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TMI Blog2013 (9) TMI 750X X X X Extracts X X X X X X X X Extracts X X X X ..... .A. NO.2965 (Cal) of 1992 in respect of assessment year 1988-89. 3. The appeal has been preferred by the department on following three substantial questions of law:- "A. Whether on the facts and circumstances of the case, the Tribunal was justified in law in deleting the addition of Rs.50,000/- made on account of expenses incurred for preparation of a project report treating it as revenue expenditure? B) Whether on the facts and circumstances of the case, the Tribunal was justified in law in set asiding the addition of Rs.12,97,588/- made on account of Commission paid? C) Whether on the facts and circumstances of the case, the Tribunal was justified in law in deleting the addition of Rs.3,08,755/- made on account of expenses incurred on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t was a new project and would have given enduring advantage to the assessee, the expenditure was to be treated as capital expenditure. On the question of foreign visits he relies on the details and purpose of the visits given by the AO and submits that the foreign visits were not for the purposes of the existing business or for a project, which was for expansion of the existing units. Even if the company was doing business in manufacture of chemicals the new project was also for manufacturing chemicals. Since it was a new project, the expenditure could not have been allowed as revenue expenditure. 7. Shri Rupesh Jain, on the other hand, relying upon Jay Engineering Works Ltd vs. CIT 311 ITR 405 (Del) and Kesoram Industries and Cotton Mills ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment of both the concerns must be common as reflected in the balance sheet of the company. In other words, there may be several permutations and combinations that may arise for determining whether the expenditure is revenue or capital and each case must, of course, be dealt with on the broad principles that have been accepted by the courts as are mentioned above. Applying these principles to the present case, it is quite clear to us that the control over the two units is in the hands of the same management and administration. There is no doubt on this score and in fact, the annual report of the assessee, which has been shown to us by learned counsel, makes a reference to the project at Hyderabad. There can be no dispute from the facts tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e previous year relevant to the assessment year, this fact, in our view, is not a relevant factor in determining whether the deduction is allowable or not. The expenses in this case are miscellaneous expenses and legal charges for the proposed cement factory project. This expenditure is not related to the setting up of a new factory, it pertains to exploring the feasibility of expanding or extending the existing business by setting up a new factory in the same line of business. The assessee, during the course of its business, may incur expenditure for obtaining a project report or legal opinion regarding the viability of such project. This cannot, in our view, be considered as capital expenditure as, in that case, any legal expenses incurre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate that the foreign travels were made by the officers of the assessee to Japan, U.S.A., U.K., Germany, Belgium and Denmark for discussions with Toyo & Chiyode for a new project. These foreign trips were made by the officers of the company for detailed discussions for introduction of chelated minerals in India. The purpose of the six foreign trips undertaken as provided by the assessee to the AO is detailed as follows:- "The purpose of the above trips are as follows:- 1) Discussion with Toyo & Chiyode for a new project. 2) & 3) For detailed discussions with parties for introduction of chelated minerals in India, for preliminary discussions for a project on pharmaceuticals, discussions for proposed manufacture of various emulsions. 4) & ..... X X X X Extracts X X X X X X X X Extracts X X X X
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