ALEMBIC CHEMICAL WORKS CO. LTD. vs COMMISSIONER OF INCOME TAX, GUJARAT

The Supreme Court held that the payment made by the appellant-assessee to a foreign company for technical know-how and training, aimed at improving the existing production process, qualifies as revenue expenditure under Section 37 of the Income Tax Act, 1961. The Court emphasized that the tests of 'once for all' and 'enduring benefit' are not conclusive, and the object and effect of the expenditure must be considered. The Court allowed the appeal, overturning the High Court's decision that classified the expenditure as capital outlay.