2012 (10) TMI 574

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... Whether the Tribunal was right in law in holding that expenditure incurred towards consultancy charges is capital in nature? 2. Whether the Tribunal was right in law in holding that the assessee has acquired an enduring benefit and hence the payments should be capital in nature? 3. Whether the the Tribunal was right in remanding the matter back to the Commissioner of Income Tax (Appeals) to decide the issue afresh even though the same was decided after proper reasoning? 2. The assessee company is engaged in the manufacture of forgings. For the assessment year 1996-97, the assessee filed return of income, which was processed by the Assessing Officer under Section 143(1)(a) and the taxable income was determined after disallowing the....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....a direction to decide the issue afresh by seeing as to whether the assessee derived any enduring benefit by incurring such expenditure. Challenging the said order of the Tribunal, the assessee is before us. 5. The only question to be decided in this appeal is as to whether the expenditure incurred by the assessee, namely, the consultancy charges, is revenue or capital in nature. It is the case of the assessee that the said expenditure was made for the study on the areas which we have already extracted supra. A perusal of the areas, which the assessee is required to cover by such study and by making such expenditure, would only show that expenditure made on such areas could be only a revenue expenditure and not a capital expenditure, as f....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... and object of the expenditure and the commercial necessities of making such an expenditure. These two decisions of the Apex Court were, in fact, followed by us in another decision made in Tax Case (Appeal) No.244 of 2006 dated 10.09.2012, to hold that the expenditure made therein was only revenue in nature.   8. By following the decisions of the Apex Court reported in [1965] 58 ITR 241 (PC) (Commissioner of Taxes v. Nchanga Consolidated Copper Mines Ltd.) and [1989] 177 ITR 377 (Alembic Chemical Works Co. Ltd.) and also by considering the nature of areas which the assessee wanted to cover by the study and by making the consultancy expenditure, we have no hesitation in holding that the expenditure referred to above are to be treated....