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TMI Blog1992 (12) TMI 19X X X X Extracts X X X X X X X X Extracts X X X X ..... 65 incurred on the construction of one fountain at Urban Improvement Trust Circle , Jaipur, was a business expenditure and it could not be considered as capital expenditure ? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in deleting the addition of Rs. 9,619 made by the Income-tax Officer on account of interest on debit balance in the accounts of the partners ?" The brief facts of the case are that the assessee has claimed an expenditure of Rs. 15,865 in respect of construction of a fountain at Urban Improvement Trust Circle at Jaipur as advertisement expense. The Income-tax Officer was of the opinion that such a huge expenditure at a place which is far off (about 5 kilometres from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... products in which the firm is dealing. It was also pointed out that a board showing the name of the firm and the names of the product was also put up near the fountain constructed by the firm. The Appellate Assistant Commissioner was of the view that the construction of the fountain was at the instance of U. I. T., Jaipur, and was done for the beautification plan of the traffic islands undertaken by the Urban Improvement Trust. The Appellate Assistant Commissioner came to the conclusion that the said fountain was constructed by Shri K. C. Kasliwal on behalf of the firm and that there is no element of publicity or advertisement involved in the said project. Similarly, the board affixed does not help the assessee to prove that it was an ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not shown that any borrowed capital had been diverted to this joint account without payment of interest. The It contention of the assessee before the Tribunal was that no connection between the interest-bearing loan taken by the assessee and the debit balance in the joint account has been proved and there was huge deposit for booking of the vehicles which was not bearing any interest. The Tribunal held that it was open to the assessee to use the deposits issued at the time of booking of the vehicles in any manner and the assessee could not be compelled to charge interest on such advances as the deposit itself did not bear any interest. The interest, was accordingly, deleted. The submission of learned counsel for the Revenue is that the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is material to be considered is the nature of the advantage in a commercial sense and it is only where the advantage is in the capital field that the expenditure would be disallowable on an application of this test. If the advantage consists merely in facilitating the assessee's trading operations or enabling the management and conduct of the assessee's business to be carried on more efficiently or more profitably while leaving the fixed capital untouched, the expenditure would be on revenue account, even though the advantage may endure for an indefinite future. The following tests were laid down in this case: (1) Test of enduring benefit.It is not every advantage of enduring nature acquired by an assessee that brings the case within th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... diture and the only restriction which has been placed under section 37 is that the expenditure should not be in the nature of capital expenditure or personal expenses of the assessee and that the said expenditure has been expended wholly and exclusively for the purpose of business. It is not the case of the Revenue that it was an expenditure in the nature of personal expenses of the assessee. Various tests have been laid down including expenditure incurred once and for all, expenditure for procuring an enduring benefit, fixed capital and circulating capital, etc. But, none of the tests can be said to be a conclusive one. The facts of each and every case are to be seen. In the present matter, the expenditure was incurred for construction of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se the deposits received at the time of booking of the Vehicles in any manner and could not be compelled to charge interest on such deposits. This finding could not have been given 'without affording an opportunity to the Revenue where it could have been examined as to what is the extent of the deposits received, details of the deposits and their correlation/nexus, with the advancement of loan to the partners. It could have been possible that, if the assessee has received any money without payment of any interest, then the same amount-or part thereof could have been advanced without charging any interest. But a correlation/nexus has to be established. Regarding the condition in the partnership deed, no finding has been given. It could be po ..... X X X X Extracts X X X X X X X X Extracts X X X X
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