Law:

Section:

Section 37(1) of the Income-tax Act, 1961 - Business expenditure - Allowability of - Assessee-company incurred expenditure on account of purchase of a TV set, which was provided to recreation club of workers - Further, it paid a sum towards consultancy and assistance provided for preparation of application for renewal of mining lease - Tribunal allowed deduction for abovesaid expenditures - Whether no referable question of law arose from order of Tribunal - Held, yes FACTS The assessee-company was carrying on the business of manufacturing and trading processed lumps and powder, etc. During the assessment proceedings, it was revealed that the assessee had paid a sum towards the consultancy and assistance provided for preparation of application for renewal of mining lease. It was also found that under the head 'Staff and labour welfare expenses', the assessee had debited the cost of colour TV, which had been provided to recreation club of the workers. The Assessing Officer treated both the expenditures as capital expenditure and disallowed the assessee's claim for deduction. On appeal, the Commissioner (Appeals) confirmed the Assessing Officer's order. On further appeal, the Tribunal allowed the assessee's claim. On an application under section 256(2) : HELD The expression 'capital expenditure' is not defined in the Act and the words 'in the nature of capital expenditure' occurring in section 37(1) make the meaning of the expression more elastic in its application to the facts of each case. The expression is to be construed in a business sense save insofar as there may be rules of construction applicable to it. [Para 4] The word 'capital' connotes permanency and 'capital expenditure' is therefore, closely akin to the concept of securing something, tangible or intangible property, corporeal or incorporeal right so that they could be of a lasting or enduring benefit to the enterprises in issue. The nature of revenue expenditure, on the other hand, is operational in its perspective and solely intended for the furtherance of the enterprise. Thus, whether a particular item of expenditure constitute revenue or capital disbursement is to be determined on the facts of…

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