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Cit vs Mandovi Hotel (P) Ltd. on 30 August, 2005 cites

Travancore Sugars And Chemicals Ltd vs Commissioner Of Income-Tax Kerala on 20 September, 1966

13. Jalan Trading Co. (P.) Ltd. case (supra), upon which strong reliance is placed by the learned counsel for the revenue, cannot be applied to the facts of this case. In that case neither the assessing officer nor the appellate authority nor the Appellate Tribunal nor the High Court went into the question whether the assessee was in fact a separate from, and independent of, the partnership firm. The exact position was not investigated, nor any finding recorded. Even otherwise, as has been repeatedly held by the Supreme Court whether an expenditure is allowable as revenue or capital expenditure, has to be decided on the facts of each case. In the facts and in the circumstances of the present case, the agreement between the parties as is discerned from the Dissolution Deed, it can safely be said that payment of 30 per cent of net profits payable by the assesseecompany to the retiring partners for a period of seven years subject to the minimum payment of Rs. 60,000 was related to annual profits that flow from the business activities of the assessee-company and the said payment cannot be related to the capital value of the assets. The Dissolution Deed does not specify any capital sum payable to the retiring partners. The payment of 30 per cent of the annual profits, subject to minimum of Rs. 60,000 every year for seven years, cannot be held to be the fixed price,'for purchase of the capital assets. All in all, expenditure in the sum of Rs. 1,34,678 by the assessee in the relevant year cannot be said to have been wrongly held by the Appellate Tribunal as revenue expenditure.
Supreme Court of India Cites 9 - Cited by 91 - V Ramaswami - Full Document

Assam Bengal Cement Co. Ltd vs The Commissioner Of Income-Tax,West ... on 11 November, 1954

"One of the tests so applied is whether the expenditure in question was for bringing into existence an asset or an advantage of an 'enduring nature', and is made 'once and for all', meaning thereby an expenditure made once and for all for procuring and enduring benefit. It may be payable not necessarily all at once but even by instalments as against a recurrent expenditure in the nature of operational expenses. (See Assam Bengal Cement Co. Ltd v. CIT AIR 1955 SC 89). The question in such cases would be, is the expenditure the assessee's working expenses laid out as part of the process of profit earning or a capital outlay necessary for the acquisition of a property or of rights of a permanent character, the possession of which is a condition of carrying on the trade. But the expressions, 'enduring benefit' and 'rights of a permanent nature', are only descriptive and not definitive and are relative in meaning, not synonymous with perpetual or everlasting. For instance, an expenditure incurred in common with other companies producing copper to bring down production so as to prevent a steep fall in the prices was construed to mean for one of them to be out of production for 12 months only and not for good. On such construction, it was held that to call such an expenditure a capital expenditure would be contradiction in terms, for, it was not and was not intended to be one for acquiring a right of an enduring benefit or as an accretion to the capital or income earning structure of the business.
Supreme Court of India Cites 7 - Cited by 406 - N H Bhagwati - Full Document

C.I.T. West Bengal Ii, Calcutta vs Coal Shipment (P) Ltd on 14 October, 1971

In CIT v. Coal Shipments (P.)Ltd (1965) 58 ITR 241 (PC) an agreement was arrived at between two companies exporting coal to Burma. The assessee-company agreed thereunder to pay, in consideration of the other company forbearing from exporting and procuring coal for its export by the assessee-company, five annas per ton (subsequently raised to Rs. 150 per ton). The amounts so paid to the other company were taxed in the hands of that company. The respondent company claimed them as admissible business expenditure for the assessment year in question. The revenue, on the other hand, claimed that the payments were for acquiring monopoly and were, therefore, not allowable as revenue expenditure. This court upheld the assessee's contention that the expenditures were not acquiring the monopoly, but were made to make the business more facile and profitable, that they were made as a temporary measure and not for deriving an advantage of an enduring character. Observing that the agreement between the two companies was not for any fixed term and could be terminated at any time at the volition of any of the parties, it was held that, although an enduring benefit need not be of an everlasting character, it should not at the same time be transitory or ephemeral, so that it can be terminated at any time at the volition of either of the parties. Payments to ward off competition would constitute capital expenditure, provided the object is to derive an advantage by eliminating the competition over some length of time but such a result would not follow if there is no certainty of duration for such an advantage and the same could be put an end to at any time. Thus, what the extent of durability or permanence should be depends on the facts of each case.
Supreme Court of India Cites 6 - Cited by 99 - H R Khanna - Full Document

Henriksen (Inspector Of Taxes) vs Grafton Hotel Ltd. on 13 May, 1942

In Strick v. Regent Oil Co. Ltd (1964 (43) Tax Cas 1), Lord, Reid, however, limited the decision in Henriksen case, to its own special facts and expressed his disagreement with it if it was to be held to have laid down any general proposition. The expression 'enduring advantage' is, thus, a relative term, not enduring in the sense of its being permanent, but is sufficiently durable depending upon the nature of the terms upon which it can be acquired. So also the expression 'once and for all', which does not mean payment at one time of the whole amount, but includes payment of a lump sum as distinct from recurrent, distributed in periodic instalments.
Calcutta High Court Cites 1 - Cited by 55 - Full Document

Bengal & Assam Investors Ltd vs Commissioner Of Income Tax, West Bengal on 2 November, 1965

The other test sometimes applied is payment when it is referable to fixed capital or capital assets as against payment referable to circulating capital or stock-in-trade. But, this test also is not capable of being treated as of uniform application. Price paid for the acquisition of a capital asset may take sometimes the form of payments of a revenue character. The simplest example is interest paid on the unpaid purchase price of capital asset. Though in relation to and referable to acquisition of a capital asset, it is nonetheless a revenue disbursement. On the other hand, in Assam Bengal Cement Co. v. CIT AIR 1965 SC 89, where the payment in question was for eliminating competition, the test of the expenditure having been incurred for and referable to a capital asset was applied.
Supreme Court of India Cites 18 - Cited by 89 - S M Sikri - Full Document

Devidas Vithaldas & Co vs C.I.T., Bombay City on 28 January, 1972

In Devidas Vithaldas & Co.'s case (supra), the Supreme Court observed that in distinguishing between capital and revenue expenditure the courts applied in different cases, different tests. Nonetheless, none of them by itself is conclusive and the determination one way or the other has to emerge on the facts and in the circumstances of each case. The Supreme Court then observed thus:
Supreme Court of India Cites 7 - Cited by 82 - J M Shelat - Full Document
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