9911796707
TMI Blog1969 (11) TMI 15X X X X Extracts X X X X X X X X Extracts X X X X ..... ian Finance Act, 1956, or in according with clause 23 of the agreement of April 1, 1938, referred to above ? (2) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the sum of Rs. 13,070, being the foreign tour expenses of Lachhman Sarup, was expenditure of a capital nature ? " In so far as the first question is concerned, it is quite unnecessary to go into the facts and circumstances of the case as detailed by the Income-tax Appellate Tribunal in its order, because it is accepted that the answer to the question is provided by their Lordships in the Supreme Court in the judgment reported as Dalmia Dadri Cement Company Ltd. v. Commissioner of Income-tax, according to which the assessee-compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of new plants and machinery which were to be installed for the extension of the assessee-company's cement factory because, after the visit of the engineer, the assessee-company purchased the plants and machinery worth one crore rupees. So the Tribunal discarded the argument on the side of the assessee-company that the expenditure could not be treated as of a capital nature as the same did not bring into existence any asset or advantage of an enduring nature. In its order of reference the Income-tax Appellate Tribunal has found as a fact, (a) that the travelling expenses incurred by the engineer were connected with the purchase of new plants and machinery which were to be installed for extension of the assesseecompany's cement factory, and ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In spite of this, the learned counsel for the assessee-company, has relied upon State of Madras v. G. Coelho in which their Lordships of the Supreme Court held that payment of interest on capital borrowed for the purchase of plantation was not capital expenditure as no new asset was acquired or enduring benefit obtained as a result of such payment ; Bombay Steam Navigation Co. (1953) Private Led. v. Commissioner of Income-tax in which it was held that the expenditure for satisfying liability related to the business, even if incurred for avoiding danger, apprehended or real, to the conduct of the business, cannot be said to be revenue expenditure, and it was a case of a liability having been incurred for payment of balance of outstanding pri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... integral part of the purchase and so it should be treated as expenditure standing by itself and connected only with the trade and business of the assessee-company, thus laid out or expended wholly and exclusively for the purpose of its business. If this approach was to be accepted, it would mean that this expenditure will have to be isolated and divorced altogether from the purchase of the plants and machinery actually installed by the assessee-company immediately after the visit of the engineer to Europe in connection with that purchase. This obviously cannot be done, because the visit was for the purchase of plants and machinery by the assessee-company, which were actually purchased soon after the visit. The purpose of the visit cannot b ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
