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of BCL. Thus the project did not have a capital nature.  </P> <P>Mr Umen, the Chief Executive Officer (CEO), who has 18 years experience as an executive or chief executive of BCP, in Board Minutes authorising the work, stated "The plant will have one or two improvements but we will not be producing any more asphalt or bitumen than we are currently." The biggest value of Timaru plant is not its ability to produce, the plant is a marketable asset for the BCP/BCL.</P> <P>The section DA 2 (1) ITA 2007 clearly provides the meaning of "capital expenditure". Capital expenditure is money spent on (a) acquiring an asset/property or (b) disposing of an asset/property that is no longer advantageous or (c) improving an asset/property to make it more advantageous. To the Timaru project of BCP/BCL, we can see that the expenditure of this project is not fulfil the provisions of "capital expenditure". The Timaru project did not aim at acquiring an asset or property, which was an asset of BCP/BCL all the time; the Timaru plant was also advantageous, the reason to commence the project was the increasing and substantial annual maintenance cost for the Timaru plant, it was not economical. </P> <P>In fact, the Timaru project is satisfied the general permission in section DA 1ITA 2007 (formerly section BD 2 (1) (b) (i) and (ii) ITA 1994). The general permission includes para (a) and para (b) which in detail provide how a person is allowed a deduction for an amount of expenditure or loss.</P> <P>(a)incurred by them deriving their assessable income; or their excluded income or a combination of the two; or</P> <P>(b)incurred by them in the course of carring on a business (for the purpose of deriving their assessable income; or their excluded income or combination of the two).</P> <P>In accordance with para (a) and para (b), we can find that, the expense of Timaru project was directly relate to the production of the assessable income etc. The Timaru plant was always considered as BCP's flag-ship. The overhaul of the whole plant, as well as the repairs and some necessary replacements are not large enough to constitute a business and incurs expenses in conducting that activity. The whole project was not relate to any particular item of income. In a word, the expense of Timaru project was incurred as part of carrying on the business to earn income. That is to say, the BCP/BCL's Timaru plant project could satisfy either limb of the general permission (para(a) or (b)) to get a deduction. </P> <P>Any facts and legal arguments relied on by you</P> <P>My views and arguments based on the facts of BCP/BCL, and the relevant Income Tax Act 2007, as well as the relevant Case Law.</P> <P>In determining whether the expense of Timaru Plant Project satisfied the general permission which is found in s DA 1(1) ITA 2007, I referred some available cases. The first one is in Buckley and Young Ltd v CIR [1978] 3 NZTC 61,271 (CA). In the case, the court established two features to s DA 1(1) ITA 2007. The court thought the taxpayer must establish a close nexus between the expense and the income. Compared with the case, we can find that the expenditure of Timaru plant project has necessary relationship both with the taxpayer and the gaining of income or carrying on of a business. And it certainly meets the general permission that we argued above. The tow points were further considered in the case of Buckley and Grieve v CIR (1984) 6 NZTC 61,682, (CA). This case resolved a matter of fact and degree whether there is sufficient nexus (connection) between the expenditure and the resultant income or business. The Timaru plant was considered as flag-ship of BCP/BCL, therefore, the onus to establish the amount is definitely deductible.</P> <P>In determining the expenditure of the Timaru plant project whether the "capital expenditure" or not, I referred the gener