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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 ..... y 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 had already been capitalized by the assessee. Once the finding of fact is that all the materials are for creating the manufacturing facility and which has definitely an enduring benefit, namely for a long time, then, it is not something that the appellant can claim to be a temporary or transitory one. The reasoning of the order of the Tribunal goes to sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tal expenditure. It was not therefore tenable. This expenditure incurred for the purpose of removing the restriction on the number of working hours with a view to increase its profits, was revenue in nature. By purchase of loom hours no new asset has been created and there is no addition or expansion of the profit-making apparatus of the assessee. The costs of additional loom hours did not add to the fixed capital to the looms. Tests and the propositions which have been culled out from this judgment can be applied, provided the facts and circumstances in each case warrant such application. Once it is not a universal proposition and must be applied in the facts and circumstances of each case, then, we have no doubt that the concurrent findin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he decision 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k re-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 eleva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upreme 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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