench, Chandigarh (for short, "the Tribunal"), arising out of its order dated June 28, 1994, in I.T.A. No. 1058/Chandi/87, for the assessment year 1979-80 : "Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in allowing ....

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....e said order and held that occasional replacements were necessary having regard to the machinery installed. 3. We have heard learned counsel for the parties and perused the record. 4. The test for determining whether an expenditure is revenue or capital, was laid down by the hon'ble Supreme Court in Assam Bengal Cement Co. Ltd. v. CIT [1955] 27 ITR 34 (SC) in the following words (page 43): ....

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....es) [1887] 2 TC 239 (CA) at page 243, Bowen L. J. observed as to the capital expenditure as follows : 'You do not use it "for the purpose of"  your concern, which means, for the purpose of carrying on your concern, but you use it to acquire the concern.' 2. Expenditure may be treated as properly attributable to capital when it is made not only once and for all, but with a view to bringi....

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....introduced to make it clear that the asset or the right acquired must have enough durability to justify its being treated as a capital asset. 3. Whether for the purpose of the expenditure, any capital was withdrawn, or, in other words, whether the object of incurring the expenditure was to employ what was taken in as capital of the business. Again, it is to be seen whether the expenditure incur....