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TMI Blog2007 (5) TMI 170X X X X Extracts X X X X X X X X Extracts X X X X ..... /1999, ITA No. 2389/Del/2000 and ITA No.4366/Del/2004 relevant for the assessment years 1995-96 to 1997-98. 2. The assessee carries on the business of manufacturing and production of CTD bars as also different types of iron rods. The assessee used to procure the raw material, that is, billets from the open market. The assessee decided to manufacture the raw material on its own and for this purpose it set up a Steel Melting Shop. In the course of setting up the Steel Melting Shop, the assessee incurred substantial expenditure and this was shown by the assessee in its books as capital expenditure incurred. The assessee also filed its returns on this basis. 3. Later the assessee filed revised returns wherein it claimed that the expendi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... profit and loss account. It follows from this that merely because the assessee showed the amount as capital expenditure in its books would not mean that it was bound by that statement and that it could not file a revised return claiming the amount as a revenue expenditure incurred in connection with the expansion of its existing business. 7. What is to be considered for deciding whether there is an expansion of an existing business or not was before the Calcutta High Court in Kesoram Industries and Cotton Mills Ltd. v. Commissioner of Income-tax, [1992] 196 ITR 845. One of the considerations would be the purpose of the expenditure and its object and effect. If expenses are incurred in setting up a new business, it would be an expen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as for this purpose that the assessee set up the Steel Melting Shop. The expenditure incurred by the assessee was towards improving its business and in a sense expanding or extending its business for the manufacture of its products, that is, CTD bars and iron rods. 10. Relying on India Discount, we are of the opinion that merely because the assessee treated the amount as a capital expenditure in its books, it would not be bound by it and relying on Kesoram Industries and Cotton Mills Ltd. [1992] 196 ITR 845. (Cal), and Goodyear, India Ltd. [2000] 243 ITR 239 (Delhi), there is no doubt that the expenditure incurred by the assessee was for the expansion and betterment of its existing business. Manufacture of the raw material for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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