Malik, C.J. - (1.) These are two references, one at the instance of the Commissioner of Income-tax and the other at the instance of the assessee.
(2.) The assessee is the Hindustan Commercial Bank, Ltd., with its head office at Kanpur. In the account year 1944-45 the assessee opened forty-six new branches, sub-branches and pay offices. In opening these new branches expenses were incurred and, while the assessee claims that the amount spent was a revenue expenditure deductible under Section 10 (2) (xv), Income-tax Act, on behalf of the Department it is claimed that the expenses incurred were in the nature of capital expenditure.
(3.) The Tribunal held that a part of the expenditure amounting to Rs. 89,870 was revenue expenditure and the balance, which came to Rs. 24,675-2-9, was capital expenditure. Though the Tribunal was of the opinion that the sum of Rs. 89,870 in round figures was revenue expenditure but as this was "deferred revenue expenditure" it spread it over a period of twenty years on the ground that the expenditure was of a heavy character, the benefits of which were likely to extend beyond the year in question upto that anticipated period. They, therefore, divided Rs. 89,870 by twenty and decided that the legitimate expenses per year were Rs. 4,493 for a period of twenty years.;