Technical collaboration for a new line of business was capital expenditure because it secured an enduring advantage.

Expenditure incurred by a director's foreign tour to negotiate technical collaboration for manufacturing new products was treated as capital expenditure because it related to commencing a new line of business, not expanding the assessee's existing operations. The court held that similarity between the proposed products and the existing goods was insufficient to characterise the outlay as revenue in nature. Where the spending is directed to securing the foundation of a new venture and confers an enduring advantage, it assumes capital character even at a preparatory stage. The amount was therefore not allowable as revenue expenditure.

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Issues: Whether the expenditure incurred for a director's tour abroad to negotiate technical collaboration for proposed manufacture of new products was capital expenditure or revenue expenditure.

Analysis: The expenditure was held to be connected not with the assessee's existing business, but with an to start a new line of manufacture through foreign collaboration. The similarity between the proposed products and the assessee's current goods was insufficient to treat the outlay as expansion of the old business. Expenditure incurred for initiating a new venture, even at an exploratory stage, was treated as bringing an enduring advantage and therefore as capital in nature.

Conclusion: The expenditure was capital expenditure and not allowable as revenue expenditure.

Ratio Decidendi: Outlay incurred to initiate a new line of business or secure its foundation through technical collaboration is capital expenditure if it confers an enduring advantage, even though the venture is only in the preparatory stage.

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