1. The assessee was carrying on its business in old Bhaji Bazar in Akola. The assessment year in question is 1976-77. During the previous year, relevant to the assessment year, 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 applicant himself constructed a new shop at a cost of Rs. 26,518.
2. In the assessment proceedings 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 land which was not his own. Before the ITO it was the case of the assessee that the shop constructed by him was to be donated to the municipality after seven years. The claim of the assessee was rejected by the ITO.
3. In appeal, the AAC recorded a finding that it could not be ascertained whether the assessee was given a lease only for seven years and it could not be presumed that the assessee would be ousted from the shop after seven 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 CIT v. J. N. Bhowmick  111 ITR 747 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 seven 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 purpose of s. 37 of the I.T. Act, 1961. Arising out of this order of the Tribunal, the following question has been referred under s. 256(1) of the Act :
'Whether on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the expenditure of Rs. 26,518 incurred by the assessee on the construction of the shop was a revenue expenditure ?'
5. 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 incurred as revenue expenditure. He has referred us to a decision of this court, to which one of us was a party, in CIT v. Vasant Screens : 124ITR835(Bom) , in which the decision of the Orissa High Court in Bhowmick's case  111 ITR 747, 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 constructed 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 the possession after seven years should also be considered. The learned counsel contended that since the shop was required to be gifted away to the municipality after seven 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.
6. 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 identical. In Vasant Screen's case : 124ITR835(Bom) , this court referred to the tests laid down in Benarsidas Jagannath, In re , by the Full Bench of the Lahore High Court. One of those well-known tests laid down by the Lahore High Court is that an 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 in 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 seven 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 the shop after a period of seven 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 seven years. As a matter of fact, the AAC 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 seven 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 handed over to the municipality after seven 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 seven 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 away the property to the municipality after seven 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 seven years would, in any case, mean that the capital asset must be held to have belonged to him like any other capital asset.
7. Now, so far as the decision of the Orissa High Court is concerned, the facts were that the assessee was running a hotel of 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, on 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.
8. 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 obligation 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, not satisfied that the decision in Bhowmick's case  111 ITR 747 , had any relevance or could be usefully relied upon in favour of the assessee.
9. The assessee admittedly had brought into being a capital 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 the seven years' period was so short that the advantage could not be treated as being of an enduring character, it is clear to us that the 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.