TaxTMI 
TaxTMI 
2024 (2) TMI 1592
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....the case and in law, the CIT(A) erred in allowing deduction u/s.35 D in respect of expenditure in connection with the issue of GDR of Rs.43,43,676/-." 2. "On the facts and in the circumstances of the case and in law, the CIT(A) erred in directing the A.O to allow depreciation on the leased assets." 3. "On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in directing the A.O to treat the expenditure on dyes and moulds amounting to Rs. 41,09,44,780/- as revenue expenditure." 4. "On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in treating the penalty charges of Rs.1932545/- received from machinery suppliers as capital receipt and directing the A.O to allow the same accordingly." 5. "On the facts and in the circumstances of the case and in law, the CIT(A) erred in treating the disallowance of expenditure on jigs and fixtures of Rs. 7,03,57,509/- as revenue expenditure." 6. "On the facts and in the circumstances of the case and in law, the CIT(A) erred in directing the A.O to deduct from the profit of the business the disallowance of Rs.42,10,566/- being the amount writ....
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....tion u/s. 35D not considered in AY 1995-96 since expansion of industrial undertaking was not completed. Copy of Assessment Order for AY 1995-96 is placed on record, Letter dated 11 February 2000 submitted before the Assessing Officer. 49. Ld. AR of the assessee relied on the following case laws: - a) CIT vs. Shree Synthetics Ltd. (162 ITR 819) b) Gujarat Narmada Valley Fertilizers Co. Ltd. vs. DCIT (ITA No. 1463/Ahd/2007 c) S.S.I. Limited vs. DCIT (85 TTJ 1049) (Chn) 50. On the other hand, Ld. DR relied on the order of the Assessing Officer. 51. Considered the submissions and material placed on record, from the submissions of the parties, we observe that the assessee has incurred expenses in connection with the issue of GDR and these expenses are allowable only when new or expansion of industrial undertaking. During the current Assessment Year, the assessee has completed the expansion of the Industrial undertaking, the expenses are allowable deduction u/s 35D of the Act, since the expenses are incurred during previous AY and expansion was completed only this AY, the relevant expenses are allowable in this Assessment Year. In the....
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....d by the Assessing Officer that excluding the investment in UTI the amount invested towards the cost of project is Rs.54.02 crores ( 182.95 crores - Rs.128.93 crores) and 2.5% of such cost works out to Rs.1.35 crores. Therefore 10 % of this amount of Rs.1.35 crores at Rs.13.5 lacs was allowed by the Assessing Officer under section 35D. 25. The learned CIT(A) confirmed the action of the AO. 26. The learned counsel for the assessee argued that the assessee has been allowed the identical claim since 1995-96 by the Income-tax Department and it is only in the impugned year where the Department has doubted its decision when there is no change of the facts and circumstances of the case. 27. The learned DR, on the other hand, argued that res judicata does not apply. 28. We have heard the rival contentions and perused the facts of the case. From the reading of the provisions contained in section 35D and the arguments of both the parties, we are of the view that there are no change in the facts as in the last 7 years and, therefore, relying upon the decision of the Hon'ble Supreme Court in the case of Radha Soami Satsang vs. CIT 193 ITR 321, it would n....
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.... such asset forms part of block of assets, depreciation ought to be allowed in subsequent years. for the above proposition he relied on the following case law: (a) Director of Income-tax (International Taxation) - II v. HSBC Asset Management India Private Limited [2014] 47 taxmann.com 286 (Bombay) (b) Commissioner of Income-tax 7 v. Sonic Biochem Extractions Private Limited (ITA No. 2088 of 2013) (Bombay) (c) CIT V. G.N.Agrawal (Individual) 217 ITR 250 57. On the other hand, Ld. DR relied on the order of the Assessing Officer. 58. Considered the submissions and material placed on record, we observe from the record that identical issue is decided in favour of the assessee for the A.Y. 1996-97. While deciding the issue, the Coordinate Bench of the Tribunal in ITA.No. 2230/Mum/2000 dated 20.06.2022 following various judicial pronouncements dismissed the ground raised by the revenue. The Relevant portion is extracted below: - "25:3 We have heard the submissions made by rival sides and have examined the orders of authorities below. In the light of findings given by Assessing Officer to reject assessee's claim following points wer....
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.... "Whether on the facts and in the circumstances of the case, the income-tax Appellate Tribunal is legally correct in holding that in the present case/ no colourable device has been adopted by the assesses, even when the intention of the assessee behind drafting the agreements between the assessee and the financial institution was to reduce the tax liability artificially of both the parties and as such the ratio of the decision of the Hon'ble Apex Court in the case of McDowell Ltd. v, CTO [1985] 154 ITR 148 (SC) has wrongly been, interpreted" The Hon'ble High Court rejected the appeal of Revenue by holding as under: 3. "Only contention raised by the learned counsel for the Revenue is that the machinery was integral part of the bollers and the same continued to be with the assessee in spite of sale. The fact remains that the sale consideration was received by the assessee and lease rental was paid by the assessee. Merely because tax liability was reduced could not be conclusive of arrangement being sham or a device. As regards the observations of the-hon'ble Supreme Court in McDowell [1985] 154 ITR 148, the matter has. been explained in subseque....
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....ised by the revenue is dismissed." 11. Respectfully following the above decision and following the principle of consistency, the view taken by the Tribunal in A.Y.1997-98 is respectfully followed, accordingly, ground raised by the revenue is dismissed. 12. With regard to Ground No. 3 which is in respect of allowing deduction in respect of expenditure incurred on dies and moulds as revenue expenditure. Ld. AR of the assessee brought to our notice that the issue in appeal has been considered by the Co-ordinate Bench of this tribunal in assessee's own case and decided the issue in favour of the assessee and against the department. 13. On the other hand, Ld. DR has fairly accepted the submissions of the Ld.AR. 14. Considered the submissions and material placed on record, we observe from the record that identical issue is decided in favour of the assessee for the A.Y. 1997-98. While deciding the issue, the Coordinate Bench of the Tribunal in ITA. No. 5030/Mum/2001 dated 13.04.2023 held as under: - "4. At the outset, with regard to Ground No. (a), which is in respect of allowing the expenditure on dies & moulds of Rs..7,16,16,415/- as a revenue expenditure, Ld. AR of....
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....ssed. 16. With regard to Ground No. 4 which is in respect of allowing penalty charges recovered from suppliers of capital goods as capital receipts, Ld. AR of the assessee brought to our notice that the issue in appeal has been considered by the Co-ordinate Bench of this tribunal and decided the issue in favour of the assessee and against the revenue. 17. On the other hand, Ld. DR has fairly accepted the submissions of the Ld.AR. 18. Considered the submissions and material placed on record, we observe from the record that identical issue is decided in favour of the assessee for the A.Y. 1997-98. While deciding the issue, the Coordinate Bench iITA.No. 5030/Mum/2001 dated 13.04.2023 held as under: - "8. With regard to Ground No. (b) which is in respect of deleting the addition of Rs..27,95,851/- representing penalty charges received from machinery suppliers, Ld. AR of the assessee brought to our notice that the issue in appeal has been considered by the Co-ordinate Bench of this tribunal in assessee's own case and decided the issue in favour of the assessee and against the department. 9. On the other hand, Ld. DR has fairly accepted the submissions of the L....
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....cisions of the Tribunal in assessee's own case pertaining to Assessment Years 1988-89 and 1991-92. Therefore following the same, the order of the learned CIT(A) is upheld and the ground o the Revenue is dismissed. We do not have a reason deviate from this consistent view of the Tribunal on the issue. Accordingly, this ground of the revenue is rejected. 37. Therefore, respectfully following the above decisions of Coordinate bench of ITAT in assessee's own case which is applicable mutatis mutandis in the present case, we are inclined to accept the submission of Ld. AR. Accordingly, this ground raised by the revenue is dismissed." 11. Further, in assessee's own case in ITA.No. 2230/Mum/2000 dated 20.06.2022 for the A.Y. 1996-97, Coordinate Bench, held as under: - "15. During the period relevant to assessment year under appeal, the assessee recovered penalty charges amounting to Rs.2,56,209/- from suppliers of the capital goods. The assessee claimed the aforesaid charges as capital receipt, whereas the Assessing Officer treated the aforesaid charges as revenue in nature. The CIT(A) following the order of his predecessor in Assessment Year 1991-92 to ....
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....ical issue is decided in favour of the assessee for the A.Y. 1995-96. While deciding the issue, the Coordinate Bench of the Tribunal in ITA.No. 3493/Mum/1999 dated 20.01.2021 held as under: - "57. With regard to this ground, Ld. AR brought to our notice para 8-8.5 of assessment order and para 33 of CIT(A)'s order and submitted that the similar issue has already been decided by the Coordinate Bench of ITAT in assessee's own case for Assessment Year : 1990-91 to 1994-95 (ITA No. 6324 & 6325/Mum/2010 and 6963 & 6964/Mum/2014) on merits in favour of the assessee. 58. On the other hand, Ld. DR relied on the orders passed by revenue authorities, however he conceded that this ground is covered by the decision of ITAT. 59. Considered the rival submission and material placed on record. We notice from the records that the identical issue has already been decided by the Coordinate Bench of ITAT in assessee's own case for Assessment Year : 1990-91 to 1994-95 (ITA No. 6324 & 6325/Mum/2010 and 6963 & 6964/Mum/2014) on merits. For the sake of clarity, relevant portion of the said decision is reproduced below:- 3.1. We have heard rival submissions and perused th....
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....e expenditure for the purpose of Income Tax Act. We find that this argument was duly 'appreciated by the Id. CIT(A) and the Id. CIT(A) duly granted relief to the assessee in this regard by following the decision of his predecessor in assessee's own case for the A.Yrs 2002-03, 2005-06 and 2006-07. 60. Therefore, respectfully following the above decisions of Coordinate bench of ITAT in assessee's own case which is applicable mutatis mutandis in the present case, we are inclined to accept the submission of Ld. AR. Accordingly, this ground raised by the revenue is dismissed." 16. Further, in assessee's own case for the A.Y. 1996-97 the Coordinate Bench in ITA.No. 2230/Mum/2000 dated 20.06.2022, held as under: - "16. The assessee has purchased Jigs and Fixtures to the tune of Rs.1,83,34,475/- to be used in production process. The assessee revenue. claimed the said expenditure as against the claim of assessee the Assessing Officer treated the expenditure as capital in nature and allowed depreciation on the same. In the first appellate proceedings, the CIT(A) reversed the findings of Assessing Officer and held the expenditure to be on revenue account. We....
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....ollowing decisions of Hon'ble Supreme Court, High Courts and ITAT on merits in favour of the assessee:- (i) DCIT vs. Sun Pharmaceutical Ind. Ltd [2010] 329 ITR 479 (Guj) (ii) DCIT vs. Sun Pharmaceutical Ind. Ltd [2010] 325 ITR (SC) (iii) United Phosphorous Ltd. vrs. ACIT(2015) 230 Taxman 596 (Guj) (iv) Lupin Ltd. vrs. JCIT (ITA No. 5088/Mum/2005) 50. On the other hand, Ld. DR relied on the orders passed by revenue authorities, however he conceded that this ground is covered by the decision of Hon'ble Apex Court, High Courts & ITAT. 51. Considered the rival submission and material placed on record. We notice from the records that the identical issues have already been decided by the Hon'ble Supreme Court, High Courts and ITAT on merits:- (i) DCIT vs. Sun Pharmaceutical Ind. Ltd [2010] 329 ITR 479 (Guj) (ii) DCIT vs. Sun Pharmaceutical Ind. Ltd [2010] 325 ITR (SC) (iii) United Phosphorous Ltd. vrs. ACIT(2015) 230 Taxman 596 (Guj) (iv) Lupin Ltd. vrs. JCIT (ITA No. 5088/Mum/2005) For the sake of clarity, relevant portion of the decision in the case of Lupin Ltd is reproduced below:- ....
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....re of the considered opinion that the apex court judgments cited above are relevant and expenses are not allowable as revenue expenditure and thus, the order of the CIT (A) does not call for any interference. Accordingly, ground 2 is dismissed." 9. From the perusal of the above decision, it is seen that the Tribunal had decided this issue based on the decision of M/s Brooke Bond India Ltd. (supra) and M/s Punjab State Industrial Development Corporation Ltd (supra), wherein the matter related to the issue of allotment of shares and increase in share capital, whereas in this case, the issue is entirely different and relates to the payment on account of lease hold of land and building. This issue as rightly been pointed out by the learned counsel is covered by the decision of the Hon'ble High Court of Gujarat in the case of DCIT vs. Sun Pharmaceuticals Industries Ltd. reported in 329 ITR 479, wherein the Hon'ble High Court has held that the payment of advance lease rent for acquisition of land on lease for a period of 19 years is revenue expenditure. While coming to this conclusion the Hon'ble High Court has relied upon the principle and ratio laid down by the Hon....
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....h, we uphold the findings of CIT(A) on this issue and dismiss ground No.7 raised in appeal by the Revenue." 42. Respectfully following the above decision and following the principle of consistency, the view taken by the Tribunal in A.Y.1996-97 is respectfully followed, accordingly, ground raised by the revenue is dismissed." 27. Respectfully following the above decision and following the principle of consistency, the view taken by the Tribunal in A.Y. 1997-98 is respectfully followed, accordingly, ground raised by the revenue is dismissed. 28. With regard to Ground No. 7 which is in respect of allowability of deduction in respect of foreign travelling expenses, Ld. AR of the assessee brought to our notice that the issue in appeal has been considered by the Co-ordinate Bench of this tribunal in assessee's own case and decided the issue in favour of the revenue and against the assessee. 29. On the other hand, Ld. DR has fairly accepted the submissions of the Ld.AR. 30. Considered the submissions and material placed on record, we observe from the record that identical issue is decided in favour of the Revenue for the A.Y. 1998-99. While deciding the issue, the Coo....
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...., we notice that the Managing director Shri Rahul Bajaj has visited Netherland & UK for attending India Growth fund Board Meeting. The Board resolution with regard to the expenses to be incurred on wife of Shri Rahul Bajaj reads as under:- "Further Resolved that air-fare and other expenses in connection with the above visit (including those of Smt. Bajaj) be and are hereby authorized to be borne by the Company." We notice that the Board resolution did not bring out any business expediency. Further, the assessee has also not proved existence of any commercial or business expediency in incurring the foreign travel expenses of wife of M D except producing copy of Board resolution, in which also, no reason was given. There should not be any doubt that this is a factual aspect and the facts prevailing in each foreign trip has to be examined. Accordingly, the decision taken by the Tribunal in AY 1986-87 may not be relevant. We notice that the Ld CIT(A) has also not brought out the business or commercial expediency in incurring expenses on foreign trips of wife of M D, but deleted the addition on the basis of quantum of expenditure, status of the M D and approval by Boar....
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....llowing the principle of consistency, the view taken by the Tribunal in A.Y. 1998-97 is respectfully followed, accordingly, ground raised by the revenue is dismissed. 36. With regard to Ground No. 9 which is in respect of allowing of deduction under section 40(a)(i) in respect of expenditure incurred in foreign currency, Ld. AR of the assessee brought to our notice that the issue in appeal has been considered by the Co-ordinate Bench of this tribunal in assessee's own case and decided the issue in favour of the assessee and against the department. 37. On the other hand, Ld. DR has fairly accepted the submissions of the Ld.AR. 38. Considered the submissions and material placed on record, we observe from the record that identical issue is decided in favour of the assessee for the A.Y. 2000-01. While deciding the issue, the Coordinate Bench in ITA.No. 3055/Mum/2005 dated 28.11.2023 held as under: - "109. During the year under consideration the assessee has incurred expenditure in foreign currency amounting to Rs.194.85 lacs and tax at source had been deducted wherever applicable and in some cases no tax was deducted. The assessing officer has disallowed the amount of....
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....t it has paid the total advance tax of Rs.204,00,00,000/- whereas assessed tax comes to Rs.195,36,36,406/- and 90% of the assessed tax comes to Rs.175,82,72,765/-, therefore, there was no shortfall in payment of advance tax. During the course of appellate proceedings before us revenue has not brought any material contrary to the submission and finding of the ld. CIT(A) therefore, this ground of appeal of the revenue also stand dismissed. 43. Respectfully following the above decision and following the principle of consistency, the view taken by the Tribunal in A.Y. 2000-01 is respectfully followed, accordingly, ground raised by the revenue is dismissed. 44. In the result, appeal filed by the revenue is partly allowed. ITA No. 4236/MUM/2005 (A.Y. 2001-02) - ASSESSEE APPEAL 45. Assessee has raised following grounds in its appeal: - "1. On the facts and in the circumstances of the case and in law, the Commissioner of Income-tax (Appeals) erred in upholding the action of the Assessing Officer in taxing the surplus on redemption of treasury bills amounting to Rs.2,98,17,570/- as interest under the head "Income from Other Sources", instead of as "Capital Gains". ....
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....ce that the issue in appeal has been considered by the Co-ordinate Bench of this tribunal in assessee's own case and decided the issue in favour of the assessee and against the department. 48. On the other hand, Ld. DR has fairly accepted the submissions of the Ld.AR. 49. Considered the submissions and material placed on record, we observe from the record that identical issue is decided in favour of the assessee for the A.Y. 1997-98. While deciding the issue, the Coordinate Bench inITA.No. 5030/Mum/2001 dated 13.04.2023 held as under: - "65. With regard to Ground No. (l) of grounds of appeal, which is in respect of redemption of treasury bills, Ld. AR of the assessee brought to our notice the letter dated 10.03.2000. He submitted that Surplus on redemption was shown as short- term capital gains in the return of income out of abundant caution. Redemption results in total extinguishment of securities other than by way of transfer and is not be covered within the definition of transfer as per section 2(47). In support of the above contentions, he relied on the decision of the Hon'ble Supreme Court in the case of Vania Silk Mills Pvt. Ltd. v. CIT (191 ITR 647) (SC). ....
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....e, the surplus arising out of redemption of treasury bills cannot be subject to capital gains. The treasury bills being capital asset, the surplus arising out of its redemption can neither be taxed as revenue receipt. The learned Counsel for the assessee fairly admitted LA that this issue is decided against the assessee by the Tribunal in assessee's own case for assessment year 1995-96. We find that the Co-ordinate Bench in assessee's own case for assessment year 1995-96 in appeal by the Revenue after placing reliance on the decision of Hon'ble Supreme Court of India in the case of CIT vs. Grace Collis, 248 ITR 323 has decided the issue in favour of the Revenue. Thus, in view of uncontroverted findings of the Co-ordinate Bench in assessee's own case in the immediately preceding assessment year, ground No.8 in appeal by the Revenue is allowed." 69. Respectfully following the above decision and following the principle of consistency, the view taken by the Tribunal in A.Y. 1996-97 is respectfully followed, accordingly, grounds raised by the revenue is allowed. Therefore, we are not inclined to sustain the findings of the Ld.CIT(A), accordingly, ground....
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....e Court decision in the case of AAC Ltd (supra). Section 40(a)(iia) prohibits deduction of "any sum paid on account of wealth-tax". However, Explanation to Section 40(a)(iia) provides as under: "Section 40(a)(iia): Explanation--For the purpose of this sub-clause, "wealth-tax" means wealth-tax chargeable under the WT Act, 1957 (27 of 1957), or any tax of a similar character chargeable under any law in force in any country outside India or any tax chargeable under such law with reference to the value of the assets of, or the capital employed in, a business or profession carried on by the assessee, whether or not the debts of the business or profession are allowed as deduction in computing the amount with reference to which such tax is charged, but does not include any tax chargeable with reference to the value of any particular asset of business or profession." In view of the Supreme Court decision in ACC Ltd. case (supra), last part of the Explanation i.e., "but does not include any tax chargeable with reference to the value of any particular asset of the business or profession" has to be read as in continuation of the beginning part of the Explanation i.e....
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....r the assessment year 1995-96. We find that the Revenue in assessment year 1995-96 has assailed the order of CIT(A) in allowing assessee's claim of deduction in respect of wealth tax. The Co-ordinate Bench following the order of Tribunal in the case of Punj Sons P. Ltd. vs. DCIT, 74 TTJ 596 (Del) upheld the findings of CIT(A) and dismissed the ground raised by Revenue in its appeal. No contrary material has been placed before us by the Revenue. Thus, ground No.9 raised by the Revenue in this appeal is dismissed for parity of reasons." 47. Respectfully following the above decision and following the principle of consistency, the view taken by the Tribunal in A.Y. 1996-97 is respectfully followed, accordingly, ground raised by the revenue is dismissed." 55. Respectfully following the above decision and following the principle of consistency, the view taken by the Tribunal in A.Y. 1997-98 is respectfully followed, accordingly, ground raised by the assessee is allowed. 56. With regard to Ground No. 5 which is in respect of disallowing deduction under section 80-O of the Act in respect of 40% of royalty amount received. Ld. AR of the assessee brought to our notice that....
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.... per clause 5 of the agreement, the LICENSEE can request the assessee to delete any part from CKD pack, meaning thereby the LICENSEE shall manufacture those parts by itself. In that case, the assessee shall provide the LICENSEE a set of drawings for such parts/components and characteristics of materials to be use in the manufacture of such parts/components. For supplying the drawings, the assessee has collected technical knowhow fee from the above said licensee, on which the deduction u/s 80-O has been claimed. 10.3 The case of tax authorities is that the payment so received by the assessee was not in respect of the drawing, design, invention, patent and trade mark outside India. However, we notice that the Agreement entered between both the parties clearly provides that the technical knowhow fee is received for supplying the drawings. The relevant clause 5 reads as under:- "5. It is further agreed that should the LICENSEE request BAJAJ to delete any part, component or process from such CKD packs, BAJAJ will provide the LICENSEE as part of Engineering Services a set of drawings for such parts/components and characteristics of materials to be used in the manufactur....
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..../- was claimed as a deduction by relying on the decision of the Hon'ble Supreme Court in the case of Alembic Chemicals Works Co. Ltd. v. CIT [177 ITR 377]. In this regard, assessee submitted that the assembly line for two-wheeler models are always dedicated lines i.e. single model lines. However, the assessee has developed many more models in view of increasing competition, and it would be too expensive to have dedicated lines for each model, a new line for motor cycles under the concept of multi model assembly line was to be developed. In this regard, the assessee utilized the services of M/s. Kawasaki Heavy Industries Ltd., Japan to understand the effect of multi model assembly line. It was contended that the expenditure was incurred to achieve efficiency in operations and accordingly, is an allowable expenditure. However, Assessing Officer not accepted the contention of the assessee. He observed that once an expenditure has been incurred for obtaining know-how, the same amounts to a capital expenditure. Therefore, the sum of Rs..17,70,92,101/- is accordingly added back to the total income. He is of the view that depreciation on the said amount is allowable to the assessee. 61....
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.... reason for arriving at such conclusion. The Assessing Officer, however, allowed depreciation on such expenditure. 4. On appeal before the CIT(A), the appellate authority noted that the expenditure was incurred for technology which was used for improvement in the existing plant and machinery. The Hon'ble CIT(A) considered such expenditure incurred to be an intangible asset as the company has received know-how and accordingly upheld the action of the Assessing Officer. In this connection, we wish to submit as under 5. The company is an Indian company engaged in the business of development, manufacturing and distribution of (a) Two wheelers, and (b) parts thereof. The company sells its products in India as well as in various other global markets. The company manufactures various models of Two wheelers. For the captioned year, the company had a dedicated assembly line for each model. Given that the company has to cater to diverse market conditions and had several automotive models in place, it was not feasible to have dedicated assembly line for each model. The company as part of its on-going business availed expert services from Mis. Kawasaki Heavy Indu....
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....clined towards the inference that the right pertained more to the use of the know-how than to its exclusive acquisition. The further circumstance that the agreement pertained to a product already in the line of the assessee's established business and not to a new product indicated that what was stipulated was an improvement in the operations of the existing business and its e ciency and profitability not removed from the area of the day-to-day business of the assessee's established enterprise. The once for all payment test was also inconclusive. What was relevant was the purpose of the outlay and its intended object and, considered in a commonsens way having regard to the business realities. In a given case, the test of 'enduring benefit might break down. In the result, the assessee was held to be entitled to the deduction of the amount paid by it to the foreign firm, the same being revenue expenditure. 8. Further, reliance is also placed on the decision of the Hon'ble Bombay High Court in the case of Bombay Burmah Trading Corpn. Ltd (2017) 250 Taxman 436 (Bom). Facts of the case: The company was engaged in business of ma....
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...., the Tribunal had rejected the claim for deduction of this very amount on the ground that the liability was not incurred in that year. Hence it was argued that the deduction be allowed in the assessment year in question. The Tribunal, on consideration of rival contentions, came to the conclusion that the technology had been supplied and which technology would enable the assessee to update and improve upon its process of manufacturing laminates. It is in these circumstances that the Tribunal concluded that in this age of vast advancing technology, it is di cult to hold that the technology acquired by the assessee would be enduring. No new asset is required by the assessee. It is in these circumstances that it allowed the deduction as revenue expenditure. [Para 19] This finding of fact cannot be interfered further appellate jurisdiction. Mere so, when it is not vitiated as pointed above. [Para 21] The facts of the case before your Honours is similar to the case before the Hon'ble Bombay High Court. The said expenditure has been incurred to update and improve the existing process of manufacturing automobiles which is similar to the finding in the case before the....
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....Industries Limited, Japan. This shows that assessee has acquired a new method of process which can accommodate multi model assembly line for manufacturing various models in the same line. This upgradation of manufacturing process which was not available with the assessee. Therefore, this is a new processing technique which assessee has acquired by paying considerable amount. The assessee has relied on several case law to put forth the argument that mere upgradation of process will not lead to any enduring benefit or does not create any capital assets. 65. On a careful consideration, we are of the view, the case law relied by the assessee are distinguishable to the facts in the present case. What is relevant is whether the new process acquired by the assessee will have an enduring benefit and whether this new process falls within the definition of Know-how. As per the definition given under section 35AB the Know-how means any industrial information or technique likely to assist in the manufacture or processing of goods or in the working of a mine, oil well or other sources of mineral deposits. From the above definition it is very clear that any industrial information or technique....
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.... were incurred for improving the efficiency of the organization and all the said expenses are of a revenue nature, the same should be allowed as deduction while computing the total income. The assessee also relied on the case of Bombay Burmah Trading Corporation Ltd. v. CIT (145 ITR 793) and CIT v. General Insurance Corporation of India (254 ITR 203). 69. After considering the submissions of the assessee, Ld. CIT(A) sustained the additions made by the Assessing Officer by observing that the expenditure had been incurred not for introduction of any capital but for the purpose of reduction of share capital, by relying on the decision of CIT v. Sakthi Finance [256 ITR 488 (Mad)] that the expenditure incurred after the commencement of business for increase in share capital is not to be allowed under section 35D. By relying on the above said logic and keeping in view the circumstances he held that basically the expenditure has been incurred for the benefit of the shareholders and not for the benefit of the company. 70. Aggrieved, assessee preferred appeal before us and filed the present grounds of appeal. 71. At the time of hearing, Ld. AR submitted that assessee has incurred t....