BHAGWATI, J.

1. The dispute in this appeal, by certificate, relates to two items of expenditure incurred by the assessee during the assessment year 1956-57 for which the relevant accounting year was the year ending on September 30, 1955. The assessee is a private limited company, carrying on business of manufacture and sale of crystal sugar in a factory situated in Pilibhit in the State of Uttar Pradesh. In the year 1952-53, a dam was constructed by the State of Uttar Pradesh at a place called "Deoni" and a road " Deoni-Dam-Majhala" was constructed connecting the Deoni Dam with Majhala. It seems that the Collector requested the assessee to make some contribution towards the construction of the Deoni Dam and the Deoni Dam-Majhala Road and pursuant to this request of the Collector, the assessee contributed a sum of Rs. 22, 332 during the accounting year ending September 30, 1955. The assessee also contributed a sum of Rs. 50, 000 to the State of Uttar Pradesh during the same accounting year towards meeting the cost of construction of roads in the area around its factory under a sugarcane development scheme promoted by the Uttar Pradesh Government as part of the Second Five Year Plan. It was provided under the sugarcane development scheme that one-third of the cost of construction of roads would be met by the Central Government, one-third by the State Government and the remaining one-third by sugar factories and sugarcane growers and it was under this scheme that the sum of Rs. 50, 000 was contributed by the assessee. In the course of its assessment to income-tax for the assessment year 1956-57, the assessee claimed to deduct these two amounts of Rs. 22, 332 and Rs. 50, 000 as deductible expenditure under section 10(2)(xv) of the Indian Income-tax Act, 1922. The Income-tax Officer disallowed the claim for deduction on the ground that the expenditure incurred was of capital nature and was not allowable as a deduction under section 10(2) (xv). The assessee preferred an appeal to the Appellate Assistant Commissioner but the appeal failed and this led to the filing of a further appeal before the Tribunal. The appeal was heard by a Bench of two members of the Tribunal and there was a difference of opinion between them. The Judicial Member took the view that the expenditure of both the amounts of Rs. 22, 332 and Rs. 50, 000 was in the nature of revenue expenditure and was, therefore, allowable as a deduction, while the Accountant Member held that this expenditure was on capital account and could not be allowed as revenue expenditure. Since there was a difference of opinion between the two members, the question which formed the subject-matter of difference was referred for consideration to a third Member. The third Member did not go into the question whether the expenditure incurred by the assessee was in the nature of capital or revenue expenditure but took a totally different line and held that the contributions were made by the assessee as a good citizen just as any other person would and it could not be said that the expenditure was laid out wholly and exclusively for the purpose of the business of the assessee. The third Member in this view agreed with the conclusion reached by the Accountant Member and held that both the amounts of Rs. 22, 332 and Rs. 50, 000 were not allowable as deductible expenditure under s. 10(2)(xv). The appeal of the assessee was accordingly rejected by the Tribunal so far as this point was concerned. The assessee thereupon sought a reference to the High Court and on the application of the assessee, the following question of law was referred for the opinion of the High Court

"Whether, on the facts and circumstances of the case, the sums of Rs. 22, 332 and Rs. 50, 000 were admissible deduction in computing the taxable profits and gains of the companys business "

2. The High Court observed that on the findings recorded by the third Member of the Tribunal and on the view expressed by the Accountant Member, the expenditure could not be said to have been incurred by the assessee in the ordinary course of its business and it could not be classified as revenue expenditure on the ground of commercial expediency. The view taken by the High Court was that since "the expenditure was not related to the business activity of the assessee as such, the Tribunal was justified in concluding that it was not wholly and exclusively laid out for the business and that the deduction claimed by the assessee, therefore, did not come within the ambit of section 10(2) (xv)". (pp. 583 & 584 of 84 ITR). The High Court, accordingly, answered the question referred to it in favour of the revenue and against the assessee. The assessee thereupon preferred the present appeal in this court after obtaining the necessary certificate from the High Court.

3. Now, an expenditure incurred by an assessee can qualify for deduction under s. 10(2)(xv) only if it is incurred wholly and exclusively for the purpose of his business, but even if it fulfils this requirement, it is not enough; it must further be of revenue as distinct from capital nature. Two questions, therefore, arise for consideration in the present appeal: one is whether the sums of Rs. 22, 332 and Rs. 50, 000 contributed by the assessee represented expenditure incurred wholly and exclusively for the purpose of the business of the assessee and the other is whether this expenditure was in the nature of capital or revenue expenditure. So far as the first item of expenditure of Rs. 22, 332 is concerned, the case does not present any difficulty at all, because it was common ground between the parties that this amount was contributed by the assessee long after the Deoni Dam and the Deoni-Dam-Majhala Road were constructed and there is absolutely nothing to show that the contribution of this amount had anything to do with the business of the assessee or that the construction of the Deoni Dam or the Deoni Dam-Majhala Road was in any way advantageous to the assessees business. The amount of Rs. 22, 332 was apparently contributed by the assessee without any legal obligation to do so, purely as an act of good citizenship, and it could not be said to have been laid out wholly and exclusively for the purpose of the business of the assessee. The expenditure of the amount of Rs. 22, 332 was, therefore, rightly disallowed as deductible expenditure under s. 10(2)(xv).

4. But the position is different when we come to the second item of expenditure of Rs. 50, 000. There the assessee is clearly on firmer ground. The amount of Rs. 50, 000 was contributed by the assessee under the Sugarcane Development Scheme towards meeting the cost of construction of roads in the area around the factory. Now, there can be no doubt that the construction of roads in the area around the factory was considerably advantageous to the business of the assessee, because it facilitated the running of its motor vehicles for transportation of sugarcane so necessary for its manufacturing activity. It is not as if the amount of Rs. 50, 000 was contributed by the assessee generally for the purpose of construction of roads in the State of Uttar Pradesh, but it was for the construction of roads in the area around the factory that the contribution was made and it cannot be disputed that if the roads are constructed around the factory area, they would facilitate the transport of sugarcane to the factory and the flow of manufactured sugar out of the factory. The construction of the roads was, therefore, clearly and indubitably connected with the business activity of the assessee and it is difficult to resist the conclusion that the amount of Rs. 50, 000 contributed by the assessee towards meeting the cost of construction of the roads under the Sugarcane Development Scheme was laid out wholly and exclusively for the purpose of the business of the assessee. This conclusion was indeed not seriously disputed on behalf of the revenue but the principal contention urged on its behalf was that the expenditure of the amount of Rs. 50, 000 incurred by the assessee was in the nature of capital expenditure, since it was incurred for the purpose of bringing into existence an advantage for the enduring benefit of the assessees business. The argument of the revenue was that the newly constructed roads, though not belonging to the assessee, brought to the assessee an enduring advantage for the benefit of its business and the expenditure incurred by it was, therefore, in the nature of capital expenditure. The revenue relied on the celebrated test laid down by Lord Cave L. C. in British Insulated and Helsby Cables Ltd. v. Atherton [925] 10 TC 155(HL) at p. 192. where the learned law Lord stated:

"When an expenditure is made, not only once and for all, but with a view to bringing into existence an asset or an advantage for the enduring benefit of a trade, ..... there is very good reason(in the absence of special circumstances leading to an opposite conclusion) for treating such an expenditure as properly attributable not to revenue but to capital."

5. This test enunciated by Lord Cave L. C. is undoubtedly a well-known test for distinguishing between capital and revenue expenditure, but it must be remembered that this test is not of universal application and, as the parenthetical clause shows, it must yield where there are special circumstances leading to a contrary conclusion. The non-universality of this test was emphasised by Lord Radcliffe in Commissioner of Taxes v. Nchanga Consolidated Copper Mines Ltd. 1965 58 ITR 241(PC), where the learned Law Lord said in his highly felicitous language that it would be misleading to suppose that in all cases securing a benefit for the business would be, prima facie, capital expenditure "so long as the benefit is not so transitory as to have no endurance at all".

6. It was also pointed out by this court in Empire Jute Co. Ltd. v. CIT (C.A No. 1191 of 1974 decided on May 9, 1980)1980 124 ITR 1 [LQ/SC/1980/265] , 10(SC), thus:

"There may be cases where expenditure, even if incurred for obtaining an advantage of enduring benefit, may, none the less, be on revenue account and the test of enduring benefit may break down. It is not every advantage of enduring nature acquired by an assessee that brings the case within the principle laid down in this test. What is material to consider 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 disallowable on an application of this test. If the advantage consists merely in facilitating the assessees trading operations or enabling the management and conduct of the assessees business to be carried on more efficiently or more profitably while leaving the fixed capital untouched, the expenditure would be on revenue account, even though the advantage may endure for an indefinite future."

7. Now it is clear on the facts of the present case that by spending the amount of Rs. 50, 000, the assessee did not acquire any asset of an enduring nature. The roads which were constructed around the factory with the help of the amount of Rs. 50, 000 contributed by the assessee belonged to the Government of Uttar Pradesh and not to the assessee. Moreover, it was only a part of the cost of construction of these roads that was contributed by the assessee, since under the sugarcane development scheme, one-third of the cost of construction was to be borne by the Central Government, one-third by the State Government and only the remaining one-third was to be divided between the sugarcane factories and sugarcane growers. These roads were undoubtedly advantageous to the business of the assessee as they facilitated the transport of sugarcane to the factory and the outflow of manufactured sugar from the factory to the market centres. There can be no doubt that the construction of these roads facilitated the business operations of the assessee and enabled the management and conduct of the assessees business to be carried on more efficiently and profitably. It is no doubt true that the advantage secured for the business of the assessee was of a long duration inasmuch as it would last so long as the roads continued to be in motorable condition, but it was not an advantage in the capital field, because no tangible or intangible asset was acquired by the assessee nor was there any addition to or expansion of the profit-making apparatus of the assessee. The amount of Rs. 50, 000 was contributed by the assessee for the purpose of facilitating the conduct of the business of the assessee and making it more efficient and profitable and it was clearly an expenditure on revenue account.

8. It was pointed out by Lord Radcliffe in Commissioner of Taxes v. Nchanga Consolidated Copper Mines Ltd. 1965 58 ITR 241 (PC), that "in considering allocations of expenditure between the capital and income accounts, it is almost unavoidable to argue from analogy". There are always cases falling indisputably on one or the other side of the line and it is a familiar argument in tax courts that the case under review bears close analogy to a case falling on the right side of the line and must, therefore, be decided in the same manner. If we apply this method, the case closest to the present one is that in Lakshmiji Sugar Mills Co. P. Ltd. v. CIT 1971 82 ITR 376(SC). The facts of this case were very similar to the facts of the present case. The assessee in this case was also a limited company carrying on business of manufacture and sale of sugar in the State of Uttar Pradesh and it paid to the Cane Development Council certain amounts by way of contribution for the construction and development of roads between sugarcane producing centres and the sugar factory of the assessee and the question arose whether this expenditure was allowable as revenue expenditure under s. 10(2)(xv). No doubt, in this case, there was a statutory obligation under which the amount in question was contributed by the assessee, but this court did not rest its decision on the circumstance that the expenditure was incurred under a statutory obligation. This court analysed the object and purpose of the expenditure and its true nature and held that it was of a revenue and not capital nature. This court observed(p. 379):

"In the present case, apart from the element of compulsion, the roads which were constructed and developed were not the property of the assessee nor is it the case of the revenue that the entire cost of development of those roads was defrayed by the assessee. It only made certain contribution for road development between the various cane producing centres and the mills. The apparent object and purpose was to facilitate the running of its motor vehicles or other means employed for transportation of sugarcane to the factory. From the business point of view and on a fair appreciation of the whole situation the assessee considered that the development of the road in question could greatly facilitate the transportation of sugarcane. This was essential for the benefit of its business which was of manufacturing sugar in which the main raw material admittedly consisted of sugarcane. These facts would bring it within the second part of the principle mentioned before, namely, that the expenditure was incurred for running the business or working it with a view to produce the profits without the assessee getting any advantage of an enduring benefit to itself".

9. These observations are directly applicable in the present case and we must hold on the analogy of this decision that the amount of Rs. 50, 000 was contributed by the assessee "for running the business or working it with a view to produce the profits without the assessee getting any advantage of an enduring benefit to itself". This decision fully supports the view that the expenditure of the amount of Rs. 50, 000 incurred by the assessee was on revenue account.

10. We must also refer to the decision of this court in Travancore-Cochin Chemicals Ltd. v. CIT 1977 106 ITR 900(SC), on which strong reliance was placed on behalf of the revenue. The facts of this case are undoubtedly to some extent comparable with the facts of the present case. But ultimately in cases of this kind, where the question is whether a particular expenditure incurred by an assessee is on capital account or revenue account, the decision must ultimately depend on the facts of each case. No two cases are alike and quite often emphasis on one aspect or the other may tilt the balance in favour of capital expenditure or revenue expenditure. This court in fact, in the course of its judgment in Travancore-Cochin Chemicals Ltd.s case 1977 106 ITR 900 [LQ/SC/1977/46] , 904 distinguished the decision in Lakshmiji Sugar Mills case 1971 82 ITR 376(SC) on the ground that:

"On the facts of that case, this court was satisfied that the development of the roads was meant for facilitating the carrying on of the assessees business. Lakshmiji Sugar Mills case 1971 82 ITR 376(SC) is quite different on facts from the one before us and must be confined to the peculiar facts of that case."

11. We would make the same observation in regard to the decision in Travancore-Cochin Chemicals case1977 106 ITR 900 (SC), and say that that decision must be confined to the peculiar facts of that case, because Lakshmiji Sugar Mills case 1971 82 ITR 376(SC), admittedly bears a closer analogy to the present case than the Travancore-Cochin Chemicals case, and if at all we apply the method of arguing by analogy, the decision in Lakshmiji Sugar Mills case must be regarded as affording us greater guidance in the decision in the present case than the decision in Travancore-Cochin Chemicals case. Moreover, we find that the parenthetical clause in the test formulated by Lord Cave L C. in Athertons case 1925 10 TC 155(HL) was not brought to the attention of this court in Travancore-Cochin Chemicals case with the result that this court was persuaded to apply that test as if it were an absolute and universal test regardless of the question applicable in all cases irrespective of whether the advantage secured for the business was in the capital field or not. We would, therefore, prefer to follow the decision in Lakshmiji Sugar Mills case and hold on the analogy of that decision that the amount of Rs. 50, 000 contributed by the assessee represented expenditure on the revenue account.

12. We, accordingly, dismiss the appeal in so far as the expenditure of the sum of Rs. 22, 332 is concerned. But, so far as the expenditure of the sum of Rs. 50, 000 is concerned, we hold that it was in the nature of revenue expenditure laid out wholly and exclusively for the purpose of the assessees business and was, therefore, allowable as a deduction under s. 10(2)(xv) of the Act and allow the appeal to this limited extent. Since the assessee has partly won and partly lost, we think that the fair order of costs would be that each party should bear and pay its own costs throughout.

13. Appeal allowed in part.