Brand creation expenditure is deferred revenue exp. Fine Jewellery 30 TMC 323 (Mum Trib)

Expenditure on back up support and maintenance of existing software is revenue in nature. Asahi India Safety Glass Ltd (2011) 245CTR 529(Del)

Admission fee paid to clubs is revenue in nature .[ Delhi High Court in Samtel Color Ltd [2009] [IT Appeal No.1152 of 2008, dated 20-1-2009] followed by Mum Trib in SAB Miller 63 taxmann.com 341

Foreign collaborator granted license to assessee to use its patents and designs—Assessee not acquiring capital asset—Amount paid to collaborator was only licence fee and constituted revenue expenditure-I.A.E.C. (PUMPS) LTD. 232 ITR 316

It is not a universally true proposition that what may be a capital receipt in the hands of the payee must necessarily be capital expenditure in relation to the payer. Therefore, the decision in CIT vs. Maheshwari Devi Jute Mills (1965) 57 ITR 36 (SC) wherein it was held that the sale of loom hours was in the nature of capital receipt and hence, not taxable, cannot be regarded as an authority for the proposition that payment made by an assessee for purchase of loom hours would be capital expenditure[Para 4]-Empire Jute Co. Ltd 124 ITR 1

The fact that expenditure is incurred over more than one year is not decisive of its being capital expenditure-Asahi India Safety Glass Ltd. 203 Taxman 277 (Del.)

The extent of the expenditure cannot be a decisive factor in determining its nature.-Asahi India Safety Glass Ltd. 203 Taxman 277 (Del.)

Test of Enduring benefit is not certain or conclusive test. What is important is not that advantage lasts forever but whether the expense incurred does away with a recurring expense(s) defrayed towards running a business as against an expense undertaken for the benefit of the business as a whole. In other words, the expenditure which is incurred, which enables the profit-making structure to work more efficiently leaving the source of the profit-making structure untouched, would be an expense in the nature of revenue expenditure. Fine tuning business operations to enable the management to run its business effectively, efficiently and profitably, leaving the fixed assets untouched would be an expenditure in the nature of revenue expenditure even though the advantage may last for an indefinite period. Test of enduring benefit or advantage would thus collapse in such like cases. It would be only truer in cases which deal with technology and software application, which do not in any manner supplant the source of income or add to the fixed capital of the assessee-Asahi India Safety Glass Ltd. 203 Taxman 277 (Del.)

Profit on remittance of amount lying in Karachi as blocked or sterilized balance and not being used for internal banking operations in Pakistan is capital in nature Canara Bank 63 ITR 328 (SC)(1967)

Loss on amount remitted from Pakistan. Allowance depends upon whether amounts held in Pakistan as capital or revenue. The fact that loss is caused by act of state resulting devaluation of currency held makes no difference Sutlej Cotton Mills 116 ITR 1 (SC)

In the field of biotechnology, license fee paid for acquiring genetic material for cereals, seeds, etc. along with right to future development and improvement and such technology would benefit assessee even after expiry of agreement period and even assessee could sell germplasm, a part of expenditure paid by assessee would be apportioned as capital expenditure. SC in Alembic Glass Company 177 ITR 377 had said that having regard to fast changing technology, there is not enduring benefit. However , Andhra Pradesh High Court in Advanta India Ltd pronounced on OCTOBER 9, 2015 [2015] 62 taxmann.com 223 (Andhra Pradesh) has found the Alembic Glass Company distinguishable.

Pre operative expenses of extension of business are revenue in nature in case of existing business

SRF Ltd HIGH COURT OF DELHI [2015] 59 taxmann.com 180 (Delhi) JANUARY  15, 2015 (FY  2005-06) relying on Jay Engg. Works Ltd. v. CIT [2009] 311 ITR 405/[2008] 166 Taxman 115 (Delhi). further relying on  Veecumsees v. CIT [1996] 220 ITR 185 (SC) where the assessee ran a jewellery business and then commenced business in the exhibition of cinematographic films. The assessee obtained loans for building a cinema theatre and the question was whether the interest payable on the loans borrowed for the new business was a revenue expenditure or not. While answering the question in favour of the assessee, the Supreme Court found that the two businesses were composite in the sense that there was interconnection, interlacing or interdependence between the jewellery business and the cinema business. 
However w.e.f AY 2004-05 proviso to section 36(1)(iii) inserted a proviso:
"Provided that any amount of the interest paid, in respect of capital borrowed for acquisition of an asset for extension of existing business or profession (whether capitalised in the books of account or not); for any period beginning from the date on which the capital was borrowed for acquisition of the asset till the date on which such asset was first put to use, shall not be allowed as deduction" 

Since SC Judgement  itself is not applicable hence whether Delhi high court judgement relying upon that judgement can be relied ? Interestingly Delhi High Court in Jay Engg distinguished SC Judgement in Challapali Sugar which is itself a judgement holding that pre-operative interest to be capitalized

The Mumbai ITAT in Vardhman Developers Ltd vs. ITO has held that expenditure towards repair and renovation of leased premises is capital in nature. It has also explained the method for allocation of common expenses to different WIP projects of a builder - [2015-ITRV-ITAT-MUM-111]

Contribution for the construction and development of roads between various sugarcane-producing centres and the sugar factories of the assessee. The roads remained the property of the Government. Held revenue expenditure

Lakshmiji Sugar Mills Co. (P.) Ltd. v.CIT [1971] 82 ITR 376 (SC), the assessee-company was carrying on the business of manufacture and sale of sugar. It paid to the Cane Development Council certain amounts by way of contribution for the construction and development of roads between various sugarcane-producing centres and the sugar factories of the assessee. The roads remained the property of the Government. This Court held that the expenditure was not of a capital nature and had to be allowed as an admissible deduction in computing the profits of the assessee’s business. The expenditure was incurred for the purpose of facilitating the running of the assessee’s motor vehicles and other means employed for transportation of sugarcane to its factories.

Expenditure on contribution for construction of tenements for asessee's workers which remain property of housing board is revenue expenditure

In the case of CIT v. Bombay Dyeing & Mfg. Co. Ltd. [1996] 219 ITR 521 / 85 Taxman 396 (SC), the company contributed to the State Housing Board certain amounts for construction of tenements for its workers. The tenements remained the property of the Housing Board. It was held that the expenditure was incurred wholly and exclusively on the welfare of the employees and, therefore, constituted legitimate business expenditure. As the assessee-company acquired no ownership rights in the tenements, this Court said that the expenditure was incurred merely with a view to carry on the business of the company more efficiently by having a contented labour force

PipeLines and Transmission lines set up to provide water and electricity in lieu of exemption from municipal taxes for 15 years is revenue expenditure

 In the case of CIT v. Associated Cement Cos. Ltd. [1988] 172 ITR 257 /38 Taxman 110A (SC), the respondent-company entered into an agreement to supply water to the municipality and provide water pipelines as also to supply electricity for street lighting and put up a transmission line for that purpose. The assessee also agreed to concrete the main road from the factory to the railway station. The amounts expended for these purposes were held to be revenue expenditure since the installations and accessories were the assets of the municipality and not of the assessee. The expenditure, therefore, did not result in creating any capital asset for the company. The advantage secured by the respondent was immunity from liability to pay municipal rates and taxes for a period of 15 years. This Court said that had these liabilities been paid, the payments would have been on revenue account. Therefore, the advantage secured was in the filed of revenue and not capital.

Section 37(1) of the Income-tax Act, 1961 - Business expenditure - Allowability of - Assessment year 1968-69 - Assessee obtained premises on lease for 39 years - In terms of lease agreement, assessee demolished existing construction and constructed new building to suit its business at its own expenses - In any circumstances assessee would not be entitled for any compensation on account of putting up new construction and it should be treated as tenant subject to payment of rent lower than rent prevailing - Assessee claimed said construction expenditure as revenue expenditure - Assessing Officer rejected its claim and treated said expenditure as capital expenditure - Whether since asset created by assessee by spending amounts did not belong to assessee but assessee got only business advantage of using modern premises at a low rent, thus, saving considerable revenue expenditure for next 39 years, said expenditure should be treated as revenue expenditure - Held, yes

Madras Auto Service (P.) Ltd[1998] 99 TAXMAN 575 (SC)AUGUST 12, 1998

Expenditure on back up, support and maintenance of existing hardware and software is revenue in nature

CIT vs. Asahi India Safety Glass Limited (2011) 245 CTR 529 (Del.)