COMMISSIONER OF INCOME TAX Vs. MAKHAN SARMAH SAVAPANDIT

JUDGEMENT

(1.) THE following question is referred to the Court for an answer under sub -s. (1) of S. 256 of the IT Act, 1961.

(2.) MAKHAN Sarmah Savapandit, the assessee, in this case, manufactures and sells tea. In the past, he privately generated energy at a cost of 0.95 paise per unit for running his factory unit. Later, at his expense, current lines were laid from the Assam Trunk Road to his factory unit. The assessee paid the Assam Electricity Board Rs. 45,149 and claimed under the IT Act in the asst. year 1977 -78 deduction of the amount of Rs. 45,149 as revenue expenditure.

(3.) WHETHER an expenditure is capital or revenue, after numerous exercises by the Supreme Court in India, it was accepted in the case of CIT vs. British India Corporation Ltd. (1987) 60 CTR (SC) 54 : (1987) 165 ITR 51 (SC) "that no test of universal application can be laid down." The test laid down in the leading case of the United Kindgom, Atherton vs. British Insulated & Helsby Cables Ltd. (1925) 10 Tax Cases 155 (HL), was explained away in Empire Jute Co. Ltd. vs. CIT (1980) 124 ITR 110 (SC) :