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2015 (7) TMI 483

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..... venue and not capital. In the case on hand, a careful reading of the order of the Tribunal and the facts as narrated it is clear that there is absolutely no justification for the Department to hold that there was a new line of business on which there occurred a loss. The parameters enunciated in the decision in Suhrid Geigy Ltd. Case (1995 (12) TMI 25 - GUJARAT High Court ) is squarely attracted to the facts of the present case, justifying the loss of the assessee as a business loss, as admittedly, the assessee is in the business of marketing bulk drugs, formulations, etc., and one of its ventures has ended in a loss and that loss is attributable to business and it cannot be deemed to be a new enterprise and a capital expenditure. Thus t .....

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..... r the head 'market research'. The said expenditure was disallowed by the Assessing Officer, which resulted in the filing of the appeal by the assessee before the Commissioner of Income Tax (Appeals). The Commissioner of Income Tax (Appeals) accepting the contention of the assessee allowed the appeal holding that since the assessee had already in the business of supply of LPG Cylinders, the marketing research expenses for extending into new territories could be treated as revenue expenditure. Aggrieved by the same, the Revenue preferred an appeal before the Tribunal and the Tribunal dismissed the same, thereby confirmed the order of the Commissioner of Income Tax (Appeals.) As against the said order of the Tribunal, the Revenue is be .....

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..... $, it agreed to supply the assessee a pilot plant, the technical information, know-how and written description of Meiji's process for fermentation of penicillin with a flow sheet of the process in the pilot plant and to arrange for the training of the appellant's representatives in various plants in Japan at the assessee's expense and advise the assessee in large scale manufacture for a period of two years. The assessee was to get technical know-how confidentially and secretly and not to seek any patent for the process. The assessee's claim for deduction of the sum paid to the Japanese company as revenue expenditure was disallowed by the Department holding that the expenses were capital in nature, for the purpose of setti .....

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..... bove discussion is that where expenses are incurred in areas which supplement the existing business and is not a fresh or new venture and agreement of acquiring technical know-how pertain to product already in the line of the established business which was intended to improve the operations of the existing business, its efficiency and profitability from the area of day-to-day business of the appellant's established enterprise's expenses be treated as revenue and not capital. On the other hand, if the technical know-how is acquired for the purpose of establishing altogether a new or fresh venture, launching of a new enterprise, the same expenditure may be treated as capital and not revenue. In such cases the test of enduring benefit .....

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