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TMI Blog2014 (3) TMI 1226X X X X Extracts X X X X X X X X Extracts X X X X ..... ision of the Hon'ble Supreme Court in the case of Empire Jute Co. Ltd. V/s. CIT, reported in 124 ITR 1. 4] It is submitted that initially the appellant was assembling the components imported from abroad. Thereafter there was a change in the policy. The appellant therefore started looking out for Indian suppliers of the components which were used in the making of the elevator. The Tribunal as also the Commissioner of Income Tax (Appeals) misunderstood this completely and misdirected themselves in law. The appellant was not disputing that the testing tower was changed. The appellant urged that it is the components for which the expenditure had been incurred. The expenses so incurred were not for creating any manufacturing facility. The e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e-appreciation and re-appraisal of the factual materials. Upon scrutinizing the entire material produced, both, the Commissioner of Income Tax (Appeals) and the Income-tax Appellate Tribunal held that the majority of the expenditure is on account of materials used for development of prototype and other components, the utilized costs of the material used by the appellant in the new project. The authorities found that assessee had created a facility of procuring components of the elevator through local vendors. Earlier these components were procured by importing and there was no manufacturing facility in India, though the same was created for that purpose. Testing towers had been erected and the expenditure incurred on the testing of elevator ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reme Court found was that the appellant had purchased loom hours from four different jute manufacturing concerns and had paid a correct sum. The Tribunal held that the expenditure incurred by the assessee was in the nature of revenue expenditure and hence deductible in computing the profits. The High Court held that the amount paid was for purchase of loom hours and in the nature of capital expenditure. It was not therefore tenable. 8] That decision of the High Court was reversed by the Supreme Court by holding that the allotment of loom hours is under the working time agreement with different mills constituted merely a contractual restriction on the right of every mill under the general law to work its looms to their full capacity, and th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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