1995 (7) TMI 58

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..... sa, raises the following question : " Whether the Tribunal was justified in holding that a sum of Rs. 13,93,793 paid as technical assistance fees can be treated as revenue expenditure to be allowed as deduction ? " The facts indicate, inter alia, that the assessee-company entered into an agreement dated December 15, 1979, with Bradley and Foster Ltd. of the United Kingdom. Under the terms of t .....

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..... evenue deduction. The Revenue preferred an appeal before the Tribunal. The Tribunal upheld the order of the Commissioner of Income-tax (Appeals). In the course of hearing our attention is drawn to the decision in Alembic Chemical Works Co. Ltd. v. CIT [1989] 177 ITR 377 (SC). The Supreme Court, while considering the case decided by the High Court as reported in ITR No. 78 of 1970 and by reversin .....

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..... ng manufacturing operations for the commercial production of penicillin in the appellant's existing plant had become obsolete or inappropriate in relation to the exploitation of the new subcultures of the high-yielding strains supplied by Meiji. The mere improvement in or updating of the fermentation process would not necessarily be inconsistent with the relevance and continuing utility of the exi .....

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..... its efficiency and profitability not removed from the area of the day-to-day business of the appellant's established enterprise. The financial outlay under the agreement was for the better conduct and improvement of the existing business and was revenue in nature and was allowable as a deduction in computing the business profits of the appellant. " On the finding of such facts, the apex court h .....

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..... onsidered in a commonsense way having regard to the business realities. In a given case, the test of "enduring benefit" might break down. Having gone through the aforesaid decision in between the lines, we find that the ratio of the said decision is squarely applicable to the facts of the present case. The decision of the Tribunal is neither contrary to nor violates any of the provisions of law. .....

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