TMI Blog2021 (5) TMI 144X X X X Extracts X X X X X X X X Extracts X X X X ..... if disbursement is made for acquisition of a source of profit or income, it would ordinarily be in the nature of capital expenditure. The source of profit or income was the profit making apparatus and this remained untouched and unaltered. There was no enlargement of the permanent structure of which the income would be the produce or fruit. When dealing with cases where the question is whether expenditure incurred by an assesses is capital or revenue expenditure, the question must be viewed in the larger context of business necessity or expediency. If the outgoing expenditure is so related to the carrying on or the conduct of the business that it may be regarded as an internal part of the profit- earning process and not for acquisition of an asset or a right of a permanent character. The possession of which is a condition of the carrying on of the business, the expenditure may be regarded as revenue expenditure. Relying on the above propositions considered by the Hon ble Supreme Court in the case of M/ s Empire Jute Company Ltd. [ 1980 (5) TMI 1 - SUPREME COURT ] we hold that the ld. CIT (A) has rightly allowed the deduction. Long Term Capital Gains - AO doubted the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an entity namely, M/ s Corus Building System Ltd. for availing the services of structural design drawings. 4. The ld. CIT (A) deleted the addition holding that the expenditure on account of drawings do not give any enduring benefit to the assessee. 5. Before us, the counsels relied on the respective supportive orders. 6. From the records, we find that the amount has been paid by the assessee to M/ s Corus to prepare a detail lay out, drawing of the ceiling for which the assessee was the executor. The payment was made for designing and detailing services for roofing system in respect of T3 terminal at IGAI, Delhi for which DIAL is the concessionaire. The amount has been paid for obtaining technical support, drawings designs. The designs are specific to the Airport and cannot be replicated for any other structure or industrial establishment other than the RGAI. The assessee has not obtained any capital asset by the way of payment made to M/s Corus for designs. 7. The tests for determination: (a) The test of enduring benefit as laid down in British Insulated and Helsby Cables Ltd. v. Atherton, 10 Tax Cases 155. Even this test must yield were there are special ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emained untouched and unaltered. There was no enlargement of the permanent structure of which the income would be the produce or fruit. When dealing with cases where the question is whether expenditure incurred by an assesses is capital or revenue expenditure, the question must be viewed in the larger context of business necessity or expediency. If the outgoing expenditure is so related to the carrying on or the conduct of the business that it may be regarded as an internal part of the profit- earning process and not for acquisition of an asset or a right of a permanent character. The possession of which is a condition of the carrying on of the business, the expenditure may be regarded as revenue expenditure. 8. Relying on the above propositions considered by the Hon ble Supreme Court in the case of M/ s Empire Jute Company Ltd. 124 ITR 1, we hold that the ld. CIT (A) has rightly allowed the deduction. Long Term Capital Gains: 9. In the instant case, the AO doubted the sale value of the flat sold by the assessee and referred the matter to the DVO to determine the share market value. The DVO determined the value of ₹ 2,06,46,000 /- against the sale value show ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adopted or assessed [or assessable] by the stamp valuation authority under sub- section (1) exceeds the fair market value of the property as on the date of transfer; (b) the value so adopted or assessed [or assessable] by the stamp valuation authority under sub- section (1) has not been disputed in any appeal or revision or no reference has been made before any other authority, court or the High Court, the Assessing Officer may refer the valuation of the capital asset to a Valuation Officer and where any such reference is made, the provisions of sub- sections (2), (3), (4), (5) and (6) of section 16A, clause (i) of sub-section (1) and sub- sections (6) and (7) of section 23A, sub- section (5) of section 24, section 34 AA, section 35 and section 37 of the Wealth- tax Act, 1957 (27 of 1957), shall, with necessary modifications, apply in relation to such reference as they apply in relation to a reference made by the Assessing Officer under sub-section (1) of section 16 A of that Act. [Explanation 1].-For the purposes of this section, Valuation Officer shall have the same meaning as in clause (r) of section 2 of the Wealth- tax Act, 1957 (27 of 1957). [Explanatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... les would not have been in good condition which prompted Mr. Nanda to transfer those vehicles to the assesses company at the same cost and in the same year thereby shifting the loss if any, is to be arisen on account of bad condition of the vehicle'. The submissions of the appellant was that in view of the restriction on registration of 6 seater vehicles in the name of a company other than the one engaged in transport business, due to the provisions of the Motor Vehicle Act, the appellant was compelled to purchase the vehicles in the name of the Director, which was sold to the appellant on the second day by him. I find that the observations of the Ld. AO are vague and presumptuous in the absence of any evidence in support of his argument. Both Mr. Arvind Nanda and appellant company are chargeable to tax at the maximum marginal rate. Hence, there was no question of any tax avoidance in this regard. Thus, it is held that the payment made was neither unreasonable nor excessive, calling for disallowance under section 40 A(2)(b). 6.4.2 Regarding disallowance out of purchase price paid to M/s Intertec, a related Firm, the appellant had furnished detailed submissions which show ..... X X X X Extracts X X X X X X X X Extracts X X X X
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