9911796707
TMI Blog1977 (10) TMI 2X X X X Extracts X X X X X X X X Extracts X X X X ..... ies Ltd., since the latter's incorporation in 1936. The managing agents were handling the sales of Mettur Industries as their sole distributors. In view of the manufacturing experience of M/s. Mettur Industries Ltd., and the managerial experience of M/s. Beardsell Co. in sales and distribution, an amalgamation of both the companies was considered to be advantageous to both of them. Therefore, instead of renewing the managing agency agreement, both the companies filed an application before the High Court under s. 394 of the Companies Act for approval of the scheme of amalgamation of the two companies and succeeded in that application. The share of M/s. Beardsell Co. in the legal expenses for getting the scheme of amalgamation approved by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the purposes of bringing into existence any asset or advantage, but for running the business with a view to get more profits. (2) Since the expenditure was incurred to rationalise the administration of the business with a view to earn more profits, the expenditure is revenue in character. (3) Since the amalgamation expenses are related to the carrying on or the conduct of the business, the expenditure can be regarded as an integral, part of the profit-earning process and hence it is revenue expenditure. (4) Beardsell's incurring amalgamation expenses were certainly for carrying on the business by getting itself amalgamated with Mettur Industries Ltd. and since the expenditure was incurred by Beardsell in its capacity as a person ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... their capacity as persons carrying on the business. Under the scheme of amalgamation, all the proprietary rights and powers of M/s. Beardsell Co. as also all their liabilities and duties stand transferred to Mettur Industries Ltd. to be held by the latter in addition to their own. The expenditure has been incurred by M/s. Beardsell Co. in their capacity as persons carrying on the business with the object of carrying on their business to their advantage. The expenditure could not be stated to have been incurred for acquiring any capital assets of an enduring nature. The expenditure has been incurred with the object of getting more profits and it relates to a period when the assessee-company was carrying on its business. We are, therefore ..... X X X X Extracts X X X X X X X X Extracts X X X X
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