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2016 (2) TMI 518 - PUNJAB AND HARYANA HIGH COURT

2016 (2) TMI 518 - PUNJAB AND HARYANA HIGH COURT - TMI - Expenditure incurred on procurement of research reports - revenue v/s capital expenditure - Held that:- The expenditure incurred in respect of same business is allowable as revenue expenditure, even if it is for expansion of the business. In the instant case here too admittedly the expenditure even as per the revenue is for expansion of business and therefore such expenditure on research reports obtained in the course is revenue expenditur .....

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in ITA No.5223/DEL/2014 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 ₹ 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 a .....

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rvices to diverse sectors across the globe. Return declaring income of ₹ 91,67,000/- was filed by the assessee online on 26.9.2009 which was processed under section 143(1) of the Act. The case was selected for scrutiny. Notice under Section 143(2) of the Act was issued to the assessee. Assessment was completed under section 143(3) of the Act at an income of ₹ 1,80,85,330/-. Addition of ₹ 88,85,332/- was made by treating huge expenditure incurred on acquiring research reports fr .....

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sset in the form of research reports about the market which will result in advantage of enduring nature for the benefit of the business of the assessee in subsequent years. Aggrieved by the order, the assessee filed appeal before the Commissioner of Income Tax (Appeals) [CIT(A)]. 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 .....

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to be revenue in nature. Admittedly, the assessee is engaged in the business of providing advisory services. It incurred expenditure of ₹ 1,01,54,665/- for obtaining research reports. According to the Assessing Officer, huge expenditure on acquiring research reports was incurred and the same was held to be expenditure of capital nature on acquisition of intangible assets. Since the expenditure had been treated as capital expenditure, depreciation at the rate prescribed for the intangible a .....

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ya Road Show Limited's case (supra) holding that expenditure incurred for carrying out technical and financial feasibility is revenue expenditure even if the assessee drops the said project. After considering the overall facts and circumstances of the case, the Tribunal held that the expenditure was for expansion of business and therefore such expenditure on research reports obtained in the course of advisory services was revenue expenditure. The mere fact that part of the expenditure was in .....

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al 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 commodity viz. special alloy wire and billets. Debentures were issued for raising funds for this new steel unit and the assessee incurred expenditure for issuing of debentures. The question was whether the expenditure incur .....

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ng that all the assessee's bid was to start manufacturing a new commodity. In the larger sense, the business of the assessee remained the same viz. the business of manufacture. The assessee was already manufacturing diverse items and a new item was added to this business. The Tribunal had found that there was complete unity of control and that there was a common fund which was most material for testing whether the business was the same. In considering whether the two businesses run by an ass .....

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