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2022 (7) TMI 334 - HC - Income TaxNature of expenditure - ISO Certification expenditure - revenue or capital expenditure - HELD THAT:- Upon appreciation of material brought on record vis-a-vis the findings of the CIT(A) as regards treating the ISO Certification expenditure as ‘Revenue expenditure’ is concerned, we are in complete agreement with the said findings of the CIT(A). The Supreme Court in catena of decisions has laid down the guidelines in the nature of test for determination of the actual nature of the expenditure wherein it is observed that the test for determination of nature of expenditure has to be considered in light of the fact that if the advantage received on incurring expense facilities relates to the carrying on of the business more efficiently and more profitably leaving the fixed capital untouch, then such expenditure has to be treated as ‘revenue’ in nature. We agree with the view of ITAT that the CIT(A) was justified in treating the entire amount as revenue in nature. We find that making of payments towards obtaining ISO Certificate in no manner touches the fixed capital of the company though it may create a positive image for particular product of the assessee company which may ultimately smooth the conduct of the business of the assessee company. However, the same in no manner actually adds to any gain in the fixed capital of the company. Subsidy receipt - Nature of receipts - subsidy was received by the assessee company under capital ASIDE Scheme - HELD THAT:- On bare perusal of the content of the aforesaid letter, it reflects that such subsidy was given towards administrative expenses incurred by the assessee company during the execution of project for upgradation of infrastructure facilities. The CIT(A) has rightly arrived at finding that the administrative expense being incurred for expansion of the infrastructure facility falls in the category of ‘capital’ in nature and has therefore, rightly deleted the addition of an amount of Rs.3.87 crore made by the Assessing Officer. We could note that the ITAT has examined the components of sanctioned subsidy and has thereafter arrived at a finding that the same has been rightly treated as capital subsidy by CIT(A). Thus, the findings recorded by the ITAT cannot be termed as perverse or dehors the record, which calls for our interference. So far as reference to Explanation – 1 of Section 43 of the Act is concerned, we find no error of law is committed by the ITAT as well as the CIT(A), while deleting the addition of an amount of Rs.3.87 crore by treating the same under the capital subsidy. In view of the above, concurrent findings recorded by the CIT(Appeals) and by the ITAT, the question of law raised by the department does not deserve any further consideration. The said question also being no more res-integra, it could not be said that the present appeal involves any question much less substantial question of law. It may be noted that the Appeal under section 260A of the Act, could be admitted only on the High Court being satisfied that the case involves a substantial question of law. - Appeal of revenue dismissed.
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