1977 (10) TMI 2

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..../s. W. A. Beardsell & Co. were the managing agents of M/s. Mettur Industries Ltd., since the latter's incorporation in 1936. The managing agents were handling the sales of Mettur Industries as their sole distributors. In view of the manufacturing experience of M/s. Mettur Industries Ltd., and the managerial experience of M/s. Beardsell & Co. in sales and distribution, an amalgamation of both the companies was considered to be advantageous to both of them. Therefore, instead of renewing the managing agency agreement, both the companies filed an application before the High Court under s. 394 of the Companies Act for approval of the scheme of amalgamation of the two companies and succeeded in that application. The share of M/s. Beardsell & Co.....

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....e Tribunal held that: " (1) The amalgamation expenses were incurred not for the purposes of bringing into existence any asset or advantage, but for running the business with a view to get more profits. (2) Since the expenditure was incurred to rationalise the administration of the business with a view to earn more profits, the expenditure is revenue in character. (3) Since the amalgamation expenses are related to the carrying on or the conduct of the business, the expenditure can be regarded as an integral, part of the profit-earning process and hence it is revenue expenditure. (4) Beardsell's incurring amalgamation expenses were certainly for carrying on the business by getting itself amalgamated with Mettur Industries Ltd. and....