2015 (7) TMI 483

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.... that the expenses incurred under the head 'market research'can be treated as revenue, when the assessee had not furnished any details, and when the market research is for entry into new territories giving rise to an enduring benefit? 2. Whether, on the facts and circumstances of the case, the Tribunal was right in holding that the expenses incurred under the head 'market research' can be treated as revenue, when the Supreme Court has held that the expenditure on initial outlay or extension of a business or substantial replacement, as a capital expenditure in the case of Assam Bengal Cement Company Ltd. (27 ITR 34)?" 2. The brief facts of the case are as follows: For the assessment year 1998-99, the assessee filed its ret....

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....oner of Income Tax  Vs  Suhrid Geigy Ltd. (1996 (220) ITR 153 (Guj)), wherein, the Gujarat High Court considering the decision of the Supreme Court in Alembic Chemical Works Co. Ltd. v. CIT [1989] 177 ITR 377 (SC) held as follows :- "In Alembic Chemical Works Co. Ltd. v. CIT [1989] 177 ITR 377 (SC) the assessee-company was engaged in the manufacture of antibiotics and pharmaceuticals. It was granted licence for the manufacture of penicillin. Until 1963, it has already made substantial investment of over Rs. 66 lakhs for setting up plant, etc., for the production of penicillin. Initially, the appellant was able to achieve only moderate yields. With a view to increasing the yield, the appellant negotiated with Meiji, a reputed Japa....

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....lin. There was no material before the Tribunal that the  area  of improvisation was not part of the existing business. There was no material to hold that it amounted to a new or fresh venture. What was stipulated was an improvement in the operations of the existing business and its efficiency and profitability not removed from the area of day-to-day business of the appellant's established enterprise. The financial outlay under the agreement for the better conduct and improvement of the existing business was revenue in nature and was allowable deduction in computing the business profits of the appellant. In coming to this conclusion, the court also noticed the principles which should govern while deciding such issues by the c....

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....eement relates to revenue and the said activity is for the purposes of improving the operations of the existing business, its efficiency and profitability from the area of day-to-day business of the appellant's established enterprise's, expenses be treated as revenue and not capital. 11. In the case on hand, a careful reading of the order of the Tribunal and the facts as narrated above, it is clear that there is absolutely no justification for the Department to hold that there was a new line of business on which there occurred a loss. The parameters enunciated in the decision in Suhrid Geigy Ltd. Case (supra) is squarely attracted to the facts of the present case, justifying the loss of the assessee as a business loss, as admittedl....