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TMI Blog1992 (6) TMI 2X X X X Extracts X X X X X X X X Extracts X X X X ..... e treated as perquisite for the purpose of disallowance under section 40(c) of the Income-tax Act, 1961 ? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in deleting the disallowance of Rs. 1,32,484 being the travelling expenses incurred in connection with the exploration of possibilities of expansion of the assessee's business which did not take place ? 3. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in deleting addition of Rs. 2,99,462 being the export subsidy and duty drawback accrued to the assessee but not accounted for in the accounts ?" It is not in dispute that the first question is covered in favour of the assessee by the decision o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to be undertaken in future were not deductible since the expenditure had no relation whatsoever with the existing business which was being carried on by the assessee. This court held that the expenses incurred for the purpose of launching a new project or initiating a new line of business, separate from the existing business, cannot be held to be a revenue expenditure incurred in connection with the existing business. This case is clearly distinguishable in view of the findings of fact recorded by the Commissioner of Income-tax (Appeals) as well as by the Tribunal in the case of the assessee-company. The assessee, in this case, is already engaged in the business of manufacturing and selling plywood. The travelling expenses were incurred i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... less the same situation, the Gujarat High Court in CIT v. Alembic Glass Industries Ltd. [1976] 103 ITR 715 held that where a new unit is set up by the assessee for manufacture of the same product at a different place, the new unit is an integral part of the existing business and is the same business as the former one. Of course, the facts in that case were slightly more complicated. There, the assessee, a manufacturer of glass at Baroda established a new manufacturing unit at Bangalore which was yet to go into production during the assessment years involved in that case. The Revenue contested the assessee's claim for deduction of the interest on the funds borrowed for the purpose of setting up the unit at Bangalore on the ground that such i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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