AJIT K. SENGUPTA, J. ( 1 ) IN this reference, the following two questions of law have been referred by the Tribunal pursuant to the order of this court under Section 256 (2) of the Income-tax Act, 1961 ;"1. Whether, on the facts and in the circumstances of the case, the sum of Rs. 4,000 (rupees four thousand only) for the assessment year 1973-74 was a permissible deduction as a revenue expenditure ? 2. Whether, on the facts and in the circumstances of the case, the sum of Rs. 4,100 (rupees four thousand and one hundred only) for the assessment year 1972-73 was a permissible deduction as a revenue expenditure ?" ( 2 ) THE questions relate to a matter relating to two successive assessment years 1973-74 and 1972-73. Shortly stated, the facts of the case are that the assessee-company claimed expenses of Rs. 4,100 and Rs. 4,000 being labour welfare expenses for the respective assessment years. According to the Income-tax Officer, the amount was spent on cost of construction of labour welfare fund quarters and, therefore, the assessee's claim was rejected. In this regard, he followed his orders for the earlier assessment years. ( 3 ) THE matter was taken in appeal to the Appellate Assistant Commissioner who deleted the additions from the respective assessments by relying entirely upon the decision of the Madras High Court in CIT v. T. V. Sundaram Iyengar and Sons (P.) Ltd. [1974] 95 ITR 428, and the order of the Appellate Tribunal for the earlier years. ( 4 ) ON further appeal, the Appellate Tribunal upheld the Appellate Assistant Commissioner's order. It followed in this regard its earlier order dated July 14, 1976, in I. T. A. No. 5119/ (Cal) of 1974-75 for the assessment year 1971-72. ( 5 ) LEARNED counsel for the Revenue contended that the expenditure claimed as deduction represents the difference between the cost of construction incurred by the assessee for the quarters of its labourers and the reimbursement made to the assessee by the State Government. Even though the building might have belonged to the State Government, the assessee had leasehold rights in the land. It was, therefore, pointed out that the part of the cost of construction borne by the assessee resulted in a capital expenditure and was not allowable as revenue deduction. ( 6 ) BUT the contention is not acceptable. Even though the building might have belonged to the State Government, the assessee had leasehold rights in the land. It was, therefore, pointed out that the part of the cost of construction borne by the assessee resulted in a capital expenditure and was not allowable as revenue deduction. ( 6 ) BUT the contention is not acceptable. The quarters had to be constructed by the assessee at the instance of the State Government and the ownership of the tenements vested in the Government. Therefore, the expenditure did not result in any acquisition of assets by the assessee. Learned counsel for the assessee drew our attention to the scheme initiated by the Ministry of Labour and Employment for the low cost housing scheme for iron miners and it was pointed out that the ownership of the houses constructed under that scheme did not vest in the assessee. That the assessee was not the owner of the quarters is evident from the fact that the assessee, even after meeting part of the cost of construction, was paying rent for the quarters to the State Government. The assessee had to incur this expenditure in discharge of its statutory obligation in putting up labourers' quarters partly at its own cost. In such a situation where the assessee was under a compulsion to incur this cost to enable it to carry on the trade, and the expenditure did not result in the creation of any assets, it is to be said that the expenditure is not on capital account and the contention of the Revenue is wrong. For this purpose, support was drawn from the decision of the Madras High Court in CIT v. T. V. Sundaram Iyengar and Sons (P.) Ltd. [1974] 95 ITR 428. In the Madras case, the assessee-company had to purchase land in the name of the District Collector for the purpose of constructing houses for the company's workers by the Government under the subsidised industrial housing scheme sponsored by the State Government. The company would have to incur similar expenditure year after year even though it would have no interest in the building. It was, therefore, held that the purchase price of the land was allowable as revenue expenditure. The company would have to incur similar expenditure year after year even though it would have no interest in the building. It was, therefore, held that the purchase price of the land was allowable as revenue expenditure. ( 7 ) WHEREVER a trader, in his capacity as a trader, by compulsion of statutory obligation, has to incur an expenditure as a compelling requisite for carrying on his trade, the expenditure resulting in a capital asset in the hands of a third party is to be taken as revenue expenditure because no asset arises to the trader by reason of such expenditure. The question of admissibility of a revenue expenditure of business should not be considered from a narrow viewpoint. The revenue expenditure is not limited only to such expenditure as is directly and immediately relatable to the operations of the trade. It is not a right approach to examine the question of admissibility of business expenditure as if all revenue expenditure must be equated with expenditure in connection with the stock-in-trade. See CIT v. Amalgamated Development Ltd. ( 8 ) WHERE the law imposes on the assessee an obligation to incur expenditure for being permitted to pursue its trading activity, the expenditure would be an outgoing from the profits of the trade. In CIT v. Associated Cement Companies Ltd. [1974] 96 ITR 650 (Bom), the cement factory of the assessee was situate outside the municipal limits of a town. The Government decided to include the area on which the factory was situate within the municipal limits. Negotiation ensued between the Government and the assessee. The assessee agreed to incur the expenditure to provide certain amenities to the town including provision of water supply, and the Government on its part undertook not to include the properties of the factory within the municipal limits for 15 years so that the assessee would not have to pay municipal taxes for that period. The assessee spent Rs. 2,09,459 on installing pipelines, etc. , which became the property of the municipal committee, and claimed it as a business expenditure. It was held to be an admissible revenue expenditure. Thus the expenditure had to be incurred under the sanction of law not bringing into existence any asset which the assessee can claim to be his, and the same cannot be excluded from the revenue field. It was held to be an admissible revenue expenditure. Thus the expenditure had to be incurred under the sanction of law not bringing into existence any asset which the assessee can claim to be his, and the same cannot be excluded from the revenue field. ( 9 ) MOREOVER, in this case, the expenditure was by way of contribution towards the welfare of the assessee's own labour force as it resulted in the provision of residential accommodation for its labourers. Therefore, the assessee correctly claimed that it is an expenditure on labour welfare account which is definitely a matter that falls in the revenue field. ( 10 ) THEREFORE, we answer both the questions in the affirmative and in favour of the assessee. There will be no order as to costs.