Honble V.K. SINGHAL, J.—The Tncomj Tax Appjllate Tribunal has referred the following qudstion of law under section 256 (I) of the Income tax Act, 1961 for the assessment year 1982-83 :— "Whether on the facts and in the circumstances of the case the development charges paid to RIICO is in the nature of capital or revenue ?" 2. Brief facts of the case are that the assessee is carrying on the business of dyeing and stentering of voil on job basis, for which the assessee obtained land in the industrial area from RilCO. The development charges of Rs. 5925/-were claimed as revenue expenditure. The 1TO found that the assessee has debited a sum of Rs. 3950/- to the Profit & Loss Account and Rs. 1975/- has been debited under the head discount which has ultimately been adjusted in the processing account. The ITO came to the conclusion that the said amount is the consideration against acquisition of leae hold rights in the plot allotted to the assessee by the RIICO. The assessee by acquiring, the lease hold rights certainly acquired an advantage and asset of enduiing nature. The said expenditure was considered as capital in nature and held not admissible. The C.I.T. (Aopeals) allowed the appeal and held it to be revenu expenditure. The matter. was taken up before the Tribunal and the appeal was allowed following another decision given by the Tribunal in the case of Jaswant Trading Company. 3. In the matter of Jaswant Trading Company, the Tribunal examined, various clauses of the lease for establishment of factory in the Industrial area by the RIICO and found that the lease has been executed lor a period of 99 years. According to the agreement, the intreprenenr has to make lease charges and the development charges in respect of the land allotted. It is also possible that the development may be made by the intrepreneur himself. The income Tax Appellate Tribunal came to the conclusiou that the development charges are clearly capital in nature. 4. The Full Bench of Lahore High Court in Benarsi Das vs. Jagannath(l), has laid down the following 3 principles for determining the nature of expenditure as to whether it is capital or revenue :- It is not easy to define the term capital expenditure in the abstract or to lay down any general and satisfactory test to discriminate between a capital and a revenue expenditure. Nor is it easy to reconcile all the decisions that were cited before us for each case has been decided on its particular facts. Some broad principles can, however,be deducted from what the learred Judges have laid down from time to time. They are as follows: 1. Outlay is deemed to be capital when it is made for the initiation of a business for extension of a business, or for a substantial replacement of equipment : vide Lord Sands in Commissioner of Inland Revenue V.-Granite City Steamship Company (1927) 13 T.C. 1, 14. In City of London Contract Corporation v. Styles, at p. 243 Bowen L.J. observed as to the capital expenditure as follows: You do not use it "for the purpose" which means, for the purpose of carrying on your concern, but you use it to acquire the concern. 2. Expenditure may be treated as properly attributable to capital when it 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, vide Viscount Cave, L.C., in Atherton V. British Insulated and Helsby Cables Ltd., (1925) 10 T.C. 155. If what is got rid of by a lump sum payment is an annual business expense chargeable against revenue, the lump sum payment should equally be regarded as business expenses, but if the lump sum payment brings in a capital asset, then that puts the business on another footing altogether. Thus, if labour saving machinery was acquired, the cost of such acquisition cannot be deducted out of the profits by claiming that it relieves the annual labour bill, the business has acquired a new asset, that is machinery. The expressions enduring benefit or of a permanent character were introduced to. make it clear that the asset or the right acquired must have enough durability to justify its being treated as a eapital asset. "3. Whether for the purpose of the expenditure any capital was withdrawn, or, in other words, whether the object of incurring the expenditure was to employ what was taken in as capital of the business. Again it is to be seen whether the expenditure incurred was part of the fixed capital of the business or part of its circulating capital. Fixed capital is what the owner turns to profit by keeping in his own possession. Again it is to be seen whether the expenditure incurred was part of the fixed capital of the business or part of its circulating capital. Fixed capital is what the owner turns to profit by keeping in his own possession. Circulating or floating capital is what he makes profit of by parting with it or letting it change masters. Circulating capital is capital which is turned over and in the process of being turned over yield profit or loss. Fixed capital, on the other hand, is not involved directly in that process and remains unaffected by it." The above judgment has been approved by the Supreme Court in Assam Bengal Cement Company Ltd. Vs. Commissioner of Income Tax (2), In C.I.T. Vs. Mihir Textiles Ltd (3), and in Additional C.I.T. Vs. Rohit Mills Ltd (4), it was held that the contribution towards betterment charges levied were against the increased potential value of the lands covered by the scheme and not against the running business of the assessee, the assesses gained an enduring advantage by payment the amount and the fact that the payment was under a statutory obligation and not because the assesses desired it as immaterial. The expenditure was on capital account and not an expenditure for producing profits in the conduct of business. 4. In the present matter, the nature of expenditure is in relation to a capital asset namely, the land which has been allotted by the RIICO to the petitioner. The expenditure is in relation to a fixed capital/asset and not to a circulating capital. The fixed capital is that which the in repreneur turns into profit by keeping the same in the business. The character of the development charges, therefore, would be in respect of an asset of which enduring benefit has been availed by the assessee. The develop neat charges makes the land in a workable position so that intrepreneur can establish its unit and such expenditure is once for all. It cannot be considered to be an advantage of limited duration. The nature of the advantage in the commercial sense is in the capital field. Therefore, we are of the view that the Income Tax Appellate Tribunal was justified in coming to the conclusion that the development charges paid by the assessee is an expenditure of capital nature and is not allowable. 5. The nature of the advantage in the commercial sense is in the capital field. Therefore, we are of the view that the Income Tax Appellate Tribunal was justified in coming to the conclusion that the development charges paid by the assessee is an expenditure of capital nature and is not allowable. 5. Accordingly, we answer the reference in favour of the Revenue and against the Assessee. 6. No order as to costs.