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TMI Blog1994 (12) TMI 16X X X X Extracts X X X X X X X X Extracts X X X X ..... r section 256(1) of the Income-tax Act, 1961, the Income-tax Appellate Tribunal has referred the following question to this court for opinion, at the instance of the Revenue : " Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in allowing the claim of the assessee for deduction of a sum of Rs. 27,940 being the expenditure incurred for laying a new pipelin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unal ("the Tribunal"). The Tribunal upheld the order of the Commissioner of Income-tax (Appeals) and dismissed the appeal of the Revenue. The Tribunal held that as the premises did not belong to the assessee, the assessee did not obtain any enduring advantage by taking the new connection. The Tribunal also held that there was already a water supply line in existence and by taking a new line, the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... caution against indiscriminate application of the oftrepeated tests like "once for all payments" and "enduring benefit test", and made it clear that these tests are not to be treated as something akin to statutory conditions. Whether an expenditure is revenue or capital will depend on the facts and circumstances of each case and on the application of the proper principles of law. As observed by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncy. If the expenditure is so related to the carrying on or conduct of the business that it may be regarded as an integral part of the profit-making process and not for acquisition of an asset or a right of permanent character, the expenditure may be regarded as revenue expenditure even though the advantage may endure for some indefinite future. What is relevant is the purpose of the outlay and it ..... X X X X Extracts X X X X X X X X Extracts X X X X
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