TaxTMI 
TaxTMI 
2013 (10) TMI 112
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....Appeal was admitted on the following substantial questions of law:- "1. Whether the Tribunal is right in law in holding that in a case in which expansion of capital was undertaken to meet the need for working funds, expenditure incurred for the said purpose is capital expenditure and is not allowable in computing business income? 2. Whether the Tribunal is right in law in holding that even when the purpose for which expenditure was incurred did not result in creation of an asset or benefit and became abortive, due to intervention by an external agency, the expenditure is not allowable? and 3. Whether the Tribunal is right in law in holding that in considering whether expenditure incurred is capital or revenue in nature, the purpose....
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.... rejected the said contention by following the decision reported in 225 ITR 798 BROOKE BOND INDIA LIMITED v. CIT. Considering the purposes for which the company incurred this expenditure, the fact that the efforts had got frustrated later on, would not alter the nature of the expenditure. Consequently, the Tribunal confirmed the view of the Assessing Officer. Aggrieved by this, present appeal by the assessee. 3. Learned counsel for the assessee reiterating the points taken before the Tribunal submitted that the decision of the Supreme Court relied on by the Tribunal as well as by the authorities below have no relevance to the case on hand, since the Apex Court did not go into the question as to whether the steps taken were to meet the ne....
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....nd gave relief to the assessee by accepting the assessee s alternate plea that as the expenditure incurred was on acquiring the know-how which was likely to assist in the manufacture or processing of goods, the assessee was entitled to the relief under Section 35AB of the Act. Thus, on the facts, this Court held that the fact that the project itself had to be abandoned subsequently by reason of the Government not making available the liquid petroleum gas required for the manufacture of the product for which this know-how had been acquired would not take away the fact that the expenditure had been incurred for the purpose of acquiring the know-how in the relevant previous year. Thus this Court held that the assessee was entitled to deduction....
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...., yet, the fact remains that the expenditure incurred was only for the purpose of expansion of the capital base. 7. Secondly, according to the assessee, since the expenditure did not yield desired result, the character of the expenditure has to be decided on the basis of the result that would yield for the benefit of the assessee's business. We do not accept that such a reasoning will be of any assistance to the assessee. 8. In the decisions reported in 253 ITR 445 CIT v. KODAK INDIA LIMITED, the Apex Court pointed out to the decision reported in 225 ITR 792 (S.C.) PUNJAB STATE INDL. DEVE. CORPN. LTD v. C.I.T. wherein it was held that the fees paid to the Registrar of Companies for expansion of the capital base of a company is directl....
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.... issue. Thus, the efforts were aborted. We do not find any justifiable ground to accept the plea of the assessee that on account of the abortive efforts, the expenditure incurred would lose its character as capital expenditure for the purpose of allowing it as a Revenue expenditure. 10. Learned counsel pointed out that in the decision reported in 225 ITR 798 BROOKE BOND INDIA LIMITED v. COMMISSIONER OF INCOME TAX, it is no doubt that the Apex Court considered the expenditure in connection with the additional issue of shares paid to the Registrar of Companies by way of filing fee and hence, has no application. We do not think so for the principle therein decided by the Apex Court read would squarely apply to the facts herein. When the exp....