TMI Blog2012 (6) TMI 626X X X X Extracts X X X X X X X X Extracts X X X X ..... to the capital base or gain an advantage in the capital field of the assessee - in favour of assessee. - ITTA Nos. 38 OF 1999, 46 OF 2000, R.C.No.31 OF 2000 - - - Dated:- 3-1-2012 - Madan B Lokur and Sanjay Kumar, JJ. For Appellant: Sri J V Prasad For Respondent: Sri B Ravindra Sri Venkateswara Rao Gudipati JUDGEMENT Per: Madan B Lokur, J: In these two appeals as well as referred case the following substantial question of law has arisen for consideration: "Whether on the facts and circumstances of the case, the Tribunal was justified in holding that the royalty paid by the assessee-company to M/s.Mohan Meakins Breweries was in the nature of revenue expenditure?" 2. The assessee was in the business of manufactur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t as strictly confidential all know-how and information received directly or indirectly from MMB and shall not disclose the same or permit disclosure thereof except to Artos personnel on the condition that each such personnel shall be previously bound in writing to secrecy on condition no law stringent than those assumed by Artos hereunder. vii) Artos shall manufacture the products at the plant strictly according to know-how and instructions of MMB and the sample approved by them. viii) Artos shall bottle products only under labels and bottle design and qualities approved by MMB. Artos shall sell the products only at price(s) in this behalf fixed in consultation with MMB." For use of the brand name of MMB and for the technical ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rejected by the Tribunal. 9. Under these circumstances, the Revenue has come up in an appeal before us in respect of two assessment years and a reference has been made under section 256(2) of the Act and in respect of another assessment year. 10. While disposing of the appeals in favour of the assessee, the Tribunal held [affirming the view of the Commissioner (Appeals)] that the case of the assessee is fully covered in its favour by the judgment of the Full Bench of this Court in PRAGA TOOLS LTD. 11. Having heard learned counsel for the parties, we are of the opinion that the Tribunal did not commit any error in arriving at the conclusion that it did. 12. In PRAGA TOOLS LTD. the question was more or less similar to the question ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osition that expenditure would be properly attributable to capital if it is incurred for bringing into existence an asset or advantage for the enduring benefit of the business. However, if the expenditure is made for running the business or working it with a view to produce profits, it would be a revenue expenditure. 14. Somewhat more recently, the Supreme Court in EMPIRE JUTE MILLS v. CIT (1980) 124 ITR 1 held as follows: "There may be cases where expenditure, even if incurred for obtaining advantage, of enduring benefit, may, none-the-less, be on revenue account and the test of enduring benefit may break down. It is not every advantage of enduring nature acquired by an assessee that brings the case within the principle laid down in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... than for accretion to the capital base or gain an advantage in the capital field of the assessee. 16. In view of the above, there can hardly be any doubt that the expenditure incurred is revenue in nature and not capital in nature. 17. We may also recall that for the assessment years 1980-81 to 1982-83 the Assessing Officer had himself come to the conclusion that the payment of royalty made by the assessee was in the nature of revenue expenditure and this view was not revised or sought to be revised by the Commissioner under section 263 of the Act. 18. Under the circumstances, the question of law is answered in the affirmative, in favour of the assessee and against the Revenue. 19. The appeals and reference stand disposed of accord ..... X X X X Extracts X X X X X X X X Extracts X X X X
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