JUDGMENT judgment of court was delivered by Ajay Kumar Mittal J.-This order shall dispose of I. T. A. Nos. 163 of 2009 and 147 of 2011 as facts and issue involved are similar. However, facts are being extracted from I. T. A. No. 163 of 2009. I. T. A. No. 163 of 2009 has been preferred by Revenue under section 260A of Income-tax Act, 1961 (in short, "the Act"), against order dated September 30, 2008, annexure A.3 passed by Income-tax Appellate Tribunal, Chandigarh Bench "B" (in short, "the Tribunal") in I. T. A. No. 614/Chandi/2008 for assessment years 2005-06, claiming following substantial question of law: "Whether, on facts and in circumstances of case and in law, hon'ble Income-tax Appellate Tribunal was correct in holding that mere fact that benefit from recurring expenditure shall be available to appellant in succeeding assessment years cannot be ground to hold such expenditure as capital expenditure?" On July 21, 2009, appeal was admitted to consider question formulated in order dated April 28, 2009, which reads thus: "Learned counsel for appellant states that only such expenditure incurred on agriculture that results in raising current crop, can be treated as revenue expenditure, whereas expenses incurred to reclaim land must be treated as capital expenditure." few facts relevant for decision of controversy involved as narrated in I. T. A. No. 163 of 2009 may be noticed. assessee is Punjab Government undertaking engaged in business of contract farming, procurement of food grains, marketing and export, etc. return declaring income of Rs. 1,50,75,000 was filed by assessee on October 31, 2005, which was processed under section 143(1) of Act on March 18, 2006. case was selected for scrutiny. Notice under section 143(2) of Act was issued to assessee on October 26, 2006. Later on, on March 6, 2007, assessee filed revised return declaring total income of Rs. 5,16,50,282. assessment was completed under section 143(3) of Act, vide order dated December 24, 2007, annexure A.1. Assessing Officer held that major expenditure incurred by assessee-company for development of land was capital expenditure. In all, expenditure of Rs. 4.43 lakhs had been allowed as revenue expenditure and balance expenses of Rs. 33.74 lakhs were disallowed being in nature of capital expenses for developing land. Aggrieved by order, assessee filed appeal before Commissioner of Income-tax (Appeals) ("the CIT(A)"). Vide order dated April 25, 2008, annexure A.2, Commissioner of Income-tax (Appeals) dismissed appeal holding that expenditure incurred to make barren land into fertile land was capital in nature. assessee filed further appeal before Tribunal. Vide order dated September 30, 2008, annexure A.3, Tribunal allowed appeal holding that land was fallow and not barren and mere fact that benefit from expenditure shall be available to assessee in succeeding assessment years could not be ground to hold such expenditure as capital expenditure. Hence, instant appeal by Revenue. We have heard learned counsel for parties and perused record. Learned counsel for Revenue submitted that expenditure which was incurred by assessee was of capital nature. Drawing support from judgment of apex court in CIT v. Madras Auto Service P. Ltd. [1998] 233 ITR 468 (SC), it was contended that Tribunal was in error in allowing same as revenue. On other hand, learned counsel for respondent-assessee on strength of judgment of apex court in Empire Jute Co. Ltd. v. CIT [1980] 124 ITR 1 (SC) submitted that expenses which were incurred by assessee were tractor hiring charges; jeep vehicle expenditure, staff welfare, HSD, preparation and renewal of seeds and electricity charges. These expenses were incurred for use in land which was fallow and not barren. Reliance was placed on noting of Punjab Government dated July 28, 2005, wherein it was stated that land was lying more or less fallow and was not being put to any alternative use. Learned counsel for assessee, thus, claimed that these expenses rightly been allowed by Tribunal as revenue expenditure. After hearing learned counsel for parties, we do not find any merit in appeals. core issue that arises for consideration in these appeals relates to whether, in facts and in circumstances, expenditure incurred by assessee for development of land is capital expenditure or revenue expenditure. expenditure would qualify for deduction under section 37 of Act if it is incurred wholly and exclusively for purpose of business. It should be revenue in nature as distinguished from capital expenditure. There is no standard formula providing for determination of expenditure to be capital or revenue. Every case is to be adjudicated on its own facts and expenditure is to be looked from commercial point of view. Supreme Court in K. T. M. T. M. Abdul Kayoom v. CIT [1962] 44 ITR 689 (SC) noticed that there can be no rule of thumb for determining as to whether particular expenditure is capital or revenue and that each case has to be decided on its own facts and circumstances. majority view was expressed as under (page 703): "... none of tests is either exhaustive or universal. Each case depends on its own facts, and close similarity between one case and another is not enough, because even single significant detail may alter entire aspect. In deciding such cases, one should avoid temptation to decide cases (as said by Cordozo) by matching colour of one case against colour of another. To decide, therefore, on which side of line case falls, its broad resemblance to another case is not at all decisive. What is decisive is nature of business, nature of expenditure, nature of right acquired and their relation inter se and this is only key to resolve issue in light of general principles, which are followed in such cases." test for categorising particular expenditure to be revenue or capital has been laid down in Empire Jute Co. Ltd. v. CIT [1980] 124 ITR 1 (SC) as under (page 10): "The decided cases have, from time to time, evolved various tests for distinguishing between capital and revenue expenditure but no test is paramount or conclusive. There is no all embracing formula which can provide ready solution to problem; no touchstone has been devised. Every case has to be decided on its own facts, keeping in mind broad picture of whole operation in respect of which expenditure has been incurred. But few tests formulated by courts may be referred to as they might help to arrive at correct decision of controversy between parties. One celebrated test is that laid down by Lord Cave L.C. in Atherton (H. M. Inspectors of Taxes) v. British Insulated and Helsby Cables Ltd. [1925] 10 TC 155, 192 (HL), where learned Law Lord stated: '... when expenditure is made, not only once and for all, but with view to bringing into existence asset or advantage for enduring benefit of trade, I think that there is very good reason (in absence of special circumstances leading to opposite conclusion) for treating such expenditure as properly attributable not to revenue but to capital.' " Division Bench of this court in CIT v. Varinder Agro Chemicals Ltd. [2009] 309 ITR 272 (P & H) recorded that there is no rigid rule to determine when expenditure is capital or revenue but generally where advantage is for enduring nature, it would be capital and where same is for running business, it would be revenue. following observations in this regard are relevant (page 274): "It is well-settled that for claiming deduction, apart from expenditure being for business, same has to be revenue expenditure. Though, there is no rigid rule to determine when expenditure is capital or revenue, generally acceptable test is where advantage is for enduring nature, it may be capital expenditure, while if expenditure is for running of business, it is of revenue nature. Some of leading judgments of hon'ble Supreme Court dealing with issue are: Assam Bengal Cement Co. Ltd. v. CIT [1955] 27 ITR 34, CIT v. Vazir Sultan and Sons [1959] 36 ITR 175, Empire Jute Co. Ltd. v. CIT [1980] 124 ITR 1 (SC); [1980] 4 SCC 25, Alembic Chemical Works Co. Ltd. v. CIT [1989] 177 ITR 377 (SC); AIR 1989 SC 1913 and CIT v. General Insurance Corporation [2006] 286 ITR 232 (SC)." Tribunal in view of pronouncements of apex court in Alembic Chemicals Works Co. Ltd. and Empire Jute Co. Limited's cases (supra), had rightly culled out following principles for ascertaining nature of expenditure to be capital or revenue: "(a) There may be cases where expenditure, even if incurred for obtaining advantage of enduring benefit, may, nevertheless, be on revenue account and test of enduring benefit may break down. (b) It is not every advantage of enduring nature acquired by assessee that brings case within principle laid down in enduring benefit test. (c) If advantage consists of merely in facilitating assessee's trading operations or enabling management or conduct of assessee's business to be carried on more efficiently or more profitably while leaving fixed capital untouched, expenditure would be on revenue account even though advantage may endure for indefinite period. (d) test of enduring benefit is not conclusive test and cannot be applied blindly and mechanically without regard to particular facts and circumstances of given case. (e) Outgoings on account of capital or revenue depend on particular and business point of view rather than upon juristic classification of legal right, if any, secured, employed or exhausted in process and question must be viewed in larger context of business necessity or expediency. (f) In infinite variety of situational diversities in which concept of what is capital expenditure and what is revenue arises, it is well nigh impossible to formulate any general rule, even in generality of cases, sufficiently accurate and reasonably comprehensive, to draw any clear line of demarcation. However, some broad and general tests have been suggested from time to time to ascertain on which side of line of outlay in any particular case might reasonably be held to fall. These tests are efficacious and serve as useful servants but as masters they tend to be over exacting. (g) idea of'once for all' payment and'enduring benefit' are not to be (g) idea of'once for all' payment and'enduring benefit' are not to be treated as something akin to statutory conditions nor are notions of'capital' or'revenue' judicial fetish. What is capital expenditure and what is revenue expenditure are not eternal verities but must need be flexible so as to respond to changing economic realities of business. expression'asset or advantage of enduring nature' is evolved to emphasise element of sufficient degree of durability appropriate to context. (h) There is also no single definitive criterion which by itself is determinative whether particular outlay is capital or revenue. 'once for all' payment test is also inconclusive. What is relevant is purpose of outlay and its intended object and effect, considered in common sense way having regard to business realities. In given case, test of'enduring benefit' might break down." Examining factual matrix in present appeals, Tribunal after examining file noting of Punjab Government dated July 28, 2005, which had been annexed to assessment order recorded clear finding that land was lying fallow and was not barren though it was not being put to alternative use. Tribunal on appreciation of evidence on record had come to conclusion as under: "7. bare perusal of above notings of Punjab Government would show that land leased to appellant was not barren land though it is said to be lying fallow and not being put to alternative use. entire case of Commissioner of Income-tax (Appeals) is based on aspect that assessee has converted barren land into fertile land and thus it results in benefit of enduring nature in capital field. There is nothing on record to suggest that land was barren, hence order of Commissioner of Income-tax (Appeals) is unsustainable. land not being put to alternative use may require special effort on part of assessee initially but all such activities are to be viewed having been carried out in course of farming activity. During year under consideration, total land cultivated by appellant out of land leased was to extent of 94 acres in kharif season and 499 acres in rabi season." Further, expenditure which was incurred by assessee and claimed to be revenue were tractor hiring charges; jeep vehicle expenditure ; staff welfare; HSD; preparation and renewal of seeds and electricity charges. expenses incurred were for furtherance of business objectives. Tribunal on examination of entire matter, keeping in view main objects of assessee, activities of assessee, nature of expenses incurred and also legal principles noticed hereinbefore, had concluded that expenditure was revenue in nature. It was observed as under: "Applying above principles to details of expenditure incurred, we find that, none of them in any manner can be held to be capital expenditure. Mere fact that benefit from incurring such expenditure shall be available to appellant in succeeding assessment year, cannot be ground to hold that such expenditure is capital expenditure. details of expenditure would show that they are tractor hiring charges; jeep vehicle expenditure; staff welfare; HSD; preparation and renewal of seeds and electricity charges. In our considered opinion, none of expenditure is of nature of providing advantage in capital field, hence, it cannot be held that they are capital expenditure. 10. Moreover, in this case, we have also perused main objects of assessee-appellant company as emerging from memorandum of association. perusal of aforesaid reveals that appellant company has been set up by Punjab Government to undertake work of land development, seed multiplication, processing and its distribution and sale. Further, appellant is empowered to undertake, assist and promote operations pertaining to agriculture, horticulture, fisheries, poultry, piggery, sheep and dairy and other related activities. appellant company is also empowered to process, sale, purchase, import export, etc., and otherwise deal in all kinds of produce of agriculture, horticulture, etc. In sum and substance, main objectives of appellant company are to undertake, assist and also carry out operations pertaining to agriculture. Notably, objectives of appellant also relate to seed multiplication and diversification of crop pattern in State to go towards high value and less water intensive crops. Evidently, Punjab Government has provided land in question to appellant on lease to carry out seed multiplication programme. In fact, annual report and accounts of multiplication programme. In fact, annual report and accounts of appellant company pertaining to previous year relevant to assessment year under consideration contain proclamation of progress in diversification through contract farming carried out. It illustrates new crops promoted and also increase in acreage of crop so grown. By referring to aforesaid, we are only trying to point out that objective of assessee in putting to use land in question was for furtherance of its objects of business. impugned expenditure has been incurred towards furtherance of business objectives. Clearly, monies recovered by selling produce raised on land in question has been accounted for by appellant in its revenue account. mere fact that in initial year expenses have outweighed receipts cannot be determining factor to hold that percentage of expenses are of capital nature. In fact, we have also examined expenses incurred by assessee for next assessment year, i.e., 2006-07 (pertaining to year ending March 31, 2006) which have been enclosed as annexure to assessment order. Here again, we notice that expenses are, by and large, of similar nature as of those incurred during year under consideration. Ostensibly, income by way of produce in next year stands on much higher footing. It is quite understandable, for agriculture operations involve certain gestation period for incomes to accrue in hands of assessee but presence of gestation period is no ground to treat portion of expense as capital in nature. From aforesaid it is evident that expenses undertaken by assessee are expenses for carrying out normal farming activities and no ad hoc basis can be adopted to segregate expenditure between capital nature and revenue." findings recorded by Tribunal are based on appreciation of evidence and principles laid down by apex court in Empire Jute Co. and Alembic Chemical Works Co. Ltd.'s cases (supra). expenses incurred by assessee as noticed above cannot be categorised to be falling in domain of being capital expenditure and are of revenue in nature. In so far as Madras Auto Services (P) Ltd.'s case (supra) relied upon by learned counsel for Revenue is concerned, suffice it to notice that legal principles enshrined therein are well recognised but in view of findings recorded by Tribunal in present appeals, it does not advance case of Revenue. Learned counsel for Revenue has not been able to show any illegality or perversity in findings recorded by Tribunal. Thus, substantial question of law is answered against Revenue. Consequently, appeals being devoid of merit stands dismissed. *** Commissioner of Income-tax v. Punjab Agro Foodgrains Corporation