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2021 (8) TMI 369 - ITAT MUMBAIDisallowance of depreciation - assessee company was yet to set up and commence its business activities - HELD THAT:- The assessee was duly granted registration by the RBI and as per the terms of the Registration the assessee was to commence the business within six months Except for the surmises and conjectures, AO’s hypothesis has no legs to stand. There is no law that there is a presumption that if the assessee earns a smaller income, commencement of business should be doubted. The claim that the issue of CIR to 32 persons is an arrangement is not backed by any inquiry whatsoever from those 32 persons by the AO. AO has clearly misled himself. No case has made out that there was any examination of assessee’s infrastructure and it was found lacking In our considered opinion the Assessing Officer has no technical qualification whatsoever in commenting upon the technological preparation of the assessee in delivering output. In our considered opinion learned CIT(A) has passed a correct order and has analysed all the facts pointed out by the AO. Nature of expenses - technology recharge cost - whether the assessee’s claim of technology recharge cost is revenue expenditure or capital expenditure? - HELD THAT:- It may be gainful to refer to the exposition in the case of Empire Jute Co. Ltd. [1980 (5) TMI 1 - SUPREME COURT] wherein it was observed that "there may be cases where expenditure, even if incurred for obtaining an advantage of enduring benefit, may, none the less, be on revenue account and the test of enduring benefit may break down. It is not every advantage of enduring nature acquired by an assessee that brings the case within the principles laid down in this test. What is material to consider is the nature of the advantage in a commercial sense and it is only where the advantage is in the capital field that the expenditure would be disallowable on an application of this test. If the advantage consists merely in facilitating the assessee's trading operations or enabling the management and conduct of the assessee's business to be carried on more effectively or more profitably while leaving the fixed capital untouched, the expenditure would be on revenue account, even though the advantage may endure for an indefinite future." On the touchstone of the above said Hon'ble Supreme Court decision and on the facts and circumstances of the case in our considered opinion learned CIT(A) has taken correct view of the matter and it does not need any interference in our part. Appeals of the Revenue stands dismissed
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