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TMI Blog1972 (8) TMI 35X X X X Extracts X X X X X X X X Extracts X X X X ..... essary to set out the relevant portion of the order of the Appellate Assistant Commissioner : " 7. The next ground relates to the disallowance of a sum of Rs. 20,065 being the fare and other expenses of three technicians of Messrs. Reynolds Metal Company sent out to India for the purpose of examining the appellant's plant. These technicians have submitted very elaborate reports which I will discuss below. Sri Bagadthey argues that these expenses were incurred only to improve the existing plant and that no extension of the plant was involved. In reply to my query Sri N. L. V. Subramaniam stated that the production of the plant rose from 1,700 tons to 2,400 tons per annum as a result of the implementation of the recommendations made by the technical experts. He also stated that the recovery from the rejects increased substantially. 8. I have gone through the reports submitted by the technical experts and in particular the report of Mr. H. W. Shoemaker. He went through various aspects of the manufacturing process like extraction, calcination and recovery of cryolite, etc., and has made recommendations for the substantial increase of the production as well as for the economic running ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we have no doubt that the entire expenditure of Rs. 20,065 must be considered as having been laid out wholly and exclusively for the purpose of business and allowable under section 10(2)(xv). " After an application had been made, the Tribunal has referred the following question under section 66(1) of the Indian Income-tax Act, 1922 : " Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the expenditure incurred by the assessee amounting to Rs. 20,065 on account of the travelling and other expenses of the three technicians of Messrs. Reynolds Metal Company was not capital in nature and was allowable under section 10(2)(xv) of the Indian Income-tax Act, 1922, as a deduction ? " Counsel for the revenue contended that whether an expenditure resulted in bringing into existence an asset or benefit of an enduring or of a permanent nature was a mixed question of law and fact. He contended that in the facts and circumstances of the case the Tribunal was in error in holding that no benefit of an enduring character had been brought into existence as the result of the recommendations made by the technical experts of Messrs. Reynolds Metal Comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the term, is short-lived. " At page 462 of the report, du Parcq L.J. observed as follows: " It is true that the period for which the right was acquired in this case was three years and no more, and a doubt may be raised whether such a right is of 'enduring benefit' or 'of a permanent character'. These phrases, in my opinion, were introduced only for the purpose of making it clear that the 'asset' or 'right' acquired must have enough durability to justify its being treated as a capital asset. This is borne out, so far as Lord Clyde's judgments are concerned, by the fact that in Adam's case, the duration of the right acquired was eight years, and that his Lordship there spoke of its 'relaively permanent character'. 'Permanent' is indeed a relative term, and is not synonymous with 'everlasting'. In my opinion the right to trade for three years as a licensed victualler must be regarded as attaining to the dignity of a capital asset, whereas the payment made for an excise licence is no doubt properly regarded as part of the working expenses for the year. " Counsel for the revenue contended that for an asset to be of an enduring or a permanent nature, it was not necessary that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e should be judged by applying the correct legal principles from a commercial point of view. In the case of Commissioner of Income-tax v. Alembic Glass Industries Ltd., the Division Bench of the Gujarat High Court had also occasion to deal with more or less a similar case. There the assessee, a company manufacturing glassware, deputed three of its technicians to the United States of America to enable them to obtain practical training in the manufacture of heat-resisting glassware. The training was imparted by Thatcher Glass Manufacturing Co. incorporated in the U. S. A. and in connection with this practical training, the assessee-company paid a sum of Rs. 71,625 by way of fee to Thatcher Glass Manufacturing Co. and a further sum of Rs. 56,302 was spent by the assessee-company for the assessment year 1961-62 for travelling, lodging and other expenses by the employees. A further sum of Rs. 3,489 was spent in the same connection by the assessee-company so far as the assessment year 1962-63 was concerned, and the company claimed the amounts of Rs. 71,625 and Rs. 56,302 as items of revenue expenditure for the assessment year 1961-62, and the sum of Rs. 3,489 as revenue expenditure for t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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