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2017 (3) TMI 1922 - AT - Income TaxNature of expenditure - revenue or capital expenditure - expenditure on account of payment for compensation as per exclusive data supply agreement for compensating the 2/3rd cost at WDV for the PMS meters becoming obsolete and consequently holding cost of severance of personal of ORG redundant consequent to PMS technology becoming obsolete - HELD THAT:- We are of the view that it has not acquired any asset by paying the aforesaid amounts to ORG for the cost of write off of PMS as the PMS meters were rendered obsolete and as a part of the arrangement for supply of data to INTAM the payment had to be made. In fact, the PMS meters remained with ORG and not acquired by INTAM and not used by INTAM as the Picture Matching Technology became obsolete. Any payment made for writing off the PMS meters borne by INTAM was of revenue nature as no asset was acquired by it. Similarly, the compensation paid to ORG for the severance of the personnel engaged in collecting data by PMS technology was also of revenue in nature, as no asset was acquired by the assessee on payment of such amount. If the expenditure did not result in the acquisition of any asset or advantage of enduring benefit, such expenditure cannot be considered as capital in nature and the same is necessarily of revenue in nature. What is material to consider is the nature of the advantage in a commercial sense and it is only where the advantage is in the capital field that the expenditure would he disallowable on an application of this test. If the advantage consists merely in facilitating the assessee's trading operations or enabling the management and conduct of the assessee's business to be carried on more efficiently or more profitably while leaving the fixed capital untouched, the expenditure would be on revenue account, even though the advantage may endure for an indefinite future. The test of enduring benefit is. therefore, not a certain or conclusive test and it cannot be applied blindly and mechanically without regard to the particular facts and circumstances of a given case. This issue of the assessee’s appeal is allowed.
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