COMMISSIONER OF INCOME TAX Vs. POLYOLEFINS INDUSTRIES LIMITED

JUDGEMENT

(1.) THIS is an application made by the Revenue under section 256(2) of the income -tax Act, 1961. Rule has been issued only in regard to the first proposed question. It reads thus :

(2.) THE Income -tax Appellate Tribunal found, in view of the fact that the assessee had merely replaced petrol engines with diesel engines which the assessee considered advisable to do in view of the steep rise in petrol prices as compared to diesel prices, that the expenditure thereon was of revenue nature.

(3.) MR . Kolah, learned counsel for the assessee, invited our attention to the judgment of the Supreme Court in Assam Bengal Cement Co. Ltd. v. CIT : [1955]27ITR34(SC) . The Supreme Court observed that the aim and object of the expenditure would determine its character, namely, whether it was capital expenditure or revenue expenditure. If the expenditure was made for acquiring or bringing into existence an asset or advantage for the enduring benefit of the business, it was properly attributable to capital and was of the nature of the capital expenditure. If, on the other hand, it was made for running the business or working it with a view to produce profits, it was revenue expenditure. The question whether expenditure was of capital or revenue nature was a question of fact to be determined by the authorities on an application of the broad principles aforementioned and courts of law would not ordinarily interfere with such findings of fact, if arrived at on a proper application of these principles.