H.N. Seth, J.
1. This is a reference under Section 66(1) of the Indian Income-tax Act, 1922, at the instance of the assessee, Lakshmi Sugar and Oil Mills. Hardoi.
2. The Income-tax Appellate Tribunal has submitted a statement of the case and has referred the following question for the opinion of this court, in respect of the assessment year 1961-62 :
' Whether, on the facts and in the circumstances of the case, the payment of Rs. 14,333 is an expense allowable under Section 10(1) or Section 10(2)(xv) of the Act '
3. The assessee carries on the business of manufacturing sugar. It appears that a scheme was sponsored by the Government of India and the Government of Uttar Pradesh for developing roads. In this connection, the assessee paid a sum of Rs. 14,333 towards the cost of construction of those roads. The assessee also paid various sums of money, in the years relevant to the assessment years 1957-58 to 1959-60, towards the cost of construction of roads under the same scheme. In all these years, the assessee claimed that, as it was a manufacturer of sugar and its business entirely depended on the development of sugarcane and its transportation, the expenses in question were incurred in furtherance of its trade and should be allowed as deduction under Section 10(2)(xv) of the Act. In respect of the assessment years 1957-58 and 1959-60 the Tribunal, by its order dated April 11, 1963, rejected the contention raised by the assessee. Following that decision, the assessee's claim for the deduction of Rs. 14,333 in respect of the assessment year 1961-62 was also rejected.
4. The assessee made application for referring the questions involved in the case in respect of the assessment years 1957-58 to 1959-60 and 1961-62 to this court for opinion. The Tribunal accepted the request made by the assessee and referred the afore-mentioned question for the opinion of this court in respect of all the afore-mentioned assessment years. In this court the reference made in respect of assessment year 1959-60 was numbered as I.T.R. No. 87 of 1964 Lakshmi Sugar and Oil Mills Ltd. v. Commissioner of Income-tax  77 I.T.R. 690.
5. This court, by its judgment dated 4th November, 1969, since reported in  77 I.T.R. 690, held that the payment made to the Government in pursuance of a scheme for development of roads in cane growing rural areas, brings assets of a capital nature into existence and should be classed as capital expenditure and is not a permissible expenditure under Section 10(2)(xv) of the Act. It was also held that under commercial principles an outgoing of a capital nature cannot be an allowable deduction in the computation of business profits debitable in the profit and loss account, and, hence, the payment cannot be allowed under Section 10(1) of the Act. While deciding the first part of the question, this court relied upon a decision in Dewan Sugar and General Mills P. Ltd. v. Commissioner of Income-tax,  77 I.T.R. 572, 574 (All.), wherein it was observed as follows ;
' When new roads are constructed, a capital asset comes into existence. It may be that the land, on which roads in question were constructed, did not belong to the assessee. But that circumstance did not alter the fact that the contribution made by the assessee brought assets of a capital nature into existence. Such expenditure must, therefore, be classed as capital expenditure. The Tribunal was right in not treating the expenditure as a permissible expenditure under Section 10(2}(xv) of the Act.'
6. Learned counsel for the assessee concedes that so far as the ratio underlying the decision in the case of Dewan Sugar Mills and the case decided by this court on November 4, 1969,  77 I.T.R. 690, is concerned, it is completely applicable to the facts and circumstances of the present case. If these two cases lay down correct law, the question referred by the Tribunal will have to be answered against the assessee. He, however, contends that these two decisions require reconsideration. According to him, the criteria laid down by the Supreme Court for determining as to when an expenditure would be of a capital nature and when it would be of a revenue nature, in the case of Bombay Steam Navigation Co. (1953) Private Ltd. v. Commissioner of Income-tax,  56 I.T.R. 52;  1 S.C.R. 770 (S.C.), was not brought to the notice of this court. The criteria laid down in that case was subsequently quoted with approval by the Supreme Court in the case of Commissioner of Income-tax v. Kirkend Coal Co.,  77 I.T.R. 530 (S.C.). According to the learned counsel, if the test as laid down by the Supreme Court in the afore-mentioned cases is applied to the facts of the present case, the expenditure in this case should also be regarded as revenue expenditure admissible as deduction under Section 10(2)(xv) of the Act. He also relied upon certain observations made by this court in the case of Security Printers of India (P.) Ltd. v. Commissioner of Income-tax,  78 I.T.R. 766 (All.), in which the question that arose for consideration was whether the expenditure incurred by an assessee in respect of foreign tour undertaken by its agent to acquaint himself with new and modern techniques was revenue expenditure. This court observed that such an expenditure was incurred only with a view to earn greater profits in a competitive market and not to acquire a new asset. Learned counsel contended that, in the instant case also, by incurring the expenditure, no new asset was acquired by the assessee. Contribution for developing the roads in the area was made so that cane may be transported to the factory in a more convenient manner and the assessee may be able to earn greater profits. The expenditure in question was, therefore, revenue expenditure.
7. Learned counsel referred us to the following observation made in the case of Bombay Steam Navigation Co.:
' Whether a particular expenditure is revenue expenditure incurred for the purpose of business must be determined on a consideration of all the facts and circumstances, and by the application of principles of commercial trading. The question must be viewed in the larger context of business necessity or expediency. If the outgoing or expenditure is so related to the carrying on or conduct of the business, that it may be regarded as an integral part of the profit-earning process and not for acquisition of an asset or a right of a permanent character, the possession of which is a condition of the carrying on of the business, the expenditure may be regarded as revenue expenditure.'
8. He argued that so long as an expenditure is related to the carrying on of the business but it does not result in acquisition of an asset or a right of a permanent character which asset or right is a condition of carrying on of the business, the expenditure must be regarded as a revenue expenditure. According to him, the asset should be such which is capable of being acquired and, therefore, it must be a tangible asset. Further, the nature of the asset should be such that its possession is a condition for the carrying on of the business. Unless both the conditions are satisfied, the expenditure cannot be treated as a capital expenditure.
9. Learned counsel then argued that, according to the statement of the case, the roads, for the construction of which the contribution was made, belonged to the Government and not to the assessee. The amount was spent by the assessee to facilitate the transportation of sugarcane to the factory as its trade entirely depended upon the development of sugarcane and its transportation. He urged that by the construction of the road no tangible asset which could be owned or possessed by the assessee came into existence and, therefore, the expenditure could not be regarded as capital expenditure. He went on to argue that the possession of any right over the road so developed was not a condition of the carrying on of the assessee's business. In the result, as laid down by the Supreme Court in Bombay Steam Navigation case, the expenditure had to be treated as revenue expenditure.
10. After carefully considering the argument raised by the learned counsel for the assessee, we are unable to accept the same.
11. Relevant portion of Section 10 of the Income-tax Act, 1922, reads as follows:
' (1) The tax shall be payable by an assessee under the head ' profits and gains of business, profession or vocation ' in respect of the profits and gains of any business, profession or vocation carried on by him.
(2) Such profits or gains shall be computed after making the following allowances, namely :.....
(xv) any expenditure (not being an allowance of the nature described in any of the Clauses (i) to (xiv) inclusive, and not being in the nature of capital expenditure or personal expenses of the assessee) laid out or expended wholly and exclusively for the purpose of such business, profession or vocation.'
12. In the case of Tat a Hydro-Electric Agencies Ltd. v. Commissioner of Income-tax,  5 I.T.R. 202, 209(P.C.), their Lordships of the Privy Council observed :
' What is money wholly and exclusively laid out for the purposes of the trade is a question which must be determined upon the principles of ordinary commercial trading. It is necessary, accordingly, to attend to the true nature of the expenditure, and to ask oneself the question, is it a part of the company's working expenses ; is it expenditure laid out as part of the process of profit-earning '
13. Their Lordships further observed that in that case an obligation to make the payment was undertaken by the appellants in consideration of their acquisition of the right or opportunity to earn profit, i.e., of the right to conduct the business and not for purposes of producing profits in the conduct of business. They, therefore, made a distinction between the acquisition of an income earning asset and the process of earning of the income. Expenditure for the acquisition of that asset was considered to be capital expenditure, whereas expenditure incurred in the process of earning of the profits was considered to be revenue expenditure. It will thus be seen that their Lordships did not confine the income earning assets only to tangible assets which are capable of being owned or possessed by an assessee. They considered that even acquisition of a right and opportunity to earn profits, i.e., the right to conduct business amounts to an acquisition of income earning asset. In this case also, the expenditure was not incurred in the process of profit earning activity. According to the assessee's own case, the expenditure was incurred in order to provide a better opportunity. to earn the profits. The expenditure having resulted into better earning opportunity, yielded an asset contemplated by the Privy Council in Tata Hydro-Electric Agencies' case.
14. In the case of Bombay Steam Navigation Co. v. Commissioner of Income-tax, their Lordships of the Supreme Court observed as follows :
' If the outgoing or expenditure is so related to the carrying on or conduct of the business, that it may be regarded as an integral part of the profit-earning process and not for acquisition of an asset or a right of a permanent character, .....'
15. In our opinion, the learned judges of the Supreme Court used the word 'asset' in the same sense in which it was used by their Lordships of the Privy Council in Tata Hydro-Electric Agencies' case, namely, acquisition of a right or opportunity to earn profits as distinguished from earning profit by conducting the business.
16. Observation made by Viscount Cave L.C., in the case of Atherton v. British Insulated and Helsby Cables Ltd.,  10 T.C. 155, 192, which has been approved by the Supreme Court, is to the following effect:
' When an expenditure is made, not only once and for all, but with a view to bringing into existence an asset or an advantage for the enduring benefit of a trade, then there is very good reason (in the absence of special circumstances leading to an opposite conclusion) for treating such an expenditure as properly attributable not to revenue but to capital.'
17. This observation also shows that money spent not only for acquisition of a tangible asset but also for the acquisition of an advantage for the enduring benefit of the trade can be considered to be capital expenditure.
18. The Supreme Court, in the case of Assam Bengal Cement Co, v. Commissioner of Income-tax,  27 I.T.R. 34, 45 ;  1 S.C.R. 972 (S.C.) observed that :
' If the expenditure is made for acquiring or bringing into existence an asset or advantage for the enduring benefit of the business it is properly attributable to capital and is of the nature of capital expenditure.'
19. This decision of the Supreme Court also shows that it is not necessary that before an expenditure can be classed as capital expenditure it must result in the acquisition of some tangible asset. Even if some advantage for the benefit of trade as a whole is derived by making that expenditure, it will be an expenditure of capital nature. The observations made by the Supreme Court in Bombay Steam Navigation Company's case cannot be interpreted in the manner suggested by the counsel for the assessee. What their Lordships were laying down in that case was that if the outgoing or expenditure was related to the carrying on or conduct of the business ,and that it was an integral part of the profit earning process, it would be an expenditure that may be regarded as revenue expenditure. In the case before us, it cannot be urged that the expenditure incurred by the assessee can be regarded as an integral part of the profit earning process. According to the assessee's own case, the expenditure was in order to facilitate generally the transport of sugarcane to its factory. The expenditure was, therefore, incurred for the purposes of securing an advantage to the business as a whole, and it could not possibly be regarded as a revenue expenditure. In the case of Security Printers v. Commissioner of Income-tax, there are no observations to indicate that before an expenditure can be treated to be a capital expenditure, it must result in the acquisition of tangible assets, which may be owned and possessed by the assessee. As stated earlier, the view of the highest court in the country is that, even if an expenditure results into an enduring advantage, in the interest of the assessee's business it could be classed as capital expenditure.
20. In the result, we feel that the decision of this court in the case of Dewan Sugar Mills and Lakshmi Sugar and Oil Mills Ltd. v. Commissioner of Income-tax do not require reconsideration. We are also in respectful agreement with the observations made in Lakshmi Sugar and Oil Mills Co. to the effect that, under commercial principles, outgoing of a capital nature cannot be an allowable deduction in the computation of business profits debitable in the profit and loss account. Hence, the payment cannot be allowed under Section 10(1) of the Act.
21. In the result, we answer the question referred in the negative and in favour of the revenue. The Commissioner of Income-tax will be entitled to receive the costs of this reference which we assess at Rs. 200. Counsel's fee is also assessed at the same figure.