Sabyasachi Mukharji, J.
1. This reference relates to the assessment years 1964-65 and 1965-66. The assessee is a company and is engaged in heavy civil engineering works. The financial years of the relevant assessment years ended on 31st March, 1964 and 1965. The assessee's business was to undertake concreting jobs of huge magnitude of many projects scattered over a number of places in the country. For this purpose the assessee owns concrete mixers and other plant/machinery. In order to use these, mixers and plant/machinery, at times the assessee had to fix them on the ground till the work undertaken was completed. As soon as the work was completed at a particular site, the assessee was to remove these to other sites and so on. The assessee had taken a contract for the construction of a dam and a power house at Barabani in Assam, which involved a heavy amount of concreting work. Under the agreement entered into with the concerned authority the assessee was allowed to use the land at the site on the following condition which was condition No. 5 :
' Use of land for construction purposes. Such land as may be available will be allowed to be used by the contractor for construction of their camps free of charge. The contractor will be responsible to clear the site after completion of their work in this contract and hand over the land to this department. The contractor will be liable to pay compensation for any damages done to the land. '
2. In order to fix the mixers and plant/machinery at the site, the assessee had to prepare a foundation on the land. For this purpose the assessee incurred a total expenditure of Rs. 11,90,706 during the financial years 1960-61 to 1962-63, and labelled it as 'erection charges'. This expenditure was capitalised in the books separately and was written off over the years on the basis of work done in each year. Accordingly, the assessee claimed deduction in the manner following :
3. For the assessment years under reference, the ITO disallowed the asses-see's claim for deduction of Rs. 6,26,016 and Rs. 1,50,640 respectively. In this connection it was observed as follows :
' The installation charges of a fixed asset are not recurring expenses year to year. They are spent on fixed capital, not on circulating capital of the business. Thus the assessee should have capitalised the installation charges and claimed depreciation on the same. This is permissible by the Act and is sanctioned by the conventions of accountancy.
The assessee has written off installation charges in a manner which is contrary to the provisions of income-tax (law) and accountancy, probably because the ' a ' (assessee) thinks that installation charges in the business of the company are revenue expenses because business is not fixed, at a particular place. The assessee takes number of contracts at different places in the country and when contracts are over, the business started at a particular place ceases. Consequently, fixed assets would have to be dismantled and transported to and reserved at a different site where a fresh contract is taken. Since on the transfer the installation charges incurred at a particular place would not increase the cost of machines, the assessee writes them off. It is right if the business is travelling business, for example, a travelling circus or a trade carried on at fairs and weekly markets at various centres. In that case, such expenses would form part of moving expenses. But the assessee's business is not a travelling one but flitting business. A travelling business is different from a flitting business where the policy of the business is to continually flit, it is not to travel. It is merely a case of substitution of one shop for another and for however short a time a shop lasts, it is permanent in its nature and then the business flits and hence the expenditure incurred in a flitting business is of a capital nature (Eastmans Ltd. v. Shaw,  14 TC 218 , Hyam v. IRC,  14 TC 479 (C Sess), Smith v. Westinghouse Brake Co.  2 TC 357 (QB)).
In the circumstances, the assessee's claim to write off installation charges on a self-chosen basis which is not in accordance with the provisions of the Act and is contrary to the conventions of accountancy, is not correct. The installation charges are part and parcel of the cost of the fixed assets and shall be considered for the purpose of- allowing depreciation. Writing off is not allowed. '
4. There was an appeal before the AAC. The AAC rejected the assessee's claim with the following observations:
'The cost of plant and machinery normally includes installation charges and such charges cannot be considered as separate from the cost of machinery and plant. Even in normal accountancy practice and under the Income-tax Act also, the depreciation is allowed on the price of the machine and the expenses incurred on its installation. Obviously installation charges are undoubtedly of capital nature and thus cannot be allowed as revenue expenditure. The appellant's case cannot be compared with the case of circus party which has to travel from place to place with short intervals whereas the appellant's business is not of casual shifting nature but it has to be shifted after a number of years when a contract is completed. The two decisions cited by the learned counsel are of no help to the appellant inasmuch as both these decisions dealt with expenditure incurred on temporary sheds and houses on which even depreciation is allowable at 100%. I, therefore, hold that the ITO was justified to consider the entire expenditure as a part of cost of plant and machinery and allowed depreciation thereon. '
5. Being aggrieved by the same, the assesses went up in appeal before the Tribunal. After taking into consideration the rival contentions, the Tribunal observed, inter alia, as follows :
'In our opinion, in order to decide whether a particular expenditure is allowable or not, what is to be considered is not only the nature of expenses incurred but also the purpose for incurring such expenses, keeping in view the nature of the business carried on by the assessee. The facts of the English decisions referred to in the orders of the income-tax authorities are quite different from the one in the present appeals. In those cases, out of a number of shops some were sold and others were purchased (Eastmans Ltd. v. Shaw,  14 TC 218 (HL) and Hyam v. IRC,  14 TC 479 (C Sess)) or a big factory was sold and a small one was purchased (Smith v. Westinghonse Brake Co.,  2 TC 357 (QB)). These were admittedly capital assets and there can be no two opinions that the expenditure incurred (loss suffered) was on capital account. In the present case, there is no disposal of any capital asset which the assessee was once owning. The assessee is carrying on business of heavy civil engineering works. For this purpose, it owns concrete mixers and other plant/machinery required for cutting, screening, etc., of stone, stone chips and other building materials. The assessee takes the plant/machinery to the work site and they are normally fixing them to the ground. But at times, the assessee is obliged to fix them on the ground as the work involved is of some special type which requires less vibration, movements, etc. As soon as the work is over at a particular site, the assessee removes the plant/ machinery leaving behind the foundation on which they were fixed. By no stretch of imagination can the expenditure incurred on fixing the plant/ machinery be treated as capital expenditure in the nature of the business carried on by the assessee. The nature of the assessee's business is quite comparable with that of a travelling business like a circus or a trade carried on at fairs. Again, the assessee does not incur such expenses every time it moves from one site to another as most of the plant/machinery could be used without fixing them on the ground. It is only where the work undertaken is of integrated and a special type that the assessee is obliged to fix the plant/machinery for a temporary period. Looking to the nature of the business and its being carried on at different places by the assessee, we are of the view that the expenditure on fixing the plant/machinery for a temporary period, was wholly and exclusively laid out for the purpose of the carrying on of the business and is also of revenue nature. Accordingly, we direct the income-tax authorities to accept the assessee's claim. We do not think that the fact that the assessee had claimed development rebate on the cost of the assets inclusive of erection charges, would make any difference in deciding the issue about the deductibility of Rs. 6,26,016 and Rs. 1,50,640 which, of course, could be withdrawn if the department so chooses.'
6. In those circumstances, the assessee (revenue ?) sought to raise two questions before this court which are as follows :
' 1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the sum of Rs. 6,26,016 and Rs. 1,50,640 was a revenue expenditure laid out or expended wholly and exclusively for the purpose of the assessee ?
2. If the answer to question No. 1 is in the affirmative, then whether, on the facts and in the circumstances of the case and having regard to the fact that the sum of Rs. 6,26,016 and Rs. 1,50,640 was incurred as expenditure in a year prior to the previous year relevant to the assessment year 1964-65/1965-66, it was allowable as a deduction in computing the profits and gains of the assessee's business for the said assessment year '
7. The Tribunal rejected the second question on the ground mentioned in para. 12 of the statement of case and observed that the I.T. authorities had disallowed the assessee's claim for deduction of the aforesaid amounts only on the ground that it was of capital nature. Further, the I.T. authorities did not disallow the assessee's claim for deduction of the aforesaid amounts on the ground which was sought to be raised in question No. 2 above. In the premises, the Tribunal declined to refer the question No. 2 as indicated above and referred the question No. 1 to us which has been set out hereinbefore.
8. The question, therefore, arises before us whether disallowance on the ground of capital expenditure was right, Learned advocate for the Revenue sought to raise (the ground) before us that, in view of the facts found by the Tribunal apparent on the records, it was clear that the expenses in question were incurred in the years prior to the relevant assessment years. In any event, the expenses could not be allowed in the years in question. This specific question was sought to be raised in a reference and the Tribunal refused to allow the assessee (revenue ?) to raise this question on the ground that it was not raised and discussed before any of the authorities below. In our opinion, the Tribunal was right in so far as it held that it was not raised before any of the authorities below. Furthermore, it appears to us that, in view of the fact that the Tribunal had refused to refer this specific question which is raised and sought to be referred to this court which the Tribunal declined to refer, it cannot now be allowed to be raised on the plea that this raises a new aspect of the facts already on record. In that view of the matter it is not necessary for us, in our opinion, to discuss in detail the decision, to which our attention was drawn, of the Judicial Committee in the case of CIT v. Basant Rai Takhat Singh,  1 ITR 197 , or the observation of this court in the case of Hindustan Aluminium Corpn. Ltd. v. CIT : 144ITR474(Cal) , on this aspect of the matter though this decision was relied on for some other aspect, to which we will refer later on, if necessary. It was contended that the expenditure created a source of earning revenue to the assessee. Reliance was placed on several authorities. Our attention was drawn to the observations of the Queen's Bench Division of the High Court of England by Mr. Justice Charles in the case of Smith (Surveyor of Taxes) v. Westinghouse Brake Company,  2 TC 357 (QB). There the erection charges were disallowed by Mr. Justice Charles. Our attention was also drawn to certain observations of the Court of Sessions, Scotland, in the case of The Law Shipping Co. Ltd. v. IRC,  12 TC 621 (C Sess) and reliance was placed on the observations of Lord Sands at pages 628-629. Learned advocate for the Revenue also relied on the decision of the Supreme Court in the case of Sitalpur Sugar Works Ltd. v. CIT, : 49ITR160(SC) . Our attention was also drawn to the observations of the Karnataka High Court in the case of Mysore State Transport Corporation v. CIT : 99ITR518(KAR) and on the decision of this court in the case of CIT v. Karanpura Development Co. Ltd. : 144ITR538(Cal) . Reliance was placed on the observations of this court in the case of CIT v. Amalgamated Jambad Syndicate Pvt. Ltd., : 117ITR698(Cal) of the said decision. On behalf of the assessee on the other hand, reliance was placed on the observations of the Supreme Court in the case of Bombay Steam Navigation Co. (1953) Pvt. Ltd. v. CIT : 56ITR52(SC) , as well as the observations of the Division Bench of this court in the case of Kalyanji Mavji & Co. v. CIT : 87ITR228(Cal) . .
9. It is not necessary for the purpose of determining the question before us in the facts and circumstances of this case to refer to the said decision in any detail. In several decisions it had been tried to enunciate the principles that are necessary to demarcate whether a particular expenditure should be allowed as revenue expenditure or disallowed as capital expenditure. As was put by Lord Reid in the case of. Regent Oil Co. Ltd. v. Strick (Inspector of Taxes),  AC 295 ;  73 ITR 301 (HL), at page 317, it may be possible to reconcile all the decisions but it is not certainly possible to reconcile all the reasons given for them. Lord Reid observed that much of the difficulty had arisen from taking too literally general statements made in earlier cases and in seeking to apply them to a different kind of case which their authors almost certainly did not have in mind, according to Lord Reid, in seeking to treat the expressions of judicial opinion as if these were words in an Act of Parliament. A further source of difficulty, according to Lord Reid, has been a tendency in some cases to treat some one criterion as paramount and to press it to its logical conclusion without proper regard to other factors in the case. The Legislature has not, as have been noted in some decisions, defined the distinguishing features of capital and revenue expenditure. It appears to us from these decisions that it must depend on the facts and circumstances and whether a particular expenditure is a revenue expenditure incurred for the purpose of business must be determined on a consideration of all the facts and circumstances of the case and by the application of the principles of commercial trading. The question must be viewed in the larger context of business necessity or expediency. If the outgoing or expenditure was so related to the carrying on or conduct of the business that it might be regarded as an integral part of the profit-earning process and not for acquisition of an asset or for a right of permanent character, the possession of which was a condition for the carrying on of the business, the expenditure in those circumstances could be regarded as revenue expenditure. (See the observations of the Supreme Court in the case of Bombay Steam Navigation Co. (1953) Pvt. Ltd. v. CIT : 56ITR52(SC) ). Therefore, in view of the fact that in this case the expenditure was necessary for carrying out better or more efficiently earning of profit by the assessee concerned, in our opinion, these were incidental to the earning of the profit and that was the immediate purpose and object of incurring the expenditure; if there was an incidental addition of some permanent nature enuring to the assessee, that in our opinion, is of no consequence in determining whether the expenditure should be allowed or not. In this case it is necessary to bear in mind the principles of commercial expediency and to judge then whether such a test would satisfy the judicial commonsense. Having looked at from that point of view, in our opinion, the Tribunal arrived at the correct conclusion.
10. The question must, therefore, be answered in the affirmative and in favour of the assessee.
11. In the facts and circumstances of the case, parties will pay and bear their own costs,
Suhas Chandra Sen, J.