' CHANDURKAR, J.-The assessee was carrying on its business in old Bhaji Bazar in Akola. The assessm ent year in question is 1976-77. During the previous year, relevant to this assessment order, the assessee was called upon by the Municipal Authorities to shift his business to a new open plot in new Bhaji Bazar where admittedly the appellant himself constructed a new shop at a cost of Rs, 26,518.
2. In the assessm ent proceeding for the assessment year in question, the assessee claimed that the expenditure incurred for the construction of the new shop should be allowed as revenue expenditure because he was compulsorily required to build a new shop on the land which was not his own. Before the Income-tax Officer, it was the case of the assessee that the shop constructed by him was to be donated to the Municipality after 7 years. The claim of the assessee was rejected by the Income-tax Officer.
3. In appeal, the Appellate Assistant Commissioner recorded a finding that it could not be ascertained whether the assessee was given a lease only for 7 years, and it could not be presumed that the assessee would be ousted from the shop after 7 years. The appeal filed by the assessee thus came to be dismissed.
4. When the matter was taken to the Tribunal by the assessee, the Tribunal took the view that the facts of this case were identical to the facts in the decision of the Orissa High Court in Commissioner of Income-tax v. J. N. Bhowmick (1) and the Tribunal proceeded on the footing that the assessee was having a plot on which he was to construct a shop for his own use for a period of 7 years and thereafter to donate it to the Municipality. The Tribunal consequently held that the cost of construction was to be treated as revenue expenditure for the purposes of section 37 of the Income-tax Act, 1961. Arising out of this order of the Tribunal, the following question has been referred under section 256(I) of the Act :- "Whether on the facts and in the circumstances of the case, the Tribunal {{FOOT NOTE}}
(1) 111 I T R 747 : 1976 Tax L R 555 {{FOOT NOTE}} was right in law in holding that the expenditure of Rs, 26,518 incurred by the assessee on construction of shop was a revenue expenditure ?"
' The learned counsel appearing on behalf of the Revenue has contended that the assessee in this case has clearly brought into being an asset which is a capital asset and there is really no question of treating the expenditure so incui red as revenue expenditure. He has referred us to a decision of this Court to which one of us was a party in Commissioner of Income-tax, Vidarbha and Marathwada v. Vasant Screens (1) in which the decision of the Orissa High Court in Bhowmick's case (cited supra) has been considered and expenditure incurred for converting a godown into a cinema theatre which the assessee had to bear was treated as being of a capital nature. Mr. Thakkar appearing on behalf of the assessee has contended that the expenditure is incurred in the course of the business and that the shop was not constrcted for starting any new business afresh.
Coupled with this fact, according to the learned counsel the fact that the assessee was required to part with possession after 7 years should also be considered. The learned counsel contended that since the shop was required to be gifted away to the Municipality after 7 years the assessee could not be said to have acquired any advantage of an enduring nature, with the result, according to the learned counsel that the expenditure was rightly treated as Revenue expenditure by the Tribunal.
5. Now, the question as to whether expenditure is to be treated as capital expenditure or revenue expenditure has to be determined by application of well-known tests to the facts of each case.
Facts of no two cases can be I entical. In Vasant Screens' case (cited supra), this Court referred to the tests laid down in Benarsidas fagannath : 15 1 T R 185 : Al R 1947 Lah. 162 In re by the Full Bench of the Lahore High Court. One of that well-knowa tests laid down by the Lahore High Court is that the expenditure may be treated as properly attributable to capital when it is made not only once and for all but with a view to bring into an asset or an advantage for the enduring benefit of a trade. It is this test which becomes relevant on the facts of the present case. There can be no dispute that when the shop was constructed by the assessee, a capital asset came into being. What is, however, contended on behalf of the assessee is that the shop premises cannot be treated as an advantage of an enduring character because after 7 years, the shop was required to be gifted to the Municipality. It is argued by Mr. Thakkar before us that the Tribunal has recorded a finding that the assessee was required to transfer away the shop after a period of 7 years to the Municipality.
We have carefully gone through the order of the Tribunal and we are unable to find any finding recorded by the Tribunal that the shop was required to be gifted to the Municipality after 7 years.
As a matter of fact, the Appellate Assistant Commissioner has positively found that on the admission of the assessee, the lease deed had not at all been executed and that the claim that the possession of the shop was to be handed over to the Municipality after 7 years could not be verified. There is nothing in the order of the Tribunal which can be read as reversing that finding though it is true that the Tribunal seems to have proceeded on the assumption for which obviously there is no material or warrant, that the premises were to be handedover to the Municipality after 7 years. We have proceeded to decide this Reference on the footing that the assessee has failed to establish that he was entitled to occupy the premises only for a period of 7 years. We need not direct our attention to the question as to what would be the effect in case the assessee would have proved that he was required to donate {{FOOT NOTE}}
(1) 1980 124 I T R 835 {{FOOT NOTE}} away the property to the Municipality after 7 years. The question as to whether a particular benefit can be said to be of an enduring character has to be determined on the facts of each case. The failure of the assessee to prove that the property would cease to be his after 7 years would, in any case, mean that the capital asset must be held to have, belonged to him like any other capital asset.
6. Now, so far as the decision of the Orissa High Court is concerned, the facts were that the assessee was running a hotel and the premises were taken by him on lease. Under the terms of the lease, the assessee had to construct certain structures. These structures were to vest in the lessor on the expiry of the lease. The lease also stipulated that it would be forfeited if the assessee failed to raise the construction within the time limit. The question which fell for consideration before the Orissa High Court was of those facts, whether the expenditure incurred by the assessee was of a capital nature or of a revenue nature. The High Court took the view that the construction raised by the assessee was an obligation which he had undertaken to perform in order to keep up the leasehold where the hotel business was being run and if the expenditure had not been incurred, the lease itself would have stood forfeited thereby depriving the assessee of the source of income.
The High Court observed that though in a way the benefit obtained by the new construction was an enduring asset to last as long as the lease subsisted this could not be the sole guideline for all types of cases and when an overall picture is taken on the facts of the case, it would be proper to hold that the expenditure was incurred in keeping up the business, and therefore, was revenue expenditure.
7. We fail to see how the Tribunal was justified in extending the benefit of the decision of the Orissa High Court to the assessee. Firstly, the decision makes it clear that the decision is given on the facts of that case. Secondly, what weighed with the High Court was that the assessee was under an obligation to incur the necessary expenditure. No such obligition has been proved or established in the present case. All that seems to have happened was that a new vegetable market site has been fixed by the Corporation It was entirely for the assessee to shift or not to shift to that site and avail of the facility of taking land on lease on which the lessee could construct a shop for its own use. We are, therefore, nor satisfied that the decision in Bhowntick's case (supra) had any relevance or could be usefully relied upon in favour of the assessee.
8. The assessee admittedly had brought into being a canital asset. The building was put up by his own volition. It was not established that the advantage was of any limited nature, and without going into the question as to whether 7 years period was so short that the advantage could not be treated as being of an enduring character, it is clear to us that expenditure incurred was of a capital nature. Accordingly, the question referred is answered in the negative and against the assessee. The assessee to pay the costs of this Reference.