← All Phrases

“test of enduring benefit”

Business ExpensesSection 37Section 3786 judgments

The decision most relied on for test of enduring benefit is Empire Jute Co. Ltd. v. CIT (124 ITR 1), cited in 622 judgments on BharatTax.

Leading authorities on test of enduring benefit

Empire Jute Co. Ltd. v. CIT
124 ITR 1 · 1980 · Supreme Court
622
citing judgments

Expenditure is classified as revenue or capital based on its practical business effect, necessity, or expediency, rather than solely on the juristic classification of rights; an enduring benefit does not automatically make an expenditure capital if it facilitates trading operations or business efficiency.

Taparia Tools Ltd. v. JCIT
372 ITR 605 · 2015 · Supreme Court
343
citing judgments

An expenditure does not automatically become capital in nature merely because it results in some enduring benefit for the assessee; it can be treated as revenue expenditure if incurred for genuine business purposes.

Alembic Chemical Works Co. Ltd. v. CIT
177 ITR 377 · 1989 · Supreme Court
275
citing judgments

Expenditure that provides a commercial advantage of an enduring nature may still be classified as revenue expenditure if its purpose is to facilitate existing trading operations, improve business efficiency, or upgrade existing products, depending on the specific context and objective.

CIT v. Madras Auto Service (P) Ltd.
233 ITR 468 · 1998 · Supreme Court
246
citing judgments

Expenditure providing an enduring advantage, such as upfront lease rent for land, is revenue expenditure if no capital asset is acquired or generated, allowing for deduction under Section 37, even when capitalized in the books of account.

Assam Bengal Cement Co. Ltd. v. CIT
27 ITR 34 · 1955 · Supreme Court
174
citing judgments

The Supreme Court established the foundational test for distinguishing between capital and revenue expenditure, holding that the aim and object of the expenditure and whether it brings into existence an asset or an advantage of an enduring nature determines its character, irrespective of the payment method. An advantage lasting five years or more can be considered enduring.

Otis Elevator Co. (India) Ltd. v. CIT
195 ITR 682 · 1992 · High Court
131
citing judgments

Club membership fees, including both entrance fees and annual subscriptions, are not considered capital expenditure if the membership's continuance depends on regular payments, and therefore are allowable as revenue expenditure under Section 37(1).

CIT v. Associated Cement Companies Ltd.
172 ITR 257 · 1988 · Supreme Court
126
citing judgments

An expenditure is classified as either capital or revenue; the 'enduring benefit' test is a key criterion for this distinction, and income tax law does not generally recognize deferred revenue expenditure unless specifically provided.

CIT v. J.K. Synthetics Ltd.
309 ITR 371 · 2009 · High Court
111
citing judgments

The Delhi High Court laid down broad guidelines for distinguishing between capital and revenue expenditure, which were implicitly approved by the Supreme Court when it dismissed the Special Leave Petition against this decision. These guidelines assist in classifying business expenses as revenue in nature, particularly when assessing the enduring benefit test.

Judgments citing test of enduring benefit

Avitel Post Studioz Limited, Mumbai vs. Deputy Commissioner of Income Tax, Circle 6(1)(2), Mumbai

ITA 5242/MUM/2024[2012-13]Status: DisposedITAT Mumbai24 Jul 2025AY 2012-13

Bench: SHRI AMIT SHUKLA (Judicial Member), SHRI GIRISH AGRAWAL (Accountant Member)

Section 143(3)Section 148Section 37(1)

some advantage may endure, if the expenditure facilitates day-to-day operations or enhances efficiency, it retains the character of revenue expenditure. The test of enduring benefit is not determinative unless it leads to creation or enhancement of a capital structure or asset. 23. In sum and substance, he submitted

The ACIT, Cochin vs. M/S.Mfar Hotels & Resorts Ltd, Cochin

In the result, the appeal by the Revenue is dismissed

ITA 335/COCH/2015[2011-12]Status: DisposedITAT Cochin27 May 2025AY 2011-12

Bench: Shri Inturi Rama Rao & Shri Sandeep Singh Karhail: A.Y. : 2011-12 C.O. No. 13/Coch/2015 : A.Y. : 2011-12 (Arising Out Of Ita No. 335/Coch/15)

For Appellant: Shri Rajakannan, AdvFor Respondent: Shri Sanjit Kumar Das, CIT-DR
Section 250

There may be cases where expenditure, even if incurred for obtaining advantage of enduring benefit, may, nonetheless, 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

Privi Life Sciences P.Ltd, Navi Mumbai vs. CIT 24, Mumbai

In the result, appeal of the assessee is partly allowed

ITA 5399/MUM/2015[2011-12]Status: DisposedITAT Mumbai23 May 2025AY 2011-12

Bench: Smt. Beena Pillai & Shri Girish Agrawalassessment Year: 2011-12

For Appellant: Shri Haridas Bhatt, CAFor Respondent: Shri Mahesh Pamnani (SR. DR)
Section 143(3)(ii)Section 68

same as capital expenditure solely on the ground that it will enduring benefit. 2.3. The learned CIT(A) ought to have held that test of enduring benefit fails if the expenditure is revenue field and therefore ought to have allowed the same as revenue expenditure. III Disallowance of Travelling expenses

Assistant Commissioner of Income Tax, Central Circle-1, Trichy vs. Vijay Dairy and Farm Products Private Limited, Musiri, Trichy

In the result, appeal filed by the Revenue is dismissed

ITA 483/CHNY/2024[2019-20]Status: DisposedITAT Chennai19 Mar 2025AY 2019-20

Bench: Shri Aby T. Varkey & Shrimanoj Kumar Aggarwal

For Appellant: Mr. N. Arjun Raj, AdvocateFor Respondent: Mr. Nilay Baran Som, CIT
Section 133ASection 143(3)Section 69A

enduring benefit, may, none advantage, of enduring benefit, may, none-the-less, be on revenue less, be on revenue account and the test of enduring benefit may break account and the test of enduring benefit may break down. It is not every down. It is not every advantage of enduring ... revenue account, even though the advantage may endure be on revenue account, even though the advantage may endure for an indefinite future. The test of enduring benefit is therefore for an indefinite future. The test of enduring benefit is therefore for an indefinite future. The test of enduring benefit

Indus Biotech Limited, Pune vs. The Assistant Commissioner of Income Tax, Circle 1(1), Pune

Accordingly, this ground is allowed

ITA 122/PUN/2024[2019-20]Status: DisposedITAT Pune10 Jan 2025AY 2019-20

Bench: Shri R. K. Panda & Ms. Astha Chandra

Section 115JSection 143(1)Section 143(1)(a)Section 36(1)(va)Section 37(1)

there may be cases where expenditure even if incurred for obtaining advantage of enduring benefit, may, nonetheless, be on revenue account and the test of enduring benefit may break down. It was pointed out that it is not every advantage of enduring nature acquired by an assessee that brings ... expenditure would be on revenue account, even though the advantage may endure for an indefinite future. Thus, it was held that the test of enduring benefit is not a certain or conclusive test and it cannot be applied blindly and mechanically without regard to the particular facts and circumstances

Mahanagar Gas Limited, Mumbai vs. Deputy Commissioner of Income Tax, Income Tax

ITA 505/MUM/2024[2021-22]Status: DisposedITAT Mumbai17 Dec 2024AY 2021-22

Bench: Justice (Retd.) Shri C.V. Bhadang & Shri B.R. Baskaran

For Appellant: Shri P.P. JayramanFor Respondent: Shri R.R. Makwana, Sr.DR
Section 143(1)Section 143(3)

there may be cases where expenditure even if incurred for obtaining advantage of enduring benefit, may, nonetheless, be on revenue account and the test of enduring benefit may break down. It was pointed out that it is not every advantage of the principle laid down in this test. What ... expenditure would be on revenue account, even though the advantage may endure for an indefinite future. Thus, it was held that the test of enduring benefit is not a certain or conclusive test and it cannot be applied blindly and mechanically without regard to the particular facts and circumstances

Mahanagar Gas Limited, Mumbai vs. Assistant Director of Income Tax, CPC

ITA 1694/MUM/2024[2021-22]Status: DisposedITAT Mumbai17 Dec 2024AY 2021-22

Bench: Justice (Retd.) Shri C.V. Bhadang & Shri B.R. Baskaran

For Appellant: Shri P.P. JayramanFor Respondent: Shri R.R. Makwana, Sr.DR
Section 143(1)Section 143(3)

there may be cases where expenditure even if incurred for obtaining advantage of enduring benefit, may, nonetheless, be on revenue account and the test of enduring benefit may break down. It was pointed out that it is not every advantage of the principle laid down in this test. What ... expenditure would be on revenue account, even though the advantage may endure for an indefinite future. Thus, it was held that the test of enduring benefit is not a certain or conclusive test and it cannot be applied blindly and mechanically without regard to the particular facts and circumstances

DCIT (It)-2(1)(2), Air Building, Nariman Point, Mumbai vs. Dbs Bank Limited, Mumbai

ITA 4722/MUM/2023[2015-16]Status: DisposedITAT Mumbai21 Nov 2024AY 2015-16

Bench: Shri Narendra Kumar Billaiya, Hon'Ble & Shri Sunil Kumar Singh, Hon'Bleι.Τ.Α. No. 3691/Mum/2023

For Appellant: Shri P.J. Pardiwala/Shri Madhur Agarwal, A/RsFor Respondent: Shri Vivek Permpurna, CIT, D/R
Section 143(3)Section 14ASection 28Section 36Section 36(1)(vii)Section 36(1)(viia)Section 36(2)Section 37(1)Section 44C

आयकर अपीलीय अधिकरण न्यायपीठ, मुंबई । IN THE INCOME TAX APPELLATE TRIBUNAL “I” BENCH, MUMBAI BEFORE SHRI NARENDRA KUMAR BILLAIYA, HON

Dbs Bank Ltd (Dbs Bank Ltd., India Branches Now Converted Into Dbs Bank India Ltd), Mumbai vs. DCIT (Int Txt)-2(1)(2), Mumbai

In the result, appeal of the assessee in ITA No

ITA 3691/MUM/2023[2015-16]Status: DisposedITAT Mumbai21 Nov 2024AY 2015-16

Bench: Shri Narendra Kumar Billaiya, Hon’Ble & Shri Sunil Kumar Singh, Hon’Ble

For Appellant: Shri P.J. Pardiwala/Shri Madhur Agarwal, A/RsFor Respondent: Shri Vivek Permpurna, CIT, D/R
Section 143(3)Section 14ASection 28Section 36Section 36(1)(vii)Section 36(1)(viia)Section 36(2)Section 37(1)Section 44C

There may be cases where expenditure, even if incurred for obtaining advantage of enduring benefit, may, nonetheless, 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 ... leaving the fixed capital untouched, the expenditure would be on revenue account, even though the advantage may endure for an indefinite future. The test of enduring benefit is, therefore, not a certain or conclusive test and it cannot be applied blindly and mechanically without regard to the particular facts

DCIT Central Circle 5 4, Mumbai vs. L and T Valdel Engineering Limited, Bangaluru

In the result, all appeals filed by the assessee stands allowed and appeals filed by the revenue stands dismissed for all assessment years under consideration

ITA 4767/MUM/2023[2011-12]Status: DisposedITAT Mumbai30 Oct 2024AY 2011-12

Bench: Smt. Beena Pillai, Jm & Shri Omkareshwar Chidara, Am

cases where expenditure, even if incurred for obtaining 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 ... leaving the fixed capital untouched the expenditure would be on revenue account, even though the advantage may endure for an indefinite future. The test of enduring benefit is, therefore, not a certain or conclusive test and it cannot be applied blindly and mechanically without regard to the particular facts

DCIT Central Circle 5(4), Mumbai vs. L and T Valdel Engineering Limited, Bangaluru

In the result, all appeals filed by the assessee stands allowed and appeals filed by the revenue stands dismissed for all assessment years under consideration

ITA 4715/MUM/2023[2013-14]Status: DisposedITAT Mumbai30 Oct 2024AY 2013-14

Bench: Smt. Beena Pillai, Jm & Shri Omkareshwar Chidara, Am

cases where expenditure, even if incurred for obtaining 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 ... leaving the fixed capital untouched the expenditure would be on revenue account, even though the advantage may endure for an indefinite future. The test of enduring benefit is, therefore, not a certain or conclusive test and it cannot be applied blindly and mechanically without regard to the particular facts

DCIT CC -5 (4), Mumbai vs. L and T Valdel Engineering Limited, Mumbai

In the result, all appeals filed by the assessee stands allowed and appeals filed by the revenue stands dismissed for all assessment years under consideration

ITA 4684/MUM/2023[2015-16]Status: DisposedITAT Mumbai30 Oct 2024AY 2015-16

Bench: Smt. Beena Pillai, Jm & Shri Omkareshwar Chidara, Am

cases where expenditure, even if incurred for obtaining 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 ... leaving the fixed capital untouched the expenditure would be on revenue account, even though the advantage may endure for an indefinite future. The test of enduring benefit is, therefore, not a certain or conclusive test and it cannot be applied blindly and mechanically without regard to the particular facts

DCIT Central Circle 5 4 Mumbai, Mumbai vs. L and T Valdel Engineering Limited, Bangaluru

In the result, all appeals filed by the assessee stands allowed and appeals filed by the revenue stands dismissed for all assessment years under consideration

ITA 4683/MUM/2023[2014-15]Status: DisposedITAT Mumbai30 Oct 2024AY 2014-15

Bench: Smt. Beena Pillai, Jm & Shri Omkareshwar Chidara, Am

cases where expenditure, even if incurred for obtaining 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 ... leaving the fixed capital untouched the expenditure would be on revenue account, even though the advantage may endure for an indefinite future. The test of enduring benefit is, therefore, not a certain or conclusive test and it cannot be applied blindly and mechanically without regard to the particular facts

DCIT Central Circle 5 4, Mumbai vs. L and T Valdel Engineering Limited, Karnataka

In the result, all appeals filed by the assessee stands allowed and appeals filed by the revenue stands dismissed for all assessment years under consideration

ITA 4682/MUM/2023[2012-13]Status: DisposedITAT Mumbai30 Oct 2024AY 2012-13

Bench: Smt. Beena Pillai, Jm & Shri Omkareshwar Chidara, Am

cases where expenditure, even if incurred for obtaining 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 ... leaving the fixed capital untouched the expenditure would be on revenue account, even though the advantage may endure for an indefinite future. The test of enduring benefit is, therefore, not a certain or conclusive test and it cannot be applied blindly and mechanically without regard to the particular facts

Larsen & Toubro Limited (Successor to M/S L & T Va;De; Engineering Limited ), Mumbai vs. Assistant Commissioner of Income Tax, Central Circle 5(4) Mumbai (Earlier AO Dcitm Circle 11(5) Bangalore, Mumbai

In the result, all appeals filed by the assessee stands allowed and appeals filed by the revenue stands dismissed for all assessment years under consideration

ITA 4555/MUM/2023[2015-16]Status: DisposedITAT Mumbai30 Oct 2024AY 2015-16

Bench: Smt. Beena Pillai, Jm & Shri Omkareshwar Chidara, Am

cases where expenditure, even if incurred for obtaining 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 ... leaving the fixed capital untouched the expenditure would be on revenue account, even though the advantage may endure for an indefinite future. The test of enduring benefit is, therefore, not a certain or conclusive test and it cannot be applied blindly and mechanically without regard to the particular facts

Larsen & Toubro Limited (Successor to M/S L & T Valdel Engineering Limited ), Mumbai vs. Assistant Commissioner of Income Tax, Central Circle 5(4), Mumbai

In the result, all appeals filed by the assessee stands allowed and appeals filed by the revenue stands dismissed for all assessment years under consideration

ITA 4554/MUM/2023[2014-15]Status: DisposedITAT Mumbai30 Oct 2024AY 2014-15

Bench: Smt. Beena Pillai, Jm & Shri Omkareshwar Chidara, Am

cases where expenditure, even if incurred for obtaining 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 ... leaving the fixed capital untouched the expenditure would be on revenue account, even though the advantage may endure for an indefinite future. The test of enduring benefit is, therefore, not a certain or conclusive test and it cannot be applied blindly and mechanically without regard to the particular facts

Larsen & Toubro Limited (Successor to M/S L & T Valdel Engineering Limited ), Mumbai vs. Assistant Commissioner of Income Tax, Central Circle 5(4), Mumbai Earlier AO DCIT, Circle 11(5) Banglore, Mumbai

In the result, all appeals filed by the assessee stands allowed and appeals filed by the revenue stands dismissed for all assessment years under consideration

ITA 4553/MUM/2023[2013-14]Status: DisposedITAT Mumbai30 Oct 2024AY 2013-14

Bench: Smt. Beena Pillai, Jm & Shri Omkareshwar Chidara, Am

cases where expenditure, even if incurred for obtaining 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 ... leaving the fixed capital untouched the expenditure would be on revenue account, even though the advantage may endure for an indefinite future. The test of enduring benefit is, therefore, not a certain or conclusive test and it cannot be applied blindly and mechanically without regard to the particular facts

Larsen & Toubro Limited (Successor to M/S L & T Valdel Engineering Limited ), Mumbai vs. Assistant Commissioner of Income Tax. Central Circle 5(4) Mumbai(Earlier AO DCIT, Circle 11(5) Bangalore ), Mumbai

In the result, all appeals filed by the assessee stands allowed and appeals filed by the revenue stands dismissed for all assessment years under consideration

ITA 4552/MUM/2023[2012-13]Status: DisposedITAT Mumbai30 Oct 2024AY 2012-13

Bench: Smt. Beena Pillai, Jm & Shri Omkareshwar Chidara, Am

cases where expenditure, even if incurred for obtaining 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 ... leaving the fixed capital untouched the expenditure would be on revenue account, even though the advantage may endure for an indefinite future. The test of enduring benefit is, therefore, not a certain or conclusive test and it cannot be applied blindly and mechanically without regard to the particular facts

Larsen & Toubro Limited, Mumbai vs. Assistant Commissioner of Income Tax Central Circle 5(4), Mumbai (Earlier AO DCIT, Circle 11(5) Banglore ., Mumbai

In the result, all appeals filed by the assessee stands allowed and appeals filed by the revenue stands dismissed for all assessment years under consideration

ITA 4551/MUM/2023[2011-12]Status: DisposedITAT Mumbai30 Oct 2024AY 2011-12

Bench: Smt. Beena Pillai, Jm & Shri Omkareshwar Chidara, Am

cases where expenditure, even if incurred for obtaining 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 ... leaving the fixed capital untouched the expenditure would be on revenue account, even though the advantage may endure for an indefinite future. The test of enduring benefit is, therefore, not a certain or conclusive test and it cannot be applied blindly and mechanically without regard to the particular facts

Assistant Commissioner of Income Tax-3-1-1, Mumbai vs. Ms. Samsonite South Asia Pvt. Ltd., Mumbai

In the result the appeal filed by the assessee stands dismissed

ITA 4231/MUM/2023[2011-12]Status: DisposedITAT Mumbai30 Oct 2024AY 2011-12

Bench: Beena Pillai & Shri Prabhash Shankarassessment Year: 2011-12

For Appellant: Dr. K. Shivaram Sr. Advocate & ShashiFor Respondent: Dr, Kishore Dhule – CIT D.R
Section 143(2)Section 143(3)Section 92C

business is in the nature of maintaining the brand and/or corporate image and it is not for creation of a brand. Further, the test of enduring benefit urged by the Revenue was considered by the Apex Court in Empire Jute Co. Ltd. v. CIT [1980] 124 ITR Taxman