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2017 (1) TMI 956 - AT - Income TaxTreatment to consultancy expenditure - capital expenditure or revenue expenditure - Held that:- The expenditure on development of new product in the line of business being carried out by the assessee is an expenditure related to such business and benefit to the assessee is in the revenue field, inasmuch as it seeks to improve the profitability of the assessee and the enduring benefit cannot be regarded to be in the capital field. The parity of reasoning laid down by the Hon’ble Apex Court in the case of Empire Jute Co Ltd (1980 (5) TMI 1 - SUPREME Court), as extracted above, clearly supports the stand of the assessee, inasmuch as the expenditure in question merely results in development of new products by the assessee in its existing line of business. Even otherwise, it is noteworthy that none of the expenditures in question are of capital nature and in fact, the expenditure which has been referred to by us in the earlier paragraph clearly are such expenditure, which are incurred in the course of carrying on of business. - Decided in favour of assessee Disallowance of one-third of directors’ foreign travel and conveyance expenses - Held that:- The details were furnished by the assessee company before the AO. In Seshasayee Brothers Ltd. vs. CIT (1960 (3) TMI 50 - MADRAS HIGH COURT) and Cooper Engineering Ltd. vs. CIT (1981 (3) TMI 49 - BOMBAY High Court) it has been held that where the details are not furnished by the assessee, the claim can be disallowed on the ground that the assessee had not established that the amount in question was expenditure laid out wholly and exclusively for the purposes of the business. If the object of the undertaken tour is commercial in nature, the expenditure would qualify for deduction. We find that the disallowance made by the AO of the directors’ expenses is bereft of sound reasoning. Therefore, the disallowance made by the AO is deleted.- Decided in favour of assessee
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