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TMI Blog1989 (5) TMI 114X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the aforesaid amount of Rs. 54,210 on the ground that it was capital in nature and could not be treated as having been incurred wholly and exclusively for the purpose of the existing business of the company, in which it was presently engaged. The learned CIT(A) was also of the opinion that the assessee-company was to obtain an asset of an enduring nature and so the expenditure in question was capital in nature. He accordingly upheld the addition made by the ITO. 7. Shri G.C. Sharma submitted that it was nobody s case that the tour expenses were bogus in nature. These expenses were genuine and had been incurred bona fide during the course of business of the assessee. These were disallowed by the lower authorities on the ground that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ministry of Industries and Civil Supplies, Shri Sharma pointed out that by this collaboration there was going to be no change in the capital structure of the company. It was stressed that the pistons already being manufactured in collaboration with Karl Schnidt, West Germany and the assessee was not embarking upon a new activity or new line of business. It was also pointed out that the collaboration agreement did not involve the import of raw materials or components. Referring to column 16 of Part C of the application for foreign collaboration, it was submitted that the specific services to be rendered by the foreign collaborator, were, "know-how and technical assistance for design, development and manufacture of piston rings, including fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uthorities being capital expenditure, but the Tribunal vide its order dt.19th Jan., 1987in ITA Nos. 2599 3106 (Del)/85 held that the expenditure was revenue in nature. On that basis the expenditure incurred on the tour of the Vice-Chairman should be allowed as a Revenue expenditure. Reliance was also placed on the decisions reported in Karamchand Premchand (P) Ltd. vs. CIT (1982) 137 ITR 209 (Guj) and Antifriction Bearings Corporation Ltd. vs. CIT 1978 CTR (Bom) 589 : (1978) 114 ITR 335 (Bom). It was strongly urged that the expenditure of Rs. 54,210 was revenue in nature and should be allowed as such. 9. The learned Departmental Representative, on the other hand, contended that the assessee wanted to set up an altogether new line of bus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the pistons which were already under manufacture by the assessee. No new product was, therefore, to be manufactured and no new line of business was to be set up. For the reasons beyond the control of the assessee the agreement fell through as theUScompany was sold to a German concern. No advantage or benefit of enduring nature has, in fact, accrued to the assessee. For these reasons we are inclined to agree with Mr. Sharma that the expenditure was revenue in nature and, therefore, allowable as a deduction in the hands of the assessee. 12. In the case of Karamchand Premchand (P) Ltd. vs. CIT reported in expenditure was incurred on foreign tour of Director for purposes of expansion of business of the managed company. Their Lordships of G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nstalled atBangaloreand also atPatiala. Different stands regarding the purpose of the visit of the Engineers were taken before different authorities of the Government. From the above, it appears that the facts of that case are distinguishable from those of the instant case. In the instant case no new plant had been set up and the collaboration was sought only for improving the quality of the pistons, which were already being manufactured by the assessee. 15. The case of Rallis India Ltd. vs. ITO reported in (1987) 29 TTJ (Cal) 366 : (1987) 23 ITD 1 (Cal) is also distinguishable on facts. In that case the company paid certain amounts to a firm for development and manufacture of spin drier. This was in respect of launching a new project, wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t forward losses of the past years. (c) Unabsorbed development rebate of the past years. (d) Unabsorbed depreciation of past years. (e) Development rebate for the current year. (f) Depreciation of current year. 5. That the learned CIT(A) erred on facts and in law in not accepting the appellant s claim that the above unabsorbed allowances of the past year should be set off in the above order of priority on year to year basis". It was brought to our notice that this issue was dealt with by the Tribunal in the assessee s own case for the asst. yr. 1977-78 in ITA Nos. 3493 and 4053 (Del)/83 and in which the order of the CIT(A) was upheld and the assessee s contention was rejected. Respectfully following the Tribunal s decision in th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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