TMI Blog1990 (5) TMI 99X X X X Extracts X X X X X X X X Extracts X X X X ..... 90' by M/s. Charles H. Kline Co. Inc., 330 Passaic Avenue, Fairfield, New Jersey 07006, U.S.A. is an authoritative book on the entire caustic-chlorine industry worldover--the latest development on the technology uses, market etc. It is stated that acquiring this book would help the assessee to be abreast of the latest developments in this industry. The cost of the book is US $ 5,500.00 (equivalent to Rs. 56,771). 3. During the accounting year ended on 31-3-1984 relevant for the assessment year under consideration, the assessee purchased the above book (WORLD CHLOR ALKALI OUTLOOK 1980-1990). The permission for remittance in foreign currency of US $ 5,500, being the cost of the above book, was also granted to the assessee by Reserve Bank of India, as per their letter dated 30th October, 1983. The book is available in 5 Volumes. The survey, conducted worldwide and completed in April 1982, required over six man-years of professional effort by a team of six marketing research specialists on the Kline staff and by two associated organizations. It analyses the technical, envirommental, and commercial trends affecting the industry and forecasts supply and demand to 1985 to 1990. Altern ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by this assessment and went in appeal to the Commissioner of Income-tax (Appeals). 6. The Commissioner (Appeals) after considering the submissions of the assessee, held as under : "This book is a storehouse of information in the field of activity of the assessee. It also gives various technological process used in the industry in various countries. It has been admitted before me that this book gives international information necessary for carrying out day-to-day business activity of the assessee. It is, therefore, clear that the book is a plant in the assessee's business. Therefore, this plant will be entitled to depreciation at the general rate available to plant and machinery. The cost of the book has to be capitalised and therefore disallowed as a capital expenditure." Accordingly, the Commissioner (Appeals) directed the Income-tax Officer to add the cost of book as capital expenditure and allow depreciation on the same at the general rate as available to the plant and machinery, and dismissed the appeal of the assessee. 7. The assessee is in second appeal before the Tribunal. According to the assessee, the Commissioner of Income-tax (Appeals) ought to have allowed the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... intended object and effect considered in a common-sense way having regard to the business realities. 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 be disallowable on an application of this test. So according to him, the order of the Commissioner of Income-tax (Appeals) should be upheld. 9. On a careful consideration of the rival submission of the parties to the dispute, we hold that the cost of the book The World Chloralkali Outlook 1980-1990 is a revenue expenditure and is an allowable deduction under section 37 of the Income-tax Act, 1961. The assessee purchased the book with a view to acquire know-how technology in consultancy. In this case, the assessee has established a leading consultancy engineering firm even prior to the purchase of the book and offering technology consultancy service to various industries. The assessee has filed a copy of the profit and loss account for the year ended 31st March, 1984. The Professional Consultancy charges paid is shown at Rs. 1,12,305 and the Service Charges received is shown at Rs. 3,40,000. The assessee has claime ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... last not more than a few years, since by that time new technology in the field of the business of the assessee may be discovered and the market study may well become outdated. It is also not in every case that an expenditure in respect of addition of enduring nature is capital because there can be special circumstances leading to the opposite conclusion as pointed out in the observations of Viscount Cave in British Insulated Helsby Cable Ltd.'s case, approved of by the Supreme Court. The question whether the expenditure is capital or not depends upon the facts of each case. There is no absolute test for the demarcation of the expenditure of revenue and of capital. 11. In the case of Alembic Chemical Works Co. Ltd., relied on by the assessee, it is held that-- "In the infinite variety of situational diversities in which the concept of what is capital expenditure and what is revenue arises, it is well nigh impossible to formulate any general rule, even in the generality of cases, sufficiently accurate and reasonably comprehensive, to draw any clear line of demarcation. However, some broad and general tests have been suggested from time to time to ascertain on which side of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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