Sabyasachi Mukharji, J. - (1.) In this reference under Section 256(1) of the I.T. Act, 1961, the following question has been referred to this court: " Whether, on the facts and in the circumstances of the case, the expenditure of Rs. 32,184 incurred in shifting the assessee's laboratory to new premises was a revenue expenditure and was allowable under Section 37(1) of the Income-tax Act,. 1961 ? "
(2.) The assessee is the Karanpura Development Co. Ltd. and the relevant assessment year was 1965-66 with the accounting period ending on 31st December, 1964. In the course of assessment proceedings the ITO noticed a claim for allowance of Rs. 32,184 representing the expenditure incurred in shifting the assessee's laboratory from the Chartered Bank Building to the premises of the Lansdowne Jute Mills Co. Ltd. The amount included the expenses for refitting plant and apparatus in the new premises. According to the ITO, the expenditure was incurred for better working of the laboratory and for research and the benefit which was to be derived from this shifting was of enduring nature (underlined by us). The ITO further held that it created a permanent advantage to the asses-see-company and ultimately the entire sum was disallowed as a capital expenditure.
(3.) Being aggrieved by the said order the assessee went up in appeal before the AAC. The AAC relying on the decision of this court in the case of CIT v. Hlndusthan Motors Ltd. [1968] 68 ITR 301 and discussing the decision of the Supreme Court in Sitalpur Sugar Works Ltd. v. CIT [1963] 49 ITR (SC) 160, upheld the decision.;