1998 (7) TMI 64

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....bjects clause of the memorandum of association so as to pursue other features. In that direction the petitioner-company approached V. B. C. Chemicals Limited, which is another company for identification and for preparation of two project reports. Pursuant to an understanding between the petitioner-company and the said V. B. C. Chemicals Limited, the petitioner-company had compensated V. B. C. Chemicals Limited for the benefits which it had sought to draw. Before the assessing authority for the assessment year 1988-89, the petitioner-company claimed exemption for the amount of Rs. 11,52,506 on the ground that the said amount is only revenue expenditure and not capital expenditure. However, the assessing authority rejected the claim of the pe....

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....to a new line of activity? 3. Whether, on the facts and in the circumstances of the case, the Tribunal, having conceded that the decision of the Karnataka High Court in the case of CIT v. Bharat Earth Movers Ltd. [1985] 155 ITR 321, is applicable to the assessee, is correct in applying the decision of the Supreme Court in Scientific Engineering House Pvt. Ltd. [1986] 157 ITR 86, in spite of the jurisdictional High Court's observation in the case of CIT v. Venkateswara Transmission (P.) Ltd. [1988] 171 ITR 476 (AP), that the Supreme Court did not consider the question whether the expenditure is capital or revenue in that case? 4. Whether, on facts and in the circumstances of the case, the Tribunal is correct in holding that the two dec....

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....this court. It is this order that is assailed before us. Learned counsel for the petitioner-company, Sri C. K. Kodandaram, apart from taking us to the various decisions of the Supreme Court as well as of this court, has drawn our attention to a Full Bench decision of this court in Praga Tools Ltd. v. CIT [1980] 123 ITR 773. While drawing our attention to the decision cited supra learned counsel tried to distinguish between capital expenditure and revenue expenditure. According to learned counsel, the expenditure incurred by the assessee which has made payments to V. B. C. Chemicals Pvt. Ltd. are in the nature of revenue expenditure and not capital expenditure. Learned counsel stated that if the assessee tries to draw the enduring benefit....