9911796707
TMI Blog2003 (4) TMI 37X X X X Extracts X X X X X X X X Extracts X X X X ..... stances of the case, the Tribunal was right in holding that scrutiny fees of Rs. 45,000 paid to GIIC for obtaining a loan for the purchase of machinery and extension of building was not allowable revenue expenditure? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the fees of Rs. 4,350 was paid to Dixit Consultants for preparing a report in connection with the loan from GSFC/GIIC for manufacturing pumps and valves was not allowable revenue expenditure? 3. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the amount of Rs. 10,000 paid to Parekh Jazal and Co., in connection with the above loan of Rs. 60 lakhs from GIIC was not allowable revenue expenditure? 4. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the amount of Rs. 14,800 paid to Ambubhai Diwanji and Co., Solicitors in connection with the above loan of Rs. 60 lakhs from GIIC was not allowable revenue expenditure? 5. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the foreign tour expenses of Rs. 39,49 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an expenditure of capital nature. Learned counsel appearing for the appellant, in this context, strongly contended that, the decision of this court in CIT v. Vallabh Glass Works Ltd. [1982] 137 ITR 389 on the basis of which the Tribunal and the authorities below had based their findings was impliedly overruled by the decision of the Supreme Court in the case of Addl. CIT v. Akkamamba Textiles Ltd. [1997] 227 ITR 464, in which the Supreme Court affirmed the decision of the Andhra Pradesh High Court, in the case of Addl. CIT v. Akkamba Textiles Ltd. [1979] 117 ITR 294. The Supreme Court dismissed the appeal which was filed by the Revenue against the said decision of the Andhra Pradesh High Court. It was pointed out that in the case of CIT v. Sivakami Mills Ltd. [1997] 227 ITR 465, the Supreme Court following the decision in Akkamamba Textiles Ltd.'s case [1997] 227 ITR 464 (SC) held that the guarantee commission paid to the bank was revenue expenditure and hence was an allowable deduction in computing the total income of the assessee for the relevant assessment year. In the case of Sivakami Mills Ltd. [1997] 227 ITR 465, the Supreme Court, affirmed the decision of the Madras High ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he cost price of the machinery and formed part of the cost of acquisition of the capital assets and, therefore, the expenditure must be regarded as capital expenditure irrespective of the time when the payment was made. This court in Vallabh Glass Works Ltd.'s case [1982] 137 ITR 389, dissented from the decision of the Andhra Pradesh High Court in Addl. CIT v. Akkamba Textiles Ltd. [1979] 117 ITR 294 and the decision of the Madras High Court in Sivakami Mills Ltd v. CIT [1979] 120 ITR 211. Learned counsel for the Revenue also referred to the decision of this court in Mihir Textiles Ltd. v. CIT [1997] 225 ITR 327, in which following the decision of this court in Vallabh Glass Works Ltd. [1982] 137 ITR 389 it was held that the payment of bank guarantee commission for purchasing machinery was capital expenditure. The decision of the Supreme Court in Punjab State Industrial Development Corporation Ltd. v. CIT [1997] 225 ITR 792, was referred to for the proposition that when an expenditure is made not only once and for all, but with a view to bringing into existence, an asset or an advantage for the enduring benefit of a trade, there is very good reason for treating such expenditure a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 (SC), any liability incurred for the purpose of obtaining a loan would be revenue expenditure. In view of this clear pronouncement of the Supreme Court, the items of expenditure covered under the first four questions which admittedly were incurred for obtaining the loan amount could not be treated as capital expenditure, because, their direct nexus was with acquiring the loan and not with acquiring of any asset. Questions Nos. 1 to 4 are, therefore, answered in the negative, in favour of the assessee and against the Revenue. The Tribunal held that the foreign tour expenditure of Rs. 39,496 and Rs. 85,411, incurred by the managing director of the company was not allowable as revenue expenditure. In para. 39 of its order, the Tribunal observed that according to it, no interference was called for in the order of the Commissioner of Income-tax (Appeals) inasmuch as the expenditure in question was on capital account and not on revenue account. It relied upon the ground in the memo of appeal reproduced in the said paragraph for reaching this conclusion. In the said ground, the appellant had taken up the contention that, the Commissioner of Income-tax (Appeals) had erred in disallowin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is, therefore, answered in the negative, in favour of the assessee and against the Revenue. Learned counsel for the assessee has stated before us that question No. 6 relating to the electric generator in respect of which claim was made at 100% depreciation on the ground that it was an energy saving device, is not pressed, because, over a period of time, full depreciation has been in fact, allowed as per the law. Question No.6 therefore, remains unanswered on the ground that the assessee at whose instance it was referred, does not press for the same. As regards the question which has been referred at the instance of the Revenue, arising from the order of the Tribunal, deleting the addition of Rs. 4,10,671 made by the Income-tax Officer invoking the provision of section 43B of the Income-tax Act, 1961, the matter is now fully covered by the decision of the Supreme Court in the case of Allied Motors (P.) Ltd. v. CIT [1997] 224 ITR 677, in which, the Supreme Court held that the first proviso to section 43B has to be treated as retrospective. In this view of the matter, the said question is answered in the affirmative, in favour of the assessee and against the Revenue. The referen ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
