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2008 (6) TMI 616 - MADRAS HIGH COURTClaim made on amount towards professional fees for assessment of market attractiveness of business - Claimed deduction u/s 36(1)(iii). Claim made on amount towards professional fees for assessment of market attractiveness of business - gaining global market, reputise on dealing with global markets, evaluation of business ability to compete, analysis of business’s future growth trend, development detailed business strategies to grow in the dynamic business environment - revenue or capital Expenditure ? - Whether the Tribunal was right in law in deleting the addition in respect of payments made to M/s. McKinsey & Co., management consultant and the same should be allowed as revenue expenditure is valid in law? - Expenditure incurred as interest paid on capital borrowed - AO added the entire interest to the cost of the fixed asset by rejecting the claim of the assessee that the expenditure is revenue in nature. HELD THAT:- It is well-settled that it is not only permissible, but is also necessary for any business to update its own knowledge and adopt better ways of organising its business, if it is to survive in the market. The expenditure incurred for such purpose cannot be regarded as capital expenditure and it is only a revenue expenditure. The fees paid to the consultant was disallowed by the revenue officials as capital expenditure on the premise that the benefits derived from such consultancies would enure to the future years also. According to the ld counsel for the assessee, this question of law is covered against the revenue by the decision of this Court in the case of CIT v. Crompton Engineering Co. Ltd.[1998 (6) TMI 23 - MADRAS HIGH COURT] - Hence, the first question of law is covered against the assessee (sic - revenue). Claimed deduction u/s 36(1)(iii) - Whether the Tribunal was right in law in deleting the addition made towards interest paid on borrowed capital is valid? - HELD THAT:- Assessee borrowed money for the expansion project and claimed deduction u/s 36(1)(iii). In respect of the AY 1994-95 in assessee’s own case, the issue has been decided in favour of the assessee by a Division Bench of this Court in the case of Carborandum Universal Ltd.[2006 (2) TMI 649 - MADRAS HIGH COURT]. This factum has also been brought to the knowledge of the Court by the learned counsel for the assessee. Therefore, the appeals are dismissed as the questions of law raised in the present appeals are covered against the revenue.
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