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TMI Blog2016 (2) TMI 518X X X X Extracts X X X X X X X X Extracts X X X X ..... 014 for the assessment year 2009-10, claiming following substantial questions of law:- "1. Whether in the facts and circumstances of the case, the ITAT was correct in granting the relief of Rs. 88,85,332/- by treating the expenditure incurred on procurement of research reports as revenue in nature? 2. Whether in the facts and circumstances of the case, the ITAT was correct in ignoring the fact that the research reports would have enduring benefits to the business of the assessee? 3. Whether in the facts and circumstances of the case, the ITAT was correct in ignoring the fact that the assessee company wanted to extend its operations and look for means for attracting potential customers and to venture into new markets?" 2. A few facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ]. Vide order dated 21.7.2014, Annexure A.II, the CIT(A) upheld the addition made by the Assessing Officer. Still not satisfied, the assessee filed appeal before the Tribunal. Vide order dated 4.2.2015, Annexure A.III, the Tribunal allowed the appeal relying upon the decision of the Delhi High Court in CIT vs. Priya Road Show Limited, (2011) 332 ITR 594 (Del.) holding that the expenditure incurred in respect of same business is allowable as revenue expenditure even if it is for expansion of the business. Hence the instant appeal by the revenue. 3. We have heard learned counsel for the parties. 4. The dispute herein is whether the expenditure incurred by the assessee for obtaining research report was rightly held to be revenue in nature. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the nature of expenditure. Consequently the appeal was allowed. The relevant findings recorded by the Tribunal read thus:- "14. The Hon'ble Delhi High Court in the case of CIT vs. Priya Road Show Limited held that expenditure incurred for carrying out technical and financial feasibility is revenue expenditure, even if the assessee dropped the said project. In holding so, the Hon'ble High Court has held as under:- "One of the judgments on which the Tribunal based its decision is of this court i.e. CIT vs. Modi Industries Limited (No.3) (1993) 200 ITR 341. In that case the assessee company which was manufacturing various commodities like sugar, vanaspati, soap, paints and varnish, torch and lantern, started manufacturing a new c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the one hand and Modi Industries Limited (No.3) (1993) 200 ITR 341, on the other would clearly demonstrate that one has to keep in mind the essential purpose for which such an expenditure is incurred. If the expenditure is incurred for starting a new business which was not carried out by the assessee earlier, then such expenditure is held to be of capital nature. In that event it would be irrelevant as to whether project really materialized or not. However, if the expenditure incurred is in respect of the same business which is already carried on by the assessee, even if it is for the expansion of the business,namely, to start a new unit which is the same as earlier business and there is unity of control and a common fund, then such an expe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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