TMI Blog2012 (10) TMI 574X X X X Extracts X X X X X X X X Extracts X X X X ..... be treated as only revenue expenditure and not as capital expenditure - in favour of assessee. - Tax Case (Appeal) No.2146 of 2006 - - - Dated:- 1-10-2012 - MRS. CHITRA VENKATARAMAN AND MR. K. RAVICHANDRABAABU JJ. For appellant : Mr. R. Vijayaraghavan For respondent : Mr. Arun Kurian Joseph Standing Counsel for Income Tax JUDGMENT (Judgment of the Court was delivered by K.RAVICHANDRABAABU, J.) The assessee is on appeal in respect of the assessment year 1996-97. The following are the substantial questions of law raised for consideration at the time of admission of this Tax Case Appeal: 1. Whether the Tribunal was right in law in holding that expenditure incurred towards consultancy charges is capital in nature? 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see, claiming that the expenditure was revenue in nature. On the other hand, the Assessing Authority rejected the said claim, holding that the said expenditure was in the capital field and consequently, not entitled for deduction. Aggrieved by the same, the assessee went on appeal before the First Appellate Authority. 4. The First Appellate Authority concurred with the Assessing Authority and rejected the claim of the assessee for deduction of the expenses on consultancy charges. The assessee filed further appeal before the Tribunal, which remitted the matter to the First Appellate Authority with a direction to decide the issue afresh by seeing as to whether the assessee derived any enduring benefit by incurring such expenditure. Challeng ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in, it was observed that 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, the expenditure would be revenue in nature, even though the advantage may endure for an indefinite future. 7. Likewise, in another decision of the Apex Court reported in [1989] 177 ITR 377 (Alembic Chemical Works Co. Ltd.), it was held that the consistent guiding principles in matters of understanding an expenditure as capital or revenue in nature, is to find out the aim and object of the expenditure and the commercial necessities of making such an expenditure. These two decisions of the Apex Court were, in fact, f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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