TMI Blog2013 (12) TMI 716X X X X Extracts X X X X X X X X Extracts X X X X ..... in its books of account and computation of income claiming it as revenue expenditure - Following Asahi India Safety Glass Limited [2011 (11) TMI 2 - DELHI HIGH COURT] - The expenditure which is incurred, which enables the profit making structure to work more efficiently leaving the source of the profit making structure untouched is an expense in the nature of revenue expenditure - The expenditure under consideration incurred by the appellant for expansion of the existing line of business or for maintenance and operation of the already established stores is an allowable deduction under section 37 - Decided against Revenue. - I.T.A. No.5759/Mum/2012 - - - Dated:- 27-11-2013 - Shri B. R. Mittal,(JM) And Sanjay Arora (AM),JJ. For the Appellant : Shri Sanjeev Jain For the Respondent : Shri Farrokh V. Irani ORDER Per B. R. Mittal, JM: The department has filed this appeal for assessment year 2008-09 against order of ld. CIT(A) dated 21.6.2012. 2. Though the grounds of appeal taken by assessee is not correctly worded, the only issue involves in this appeal is as to whether on the facts and in the circumstances of the case and in law, ld. CIT(A) has erred in deleting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied on by assessee constitutes one individual business as all the activities of the company are directly operated and managed by its Board of Directors or its employees. The administration of the assessee is centralized and the major policies are framed at the central level. Hence, there exists inter-connection, inter-lacking, inter- dependence, common management, common business organization, common fund, common administration and common central place of business; e) That the assessee has incurred operational and maintenance expenses towards salary, electricity, audit fees and likes. For expansion of the existing line of business or for maintenance and operation of the already established operations. f) That where the expenses are directly identifiable with the operation and maintenance of the existing operations, the same have been expensed out during the year and where the expenses are not directly identifiable with the operations and maintenance of the existing stores, the same has been transferred to the "Project development expenditure" pending capitalization. That what is being reflected by assessee, in the books of account, "Project Development Expenditure" and not capi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is allowable u/s 37 of the Act. It was stated that once the assessee has started its business, expenditure incurred on employees and expenditures for planning and execution of various logistic solution are in respect of expansion of the existing line of business and therefore, the same is the expenditure incurred in connection therewith. Hence, the same is revenue expenditure. It was also contended that from the details of the expenses claimed as revenue expenses, it can be observed that the amount had been spent towards various sub-heads like salary, wages, general and administrative charges etc. All Such expenses are in the nature of general overheads and incapable of giving rise to any capital assets in the capital field. By incurring those expenses, the assessee has not acquired ownership of any assets or benefit of enduring nature which creates a new source of income. The expenses merely facilitated management in conduct of assessee's business and allowed it to run its business more efficiently. Ld. CIT(A) after considering the submissions of the assessee vide paras 3.9 to 3.12 has held that disallowance of claim of expenditure by the AO of the "Project Development Expenditu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wages of these employees. The appellant has in this regard, furnished the breakup of the Project Development Expenditure' as well as a list of all the employees along- with their designation and job specification giving details of salaries and wages paid to them. From these details it is evident that the expenses incurred are purely of revenue nature. 3.11 In the case of Asahi India safety glass limited (supra), Hon'ble Delhi High Court has held that 'what is required to be seen is not whether the advantage obtained lasts forever but whether the expense incurred does away with a recurring expense (s) defrayed towards running a business as against an expense undertaken for the benefit of the business as a whole. In other words, the expenditure which is incurred, which enables the profit making structure to work more efficiently leaving the source of the profit making structure untouched, would in our view be an expense in the nature of revenue expenditure. Fine tuning business operations to enable the management to run its business effectively, efficiently and profitably; leaving the fixed assets untouched would be an expenditure in the nature of revenue expenditure even though t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her the Assessee is entitled to a particular deduction or not will depend on the provisions of law relating thereto and not on the view which the Assessee might take of his own rights; nor can the existence or absence of entries in his books of account be decisive or conclusive in the matter. The Tribunal held that when the expenditure is incurred for the purpose of expansion of business which is already in existence and which is in the nature of revenue then the same is allowable as revenue expenses in respect of the treatment given by the assessee to such expenditure in its books of accounts. The Tribunal also placed reliance on the decision of the Hon'ble High Court of Bombay in the case of CIT vs. Kothari Auto Parts Manufacturers Pvt. Ltd. (109 ITR 333) and the decision of decision of Hon'ble Gujarat High Court in the case of CIT vs. Alembic Glass Industries Ltd. (103 ITR 715). In the case of Kothari Auto Parts Manufacturers Pvt. Ltd.(supra), the jurisdictional High Court has held that assessee company had started selling auto parts and incurred certain expenditure in relation to activity of manufacturing of auto parts. Noting from the Memorandum of Association it was observed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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