1. The petitioner is a share broker and a member of the Cochin Stock Exchange. He is also engaged in textile business. He is an assessee under the Income Tax Act, 1961, on the files of the first respondent. The challenge in this original petition is against the orders passed by the Commissioner of Income-tax in revision under section 264 of the Act confirming the orders of assessm ent for the periods 1992-93 and 1993-94.
2. The brief facts leading to the filing of this original petition are as follows: The petitioner as a member of the Cochin Stock Exchange made contributions to the Stock Exchange building fund.
3. This amount though claimed by the petitioner as a revenue expenditure incurred wholly necessarily and exclusively for carrying on business, was not accepted the Assessing Officer and from Exh. P-1 assessm ent it could be seen that the petitioner himself ultimately agreed for treating this amount as capital expenditure. Accordingly, the said contribution amounting to Rs.1,7,461 was added to the assessee's total income. For the year 1993-94, a sum of Rs.42,539 was added on the same basis to the assessee's total income. The petitioner filed a revision against these orders.
4. Before the Commissioner, the petitioner -agreed that this is a voluntary contribution to a capital fund and can be disallowed and added back to the income returned. The assessee himself agreed here also with the disallowance. The relevant extract from the order of the Commissioner is as follows: "As this is a voluntary contribution to 'a capital fund, this is also disallowed and added back to the income returned.
5. The assessee, Sri Mahesh B. Shah, agrees to the above disallowance.
6. I agreed to the above.
7. (Sd.( Mahesh B. Shah, March 13, 1995."
8. The second question is whether this contribution is a revenue expenditure that can be deductible.
9. Section 37 of the Income-tax Act allows any expenditure not being in the nature of capital expenditure or personal expenses of the assessee laid out or expended wholly and exclusively for the purposes of the business. The contention of the petitioner before the authorities below is that the assessee does not have any right on the building fund and hence the same cannot be treated as capital expenditure. In Empire Jute Co. Ltd. v. CIT (1980) 124 ITR 1, the Supreme Court held that it is not a universally true proposition that what may be a capital receipt in the hands of the payee must necessarily be capital expenditure in relation to the payer. The fact that a certain payment constitutes income or capital receipt in the hands of the recipient is not material in determining whether the payment is revenue or capital disbursement qua the payer. The Supreme Court held that where it is capital expenditure or revenue expenditure would have to be determined having regard to the nature of the transaction and other relevant factors. The petitioner appears to have not raised these questions which . He wants to argue. No materials have been furnished to show before the authorities or before this Court to establish that this is a revenue expenditure and it is expended wholly and exclusively for the purposes of the business. From the admitted fact that the contribution made to the building fund of the Cochin Stock Exchange appears to be a voluntary contribution and the fact that this has been treated as a capital income in the hands of the Cochin Stock Exchange does not automatically follow that it is revenue expenditure in the hands of the assessee. That part, the questions, though raised, was not pursued further. On the contrary, the petitioner had conceded before the. Authorities that this is a capital expenditure and, therefore it has to be treated as income. There is no error or illegality in Exhs. P-3 and P-4 orders. Therefore, there is no scope to interfere with the confirming orders by invoking the jurisdiction under Article 226 of the Constitution of India. in O.P. No'. 17756 of 1998 in reference to a similar claim, I declined to interfere, though it may be on the basis of the judgment in Mafatlal Industries Ltd. v. Union of India (1987) 5 SCC 536. For all these reasons I do not find any grounds to interfere with the orders, Exhs. P-3 and P-4. Accordingly, the original petitions fails and it is dismissed.