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TMI Blog1963 (4) TMI 63X X X X Extracts X X X X X X X X Extracts X X X X ..... The questions referred was clearly correctly answered by the High Court in negative. - Civil Appeal No. 350 of 1962 - - - Dated:- 10-4-1963 - SARKAR J. For the Appellant: G. S. Pathak and G.G. Mathur For the Respondent: N. D. Karkhanis and R. N. Sachthey JUDGMENT SARKAR J. -This case does not seem to us to present any real difficulty. It arises out of a reference to the High Court of Patna of two questions both of which were answered by the High Court against the assessee, the appellant in this court. The appellant is a company manufacturing sugar. It had its factory originally at a place called Sitalpur. That place was found to be disadvantageous for the appellant's business as sugarcane of good quality was not availab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent in the profit-making machinery, that is, in the capital assets. It was, therefore, a capital expenditure and not a revenue expenditure. The case, furthermore, is completely governed by authorities. We think it comes clearly within the well-known dictum of Viscount Cave in Atherton v. British Insulated and Helsby Cables Ltd. [1925] 10 Tax Cas. 155, 192, that " when an expenditure is made, not only once and for all, but with a view to bringing into existence an asset or an advantage for the enduring benefit of a trade, I think that there is very good reason (in the absence of special circumstances leading to an opposite conclusion) for treating such an expenditure as properly attributable not to revenue but to capital ". The test formul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other advantage of an enduring nature for the benefit of the trade. It is true that it has been said, as Mr. Pathak pointed out, that the advantage acquired by the expenditure must be analogous to an asset (see Halsbury's Laws of England, third edition, volume XX, page 162) but that only means advantage of the nature of a capital asset, that is to say, " an advantage to the permanent and enduring benefit of the trade ": see ibid, page 161. It is obviously not necessary for an advantage to be of such a nature that it must be the acquisition of a material asset or of a chose in action. As to the authorities, they are all against the view for which Mr. Pathak contends. We propose to refer to two of them only. First there is the case of Grani ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Whether an expense is on capital account or not would not depend on whether it was incurred for earning larger profits than before nor would an expenditure be on revenue account because it was incurred for turning a losing concern into a profitable one. The other case to which we will refer is Bean v. Doncaster Amalgamated Collieries Ltd. [1946] 27 Tax Cas. 296. The colliery company was required by a statute to incur expenses for remedial works necessary to obviate loss of efficiency in an existing drainage system due to subsidence caused by the company's workings. The Drainage Board formed a general drainage improvement scheme and the company paid a part of the expenses of the new drainage constructed under the scheme. As a result of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to decide under which class an expenditure properly falls. No such difficulty, however, arises in the present case. We think, for the reasons earlier mentioned, that the present is a plain case and we feel no doubt that the expenses for shifting and re-erection were incurred on capital account. The first question referred was clearly correctly answered by the High Court. The appellant's case is even weaker with regard to the other question which was this : " Whether the assessee was entitled to claim depreciation on the said expenditure of Rs. 3,19,766 ? " This question was raised presumably on the basis that if in respect of the first question it was held that the expenditure was on capital account, then depreciation should be paya ..... X X X X Extracts X X X X X X X X Extracts X X X X
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