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TMI Blog1987 (5) TMI 78X X X X Extracts X X X X X X X X Extracts X X X X ..... anufacture of piston rings and related matters. 2. The first ground and contention is with regard to disallowance of Rs. 57,303 which was added on account of foreign travelling expenses incurred by S/Shri J.V. Patankar and S.N. Kapoor in connection with their visit toWest Germanyfor training purposes for three months. The ITO for his action relied on the assessee's application datedApril 13, 1978to the Reserve Bank ofIndia, Exchange Control Department by which foreign exchange was sought on the proposed training of five persons. In the said application it was stated that the assessee had been granted a new industrial licence for setting up a new plant for the manufacture of 10 million piston rings at Yelahanka near Bangalore in Karnataka ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt for advance training on latest technology for manufacture of piston rings, for which the machines were not only installed at Bangalore, but also at Patiala as a measure of renovation and replacement. It was submitted that the company being an on-going process, expenditure for updating of the knowledge of the technicians and personnel by the latest technological advances was necessarily revenue in character. It was also stated that the said two engineers had been working in thePatialaunit at the time of deputation for training. 5. The CIT(A) upheld the disallowance after examining and perusing the directions and findings recorded by the Inspecting Asstt. Commissioner in the course of proceedings u/s 144-B that when the assessee had got ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , because the training, as per assessee's own version, was meant for gaining new technology as stated in the application. Therefore, without involving ourselves with any judicial precedent we uphold the CIT(A)'s order on the question of disallowance. 8. The next agitation is against confirmation of addition of Rs. 24,593 made in the assessment out of directors' travelling expenses. Reproduction of the following portion of the assessment order gives all the related facts and the basis of the addition : "According to letter and data dated 22-2-1982 out of this expenditure a sum of Rs. 13,200 represents directors fees and the balance is claimed on account of Director's travelling expenses of Rs. 94,820. In these expenses, there is a claim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ital in nature on the ground that loans obtained could not be treated as assets or advantage for enduring benefit of business. 11. Against that Revenue's reliance on the following noted two judgments is well placed : (i) Shree Digvijay Cement Co. Ltd. v. CIT [1982] 138 ITR 45 (Guj.) (ii) Brooke Bond India Ltd. v. CIT [1983] 140 ITR 272 (Cal.) In the first of the two cases the Hon'ble Gujarat High Court stressed that expenditure incurred for enlarging the capital base by issuing new shares could not be considered as revenue expenditure. 12. The Hon'bleCalcuttaHigh Court in Brooke Bond India Ltd.'s case has in categorical terms held that if expenditure is incurred for affecting capital structure, it cannot be held to be revenue in c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould not understand the implication of the order of the learned CIT(A) is not considered valid because what has been directed is that expenditure incurred after the commencement of business should be allowed and such approach cannot be said to be erroneous : "4.2 On behalf of the appellant it has been claimed that the disallowance made by the ITO was contrary to law and unjustified. It has been stated that it is normal practice with the lenders of funds that the title to the property to be mortgaged is investigated. It is submitted that these expenses were not incurred for establishing title of capital assets as upheld by ITO but only in connection with verification and investigation of the existing title of the company to the said land. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owance of Rs. 10,46,582 in respect of Bangalore plant is totally misconceived because the issue came to be restored by the CIT(A) to the ITO with the direction to examine the issue in the light of the directions already given by the IAC, as contended by the assessee. In our view, however, when the matter was restored the assessing officer should not have been bound in any fashion. If the CIT(A) thought it fit to send the matter back after noticing the ITO's observation in para 4.3 that no break up of expenditure of pre-production and post-production was filed, the assessee should have no grievance. According to the assessee the entire expenditure prior to the commencement of the new unit atBangalorewas duly capitalised. If such assertion is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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