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TMI Blog2003 (4) TMI 37X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal was right in holding that the amount of Rs. 10,000 paid to Parekh Jazal and Co., in connection with the above loan of Rs. 60 lakhs from GIIC was not allowable revenue expenditure? 4. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the amount of Rs. 14,800 paid to Ambubhai Diwanji and Co., Solicitors in connection with the above loan of Rs. 60 lakhs from GIIC was not allowable revenue expenditure? 5. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the foreign tour expenses of Rs. 39,496 and Rs. 85,411 incurred by the managing director of the company was not allowable revenue expenditure? 6. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that electric generator is not an energy saving device and, therefore, is not entitled to 100 per cent. depreciation? At the instant of the Revenue: R.A. No. 334/Ahd./1989: Whether, in law and on facts, the Appellate Tribunal is right in deleting the addition of Rs. 4,10,671 made by the Income-tax Officer invoking the provisions of section 43B of the Income-tax Act, 1961?" ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt dismissed the appeal which was filed by the Revenue against the said decision of the Andhra Pradesh High Court. It was pointed out that in the case of CIT v. Sivakami Mills Ltd. [1997] 227 ITR 465, the Supreme Court following the decision in Akkamamba Textiles Ltd.'s case [1997] 227 ITR 464 (SC) held that the guarantee commission paid to the bank was revenue expenditure and hence was an allowable deduction in computing the total income of the assessee for the relevant assessment year. In the case of Sivakami Mills Ltd. [1997] 227 ITR 465, the Supreme Court, affirmed the decision of the Madras High Court in Sivakami Mills Ltd. v. CIT [1979] 120 ITR 211. Learned counsel submitted that in view of the decision of the Supreme Court in India Cements Ltd. v. CIT [1966] 60 ITR 52, all the expenses H incurred for the purpose of raising a loan were required to be allowed as revenue expenditure. Learned counsel appearing for the Revenue, on the other hand, argued that, the expenditure of these four items was incurred for the purpose of raising a loan which was to be utilised for purchase of machinery. Since the loan amount was to be used as a capital investment the amount spent for rais ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. v. CIT [1997] 225 ITR 327, in which following the decision of this court in Vallabh Glass Works Ltd. [1982] 137 ITR 389 it was held that the payment of bank guarantee commission for purchasing machinery was capital expenditure. The decision of the Supreme Court in Punjab State Industrial Development Corporation Ltd. v. CIT [1997] 225 ITR 792, was referred to for the proposition that when an expenditure is made not only once and for all, but with a view to bringing into existence, an asset or an advantage for the enduring benefit of a trade, there is very good reason for treating such expenditure as properly attributable not to revenue but to capital. It was held that, this was, however, not a strait-jacket formula and the question will have to be determined in the backdrop of the facts of each case. The test laid down can at best be a guide for determining whether a particular expenditure forms part of revenue expenditure or capital expenditure. The question whether obtaining a loan can be regarded as an asset or advantage for enduring benefit of business of an assessee and whether the expenditure incurred in connection thereof towards the stamp duty, registration fees, lawyer' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9,496 and Rs. 85,411, incurred by the managing director of the company was not allowable as revenue expenditure. In para. 39 of its order, the Tribunal observed that according to it, no interference was called for in the order of the Commissioner of Income-tax (Appeals) inasmuch as the expenditure in question was on capital account and not on revenue account. It relied upon the ground in the memo of appeal reproduced in the said paragraph for reaching this conclusion. In the said ground, the appellant had taken up the contention that, the Commissioner of Income-tax (Appeals) had erred in disallowing these amounts which were foreign tour expenditure incurred by the managing director of the company "for the purpose of setting up a new line of production but nothing materialised and no asset is created". It would appear from the minutes of the 29th meeting of the board of directors held on February 11, 1983, a copy of which was on record that, the foreign tour expenses of Rs. 39,495.67 ps. were incurred on the foreign tour by the managing director to West Germany for the period from April 25,.1983 to May 8, 1983, in connection with discussions with Lupofresh who were going to supply ..... X X X X Extracts X X X X X X X X Extracts X X X X
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