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TMI Blog1993 (9) TMI 318X X X X Extracts X X X X X X X X Extracts X X X X ..... ction with the foreign tours of the assessee's managing director was deductible in arriving at the assessee's total income for the years under consideration ? (2) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was justified in holding that surtax liability was not admissible deduction for the years under consideration ? (3) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the development rebate was not admissible on rolling mill rolls for the years under consideration ? (4) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the benefit under section 35B was not available in respect of expenditur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ues involved in these two questions. This reference relates to the assessment years 1973-74, 1974-75 and 1975-76. The assessee is a private limited company. The business of the assessee-company is to manufacture and sell copper, brass, aluminium circles, steel strips, etc. In the previous year relevant to the assessment year 1973-74, the assessee incurred an expenditure of Rs. 27,859 in connection with the foreign tours of its managing director and claimed deduction in respect of the same as a revenue expenditure. Similar claim was made for a sum of Rs. 36,552 in the previous year relevant to the assessment year 1974-75. The claim of the assessee for deduction of the amount spent by it on the foreign tours of its managing director was not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce this reference.. We have carefully considered the controversy raised in question No. in regard to the allowability of the expenditure incurred in connection with the foreign tours of the assessee's managing director as a deduction under section 37(1) of the Income-tax Act in computation of its income. Under section 37(1) of the Act, any expenditure laid out or expended wholly and exclusively for the purposes of the business or profession is allowable as deduction in computing the income chargeable under the head "Profits and gains of business or profession", the only exception being that it is not in the nature of capital expenditure or personal expenses of the assessee. It is nobody's case in the instant case that it is the personal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ether any expenditure should be incurred in the course of his or its business. Such expenditure may be incurred voluntarily and without any necessity and if it is incurred for promoting the business and to earn profits, the assessee can claim deduction .... even though there was no compelling necessity to incur such expenditure. " In the instant case, we do not find any serious controversy in regard to the fact that the expenditure in question was business expenditure. The only contention of the Revenue is that it is an expenditure of capital nature because the purpose of the visit of the managing director was to inspect and to take a trial run of the capital equipment purchased by the assessee-company. In other words, according to the Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... treat the expenditure on the visit as part of the cost of any machinery because no machinery, as such, is purchased. In such an event, either it may be disallowed altogether or it may be allowed treating it as a revenue expenditure. In our opinion, having regard to the facts and circumstances of the present case it is difficult to hold that the expenditure incurred by the managing director on the foreign tour can be held to be an expenditure of capital nature. It may be apposite to observe that the dividing line between capital expenditure and revenue expenditure, which was held by the courts to be thin all throughout, has become much thinner and thinner by a catena of decisions of the Supreme Court rendered during the last few years. Appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... remains that the rolling mill rolls are machinery used for the purpose of business of the assessee. The two sections (sections 32 and 33) are intended to achieve two different objects and that is why under section 33 allowance of development rebate is hedged in with a number of conditions and development rebate once allowed is even liable to be withdrawn on the happening of certain contingencies. In that view of the matter, we are of the opinion that the assessee cannot be denied development rebate merely on the ground that the rate of depreciation prescribed in the Appendix to the Rules happens to be 100 per cent., if the assessee has otherwise fulfilled the conditions or requirements of the law for allowability of development rebate. In t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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