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TMI Blog2008 (5) TMI 257X X X X Extracts X X X X X X X X Extracts X X X X ..... whether it is an expenditure which is capital in nature”, are substantial question of law – impugned judgment of the High Court is set aside and the matter is remitted for fresh consideration - appeal is allowed - 3347 of 2008 - - - Dated:- 6-5-2008 - S.H. KAPADIA and B. SUDERSHAN REDDY JJ. H. Raghavendra Rao, Vikram Gulati, Ms. Alka Sharma, B.V. Balaram Das, Advocates, for the appellant. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in this Civil Appeal. Firstly, whether the question regarding applicability of Section 35AB of Income Tax Act, 1961 was ever raised by the Assessing Officer in this case? The second question which arises for determination in this case is whether the expenditure incurred is revenue expenditure or whether it is an expenditure which is capital in nature and depending on the answer to the said questi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Officer is not clear principally because it has focused only on one point, viz., whether such expenditure is revenue or capital in nature. At the same time, it is important to note that even for the applicability of Section 35AB, the nature of expenditure is required to be decided at the threshold because if the expenditure is found to be revenue in nature, then Section 35AB may not apply. Howe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hin the ambit of provisions of Section 35AB of the Income Tax Act, 1961, whereas the payment is a capital expenditure in view of the following judgments. (A) Femmur Woodruf and Co. Ltd. v. CIT [1976] 102 ITR 665 (Mad); (B) Ram Kumar Pharmaceuticals Works v. CIT [1979] 119 ITR 33 (All). (C) CIT v. Warmar Hindustan Ltd. [1986] 160 ITR 217 (AP) (D) CIT v. Southern Switch Gears ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... between the parties, whether the expenditure is revenue or capital in nature and, depending on the answer to that question, the High Court will have to decide the applicability of Section 35AB of the Income Tax Act. On this aspect we keep all contentions on both sides expressly open. 8. Accordingly, the impugned judgment of the High Court is set aside and the matter is remitted for fresh consi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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