1. Both these are references to this court under Section 66(1) of the Indian I.T. Act, 1922, at the instance of the assessed, The Hindustan Times Ltd., New Delhi. The references arise out of the I.T. assessments of the above company for the assessment years 1961-62 and 1962-63. For the assessment year 1961-62, the following two questions have been referred for the decision of this court :
' (1) Whether, on the facts and in the circumstances of the case, the Tribunal was correct in upholding the disallowance of Rs. 14,260, being the value of car given to Shri Durgadas, on the ground that it was not an expenditure allowable under Section 10(2)(xv) of the Indian Income-tax Act, 1922?
2. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the sum of Rs. 23,600 is capital expenditure and, as such, could not be allowed? '
2. For the assessment year 1962-63, the question referred is :
'1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the sum of Rs. 17,771 is capital expenditure ?'
3. It may be mentioned here that the sum of Rs. 17,771 referred to in the question for assessment year 1962-63 is of the same nature as the expenditure of Rs. 23,600 which is referred to in the second question for the assessment year 1961-62. Thus, one of the two questions is common for both the years. It will be convenient to dispose of both the references by a common judgment.
4. Taking up first, the first question referred in I.T.R. No. 48/70, the relevant facts are very brief.
5. The assessed is a public limited company engaged in the business of printing and publishing, inter alia, a daily newspaper in English and a daily newspaper in Hindi. Shri Durgadas was the editor of the Englishpaper, Hindustan Times. On his retirement, the company presented him with a car costing Rs. 14,260. This was debited by the company to the miscellaneous expenditure account under the head ' Gifts, etc., to employees '. The ITO disallowed the expenditure without any discussion. The AAC upheld it saying that the gift was not covered by the service conditions but was an ex gratia payment. Before the Tribunal, it was argued that Shri Durgadas had started his career as a reporter, that gradually he rose to the position of editor, that the car was presented to him in appreciation of the long and distinguished work which he did for the publication, so that others might emulate his example and that the expenditure was really necessitated by business expediency. The Tribunal, however, held that the decision of the Supreme Court in Gordon Woodroffe Leather Manufacturing Co, v. CIT : 44ITR551(SC) was directly applicable to the circumstances of the present case and upheld the disallowance of Rs. 14,260. The first question relates to the correctness of this conclusion.
6. Shri Vaish, learned counsel for the assessed, submitted that the observations of the Supreme Court in Gordon Woodroffe Leather . v. CIT : 118ITR261(SC) . The Supreme Court has pointed out in this decision (See headnote) :
' The three tests laid down by the Supreme Court Gordon Woodroffe Leather Mfg. Co. v. CIT : 44ITR551(SC) , viz., (i) that the payment should have been made as a matter of practice which affected the quantum of salary, (ii) that there was an expectation by the employee of getting a gratuity, and, (iii) that the sum of money was expended on the ground of commercial expediency and in order indirectly to facilitate the carrying on of the business of the assessed, have to be read disjunctively.'
7. Learned counsel submitted that it was not, thereforee, necessary for the assessed to prove that there was a practice of making such gifts to employees at the time of their retirement. It was sufficient for the assessed to show that the sum of money was expended on grounds of commercial expediency and indirectly to facilitate the carrying on of the business of the company. He further submitted that in appreciating this question we should take into account the trend of judicial decisions which show that such questions as this have to be looked at from the point of view of prudent businessmen. In Shahzada Nand and Sons v. CIT : 108ITR358(SC) , the Supreme Court observed (pp. 366, 367) :
' What is the requirement of commercial expediency must be judged, not in the light of the 19th century laissez faire doctrine which regarded man as an economic being concerned only to protect and advance his self-interest but in the context of current socio-economic thinking, which places the general interest of the community above the personal interest of theindividual and believes that a business or undertaking is the product of the combined efforts of the employer and the employees and where there is sufficiently large profit, after providing for the salary or remuneration of the employer and the employees and other prior charges such as interest on capital, depreciation, reserves, etc., a part of it should in all fairness go to the employees.'
8. Learned counsel also drew our attention to the observations of Desai J. in CIT v. Laxmi Cement Distributors Pvt. Ltd. : 104ITR711(Guj) :
' The payment of family pension or gratuity to the dependants of a deceased employee, however, is now a recognised concept in the field of employment and it has received statutory recognition. It cannot any longer be treated as a bounty or a philanthropic gesture actuated by compassionate objective. Even if such payment is not provided for by any scheme or contract of employment or otherwise, a demand for the same could still be raised by way of an industrial dispute by employees governed by labour legislation and such demand may well be accepted in the course of an industrial adjudication having regard to the paying capacity of the employer and any other relevant considerations. If a prudent employer, conscious of the new trend and ethos, voluntarily makes such payment in order to avoid such a dispute, and to buy industrial peace and contentment amongst workers, it could certainly be treated as having been made on the ground of commercial expediency. The solitary payment might well mark the beginning of a new practice (and every practice must necessarily originate at some point of time in an action taken for the first time) and in the very nature of things, it cannot be confined to an isolated case, for the employer would then render himself open to the charge of discrimination and land himself in an industrial dispute. It would thus appear, as earlier stated, that not much stress could be laid on the fact that there was no antecedent obligation or prior practice justifying such a payment.'
9. He also referred to the decision of W. T. Suren & Co. (P.) Ltd. v. CIT : 80ITR602(Bom) in which at page 621 it was pointed out that where payment is made to employees primarily in consideration of the past services rendered by them to the firm it would be for purposes of business and in the nature of business expenditure and will not partake of the nature of capital expenditure. In the light of these decisions learned counsel contended that in the present case the payment made to Shri Durgadas, even if it is treated as the first of its kind, as stated in the enclosure to the application under Section 66(1), was only ' in order to preserve and inspire confidence in the minds of the other employees of the company who may emulate his example of service. The gift was made thus to further the interests of the business and to enhance its reputation and goodwill in order to attractthe best talents in its employment and to keep the existing members of the staff with a promise to remunerate them likewise for their meritorious, efficient and long services so rendered by them.'
10. It was also pointed out that actually this was not the first payment of the kind because in the assessment year 1961-62, there is also a reference to a sum of Rs. 3,000 which had been paid in lieu of gratuity to the widow of late Dev Dass Gandhi, managing editor of the Hindustan Times. The ITO had disallowed the expenditure. But, in appeal, the AAC, following an earlier order of the Tribunal in connection with the assessment year 1959-60, had allowed the amount as a revenue expense. On these facts, Mr. Vaish contends that the assessed had established the existence of a past practice and that even otherwise the payment was clearly one made with a view to indirectly facilitate the carrying on of the business of the assessed.
11. There is a good deal of force in the broad submissions made by the learned counsel. But we find that our hands are tied down in this case by the lack of any material whatsoever on the basis of which these contentions could be accepted. As already pointed out, in the assessed's accounts, in the assessment order as well as in the order of the AAC the payment has been treated only as a gift made to Durgadas. Even at the stage of the appeal before the Tribunal no facts were placed on behalf of the assessed to support the contention that this was not a payment made as a gift on personal grounds to Durgadas but that it really had been made as a testimonial to his past services and with a view to encourage and enthuse the other employees of the company to serve it loyally and faithfully. Before the Income-tax Tribunal, the assessed did not even draw its attention to the disallowance and subsequent allowance of the payments made to Mr. Dev Dass Gandhi. The circumstances in which the above payments were made and disallowed but subsequently allowed by the Tribunal have also not been brought on record. The only fact that is available is that on the retirement of an employee after a long service in the company he has been given a motor car as a present. We find it very difficult to agree with the learned counsel that from this simple fact we should infer the facts for the proof of which the onus is very strongly on the assessed. It is well established that when an assessed claims an expenditure as deductible under Section 10(2)(xv) of the Indian I.T. Act, 1922, the onus is on him to prove that he is entitled to the deduction of the expenditure in question. Having regard to the observations of the Supreme Court in Gordon Woodroffe Leather Mfg. Co. : 44ITR551(SC) , the assessed must have placed some material before the authorities from which an inference could reasonably be drawn that the car was given not on personal grounds but as an initial step of rewarding employees who had rendered a long and faithful service to the company. In all the cases relied upon by Mr. Vaish, there waspresent before the authorities ample material to, support the claim for deduction. In Laxmi Cement Distributors Pvt. Ltd. : 104ITR711(Guj) , the Tribunal had found as a matter of fact that the payment was made to maintain good relations between the employer and the employees and to engender confidence in the management. However, the nature of the payment in that case was such that the court considered it not unreasonable to uphold the claim of the employer that the predominant motive behind the gesture was to demonstrate the interest which he took in the ultimate well-being of his employees and their dependants with the end in view of securing the loyalty and devoted service of all his employees without whose whole-hearted co-operation his business cannot possibly be carried on with efficiency and profit.
12. In Shahzada Nand and Sons' case : 108ITR358(SC) , the court was really concerned with the reasonableness of an amount of commission based on turnover which was paid to an employee by way of remuneration and the court was only pointing out that under modern conditions this was a normal and prudent way of remuneration of an employee by a businessman who has interest in the prosperity of his business.
13. Again, in Sassoon J. David and Co. P. Ltd.'s case : 118ITR261(SC) , the question really was whether the motive behind the payment of certain compensation was for the purposes of the business of the assessed or had a relation to the taking over of the management of the company in question by a different set of shareholders. It was found as a fact that as a result of the expenditure in question the appellant-company had benefited by a reduction in the wage bill and that the amount was expended on grounds of commercial expediency in order to indirectly facilitate the carrying on of the business. One of the items paid in that case was an annual payment of Rs. 16,885 to one of the directors of the company for a period of 3 years and the court observed (p. 271) :
' It is too late in the day now, whatever may have been the position about two decades ago, to treat the expenditure incurred by a management in paying reasonable sums by way of gratuity, bonus, retrenchment compensation or compensation for termination of service as not business expenditure. Such expenditure would ordinarily fall within the scope of Section 10(2)(xv) of the Act.'
14. Shri Vaish very strongly relied on these observations. But in the present case, the payment in question does not fall within any of the categories mentioned by the Supreme Court. Perhaps the employee was entitled to a gratuity and was paid what he was entitled to under the conditions of service. What we are concerned with is not a normal commercial payment which usually accompanies such occasions as mentioned in the judgment of the Supreme Court. This is slightly a different type ofex gratia payment or a present given to a person who occupied a sufficiently high post in the company's business. It could be that such a payment was intended purely as a personal testimonial and to express the regard and affection of the employer towards the employee. On the other hand, it could be that it was a testimonial in recognition of the loyal services of the employee from which the company hopes that the other employees could also receive inspiration. Essentially, this would be a question of fact and, as we have already mentioned, we think that it was for the assessed to have placed some material by way of resolution, by way of past or future practice or some other indications to show that this was not an isolated instance of a personal gift. We think there is force in the contention of Shri Verma, counsel for the department, that the necessary facts have not been placed on record by the assessed and that the conclusion arrived at by the Tribunal on the paltry material before it was a conclusion of fact with which this court should not interfere in a reference. We are of opinion that in this case, the assessed is handicapped by the lack of adequate and relevant information and material and that the Tribunal's conclusion which was arrived on the basis of such material as was placed before the Tribunal does not call for interference at our hands. We, thereforee, answer the first question in the affirmative and in favor of the revenue.
15. The facts relevant for the second question referred in 1961-62 and the only question referred in 1962-63 may now be stated.
16. The assessed-company was getting supplies of direct current by the New Delhi Municipal Committee for its business premises. It was found that the voltage of the direct current was quite often low with the result that the machines could not work satisfactorily and give maximum output. The company applied to the New Delhi Municipal Committee for changing the supply to alternating current from direct current. The New Delhi Municipal Committee informed the company that for this purpose new cables would have to be laid at an expenditure of Rs. 23,600 and that this expenditure was to be borne by the company although under the Electricity Rules the cables themselves would be the property of the New Delhi Municipal Committee. The company, accordingly, agreed to this condition and the direct current was replaced by alternating current. It has to be clarified in this connection that the expenditure incurred by the company, in this regard, was divided into two parts. One part represented the cost of laying the electric cables from the mains up to the business premises of the company. It is in respect of this that a sum of Rs. 23,600 has been claimed as an expenditure. The company also incurred further expenditure within the company's premises itself as a result of the conversion from direct current to alternating current. But this expenditure has been capitalised by the company and has not been claimed as a deduction.Similarly, for the assessment year 1962-63, the company incurred an expenditure of Rs. 17,771 to represent the items of expenditure claimed as deductible by the company which consisted of the cost of laying cables which remain the property of the New Delhi Municipal Committee as a prelude or pre-requisite for the supply of alternating current to the assessed.
17. The expenditure claimed by the assessed was disallowed by the ITO in the assessment year 1961-62, but was allowed by the AAC, However, the Tribunal relying on Nagpur Electric Light and Power Co. Ltd. v. CIT  6 ITC 303 , and certain other decisions came to the conclusion that the expenditure was capital in nature. The reasoning of the Tribunal in para. 14 of the order for the assessment year 1961-62 is :
' 14. In the instant case, the purpose of conversion from direct current to alternating current was to promote the efficiency and output of the printing press, which was at a low ebb prior to the conversion. The fact that the conversion of the lines has brought about an improvement in the efficiency and output has not been controverter. The complaint of the assessed in regard to the low voltage in the past did not any longer persist. We would, thereforee, be justified in the circumstances in coming to the conclusion that an asset of enduring advantage has been brought into being. It is now well-settled law that it is not necessary that a tangible asset should be brought into being. All that is necessary is that an advantage of enduring nature should come into existence. As for example, shifting of a factory from one location to another does not bring about any tangible asset but all the same expenditure incurred for that purpose would be disallowable as capital expenditure. This is laid down by the decision of the Supreme Court of India in Sitalpur Sugar Works Ltd. v. CIT : 49ITR160(SC) . For all these reasons, we hold that the expenditure of Rs. 23,600 incurred by the assessed for cable laying is capital expenditure and as such could not be allowed. '
18. The amount of Rs. 17,771 for the second year was disallowed on the same reasoning. It is out of these facts that the second question for consideration before us arises.
19. We have come to the conclusion that the view taken by the Tribunal is erroneous. It is important to remember that this is not a case where the assessed is obtaining supply of electricity for the first time. Its business has been in existence for quite some time and it was also obtaining electricity though the supply was of direct current. The expenditure presently in question has been incurred only to change the nature of the supply of electricity from direct current to alternating current. Granting that this change was undertaken or accepted by the assessed because there were some difficulties in making the machines work satisfactorily withdirect current, we do not think that it would be correct to describe the expenditure as having been laid out either to acquire any asset or to acquire any advantage of enduring nature. By the expenditure in question the assessed did not certainly acquire any asset, because it is common ground that the cables which were laid did not belong to the assessed but continued to belong to the New Delhi Municipal Committee. Shri Verma, however, contends that as a result of the expenditure the company had acquired an advantage of enduring nature.
20. We are unable to accept this view. It has been pointed out that the word 'enduring' has a special significance. It has been described as meaning ' enduring in the way that fixed capital endures '. In IRC v. Carron Company  45 TC 18 , the House of Lords pointed out that what matters is the nature of the advantage in a commercial sense, and it is only where the advantage is in the capital field that the expenditure would be capital in nature. If the advantage consists merely in facilitating the assessed's trading operations or enabling the management and conduct of the assessed's business to be carried on more efficiently and profitably, leaving the fixed capital untouched, the expenditure would be on revenue account even though the advantage may endure for an indefinite future. Another principle that has been pointed out in this connection is that an amount spent by the assessed may be deductible as a revenue expenditure even though it results in the acquisition of capital assets by a third party. Thus, in CIT v. T. V. Sundaram Iyengar & Sons (P.) Ltd. : 95ITR428(Mad) , it was held that where an assessed purchases land for and in the name of the Government on which the Government was to construct residential quarters for the employees of the assessed and the assessed had no interest in the property, the expenditure would be on revenue account. In the present case, the expenditure has been incurred by the assessed only to run its own business more profitably and more advantageously. It was expenditure in the nature of, ' remedial expenditure ' as described in Satyadev Chambers Pvt. Ltd. v. CIT : 117ITR86(Guj) .
21. We may also refer to the decision of the Supreme Court in Lakshmiji Sugar Mills Co. P. Ltd. v. CIT : 82ITR376(SC) . In that case, the assessed, a private limited company, carrying on sugar business paid to the Cane Development Council, certain amounts by way of contribution for the construction and development of roads between the various sugarcane producing centres and the sugar factories of the assessed. The expenditure was incurred under a statutory obligation for the development of roads which were originally the property of the Government and remained so even after the improvement had been done. The roads were already in existence and there was no finding that the roads were altogether newlymade. In these circumstances, it was held that the expenditure incurred by the assessed was in the nature of revenue expenditure. It was an expenditure incurred for running the business or working it with a view to producing profits without the assessed gaining any advantage of an enduring benefit to itself. The position in the present case is also similar.
22. Shri Vaish also invited our attention to the decision of the Allahabad High Court in C1T v. Kanodia Cold Storage : 100ITR155(All) . In that case, the assessed made a payment of Rs. 14,742 to an electric supply undertaking towards cost of transformer and service line for replacing the existing line to enable it to have higher electric power for its cold storage business. There also the ownership of the line newly put in was to vest in the electric supply undertaking. The High Court, applying the principle laid down by the Supreme Court in the case of CIT v. Mahalakshmi Textile Mills' Ltd. : 66ITR710(SC) , held that the expenditure was in the nature of revenue expenditure. It was pointed out that the already existing line was the appliance through which the assessed received power for its cold storage. The object of incurring the aforesaid expenditure was to get the existing power line replaced so as to enable the assessed to receive higher voltage electric power for its cold storage. The change in the appliance for receiving power was required by the assessed so that its plant may work more efficiently and it cannot be said that by changing the line the assessed procured some enduring asset. In our opinion the decision of the Allahabad High Court fully applies to the facts of the present case as the situation here is also more or less identical. Moreover, as pointed out by Shri Vaish, the Supreme Court in Mahalakshmi Textile Mills' case : 66ITR710(SC) has affirmed the view that an assessed would be treated as incurring revenue expenditure even in a case where he is replacing parts of capital assets which belong to him in order to improve their efficiency and output. In the present case the expenditure has been incurred not in relation to any asset owned by the assessed but in order to obtain a better and more satisfactory electric supply in the business operation of the assessed by contributing towards the cost of cables which would remain the property of the New Delhi Municipal Committee. In these circumstances, we agree with the learned counsel that the expenditure in question does not create any asset for the assessed nor can it be described as conferring an enduring advantage on the assessed so as to warrant the treatment of the expenditure incurred as capital expenditure. The finding that the expenditure was with a view to obtain an enduring advantage is not a finding of fact. It involves a proper interpretation of this concept laid down in judicial decisions which has been interpreted, as has already been referred to, in several decisions. The conclusion, thereforee, raises an interpretation of law and we are, thereforee, unable to accept the contention ofShri Verma that on this question also the finding of the Tribunal should be treated as a finding of fact.
23. For the reasons discussed above, we answer the second question referred in the assessment year 1961-62 as well as the question referred in the assessment year 1962-63, in the negative and by saying that sums of Rs. 23,600 and Rs. 17,771 did not constitute capital expenditure but were allowable in the computation of the business expenditure of the assessed. As neither side has succeeded, we make no order as to costs.