1980 (4) TMI 57

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..... he revenue : " Whether it has been rightly held that project expenses incurred by the assessee were incidental to the carrying on of the assessee's business of managing agency and were not capital expenditure ? " The assessee is a private limited company and its main business is that of managing agency. They had also been investigating several projects and, wherever feasible, promotion of new .....

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..... ontending before the Tribunal that the promotion of newsprint paper mill was ultra vires the objects of the company. The Tribunal referred to the memorandum of the company and proceeded to consider the question on the basis that such promotional undertakings are within its objects. On the merits also, the Tribunal held that the expenses which were incurred by the assessee in the abortive projects .....

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..... xchange, mortgage (with or without a power of sale), assign, lease, sublet and generally deal with the whole or any part of the business, estates, property or undertaking of the company as a going concern or otherwise to any person or persons, association or associations, or otherwise for such consideration as the company may think fit, and either for cash or for shares, debentures or securities f .....

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..... facture of chemical plants, manufacture of asbestos sheets and pressure plants and newsprint paper mill projects. If the project materialised, the expenses were transferred and recovered from the new unit and the assessee secured the office of the managing agents or technical consultancy or the like and earned profits. If the projects were unsuccessful, the assesseecompany was writing off the expe .....

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..... fore, allowable as revenue expenditure. On the facts, therefore, there could be no doubt that the expenses incurred in this case were in the course of the business as promoters of companies or as managing agents and with a view to augment their income. A similar view was taken in CIT v. J. K. Industries (P.) Ltd. [1969] 71 ITR 594 (Cal). As such, the Tribunal was right in holding that it is allowa .....

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