TMI Blog1961 (4) TMI 105X X X X Extracts X X X X X X X X Extracts X X X X ..... ng new companies can constitute admissible deductions either under section 10(2)(xv) or under section 10(2)(xi) of the Act? The assessee company had as one of its objects promotion of new companies and obtaining the managing agency of the companies so promoted. The claim of the assessee was that it incurred preliminary expenditure to promote a cement company to be known as Arcot Cement Co., and in the three years of account in question expended large sums to explore possibilities for successfully launching that contemplated cement company. Eventually the cement company was never formed. The moneys had been spent by the assessee. The assessee claimed these sums as lawful admissible deductions in computing its profits in the relevant ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter the character of the expenditure when the money was expended. If, however, the assessee expended the moneys with the expectation, even if there was no specific contract with anyone, of recovering those moneys, the position would obviously be different. If, for example, the assessee had produced evidence that in the past when it had incurred such preliminary expenses for promoting a company it got back the amount so expended from the companies as they were formed, the assessee could claim that they were expenses incurred by it in the normal course of conducting its own business, part of which was promoting new companies. But there was no such evidence in this case. We are referring to this aspect independent of the position whether the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ejected. The second question was: Whether, on the facts and in the circumstances of this case, the sums of ₹ 95,860, ₹ 2,835 and ₹ 3,143, spent by the assessee in improving the guest house during the previous years for the assessment years 1948-49, 1949-50 and 1950-51 respectively can be allowed as a proper deduction in computing the profits assessable to income-tax under section 10(2) of the Act? Obviously, the claim was considered under section 10(2)(ii) of the Act. No doubt, the assessee expended the moneys on two buildings of which he was a tenant. Having taken the buildings on lease, the assessee expended moneys to make them fit for use as guest house to accommodate the guests of the assessee company a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the question whether the expenditure incurred by the assessee in this case was expenditure on current repairs or was expenditure in effecting improvements which was of a capital nature. It is for the assessee to prove that he was entitled to the deduction under section 10(2)(ii), and once again we have to point out that the material the assessee placed before the Tribunal was not enough to sustain that claim either in whole or in part. Learned counsel suggested that a further investigation and a further statement of the case might be called for; but unless the assessee could satisfy us that material was placed before the Tribunal on which the Tribunal could have found that at least a part of the claim was well founded there can be no just ..... X X X X Extracts X X X X X X X X Extracts X X X X
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