TMI Blog1993 (8) TMI 51X X X X Extracts X X X X X X X X Extracts X X X X ..... was the subject-matter of two appeals before the Appellate Tribunal, both by the assessee and also by the Revenue. The Tribunal passed a consolidated order in the said two appeals dated August 1, 1986. While considering the appeals, the Appellate Tribunal allowed a sum of Rs. 1,132 as a permissible deduction in computing the agricultural income of the assessee. The said sum represented expenses incurred in connection with sales tax appeals. Aggrieved by the said portion of the common order, the Revenue moved the Tribunal for referring a question of law and the following question (question No. 1) has been referred to this court, at the instance of the Revenue : " (1) Whether, on the facts and in the circumstances of the case, the Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e an admissible deduction. Counsel for the assessee brought to our notice a few Bench decisions of this court. They are Commr. of Agrl. I. T. v. Kartikulam and Alathur Estates [1968] 169 ITR 386 ; Commr. of Agrl. I. T. v. Malabar Industries Co. Ltd. [1988] 169 ITR 390 (Appex.) ; Commr. of Agrl. I. T. v. Emerald Valley Estates Ltd. [1988] 169 ITR 392 (Appex.) ; Commr. of Agrl. I. T. v. Kartikulam and Alathur Estates Ltd. [1988] 169 ITR 393 (Appex.) and Commr. of Agrl. I. T. v. S. Bhaskaran [1988] 169 ITR 395 (Appex.). In the above cases, it has been broadly held that the expenses incurred in filing appeals, revisions, reference applications, etc., (claimed as legal charges) are allowable deductions in computing the agricultural income under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnection with the alteration of the memorandum of association of the assessee is an allowable deduction. The Appellate Tribunal negatived the plea for allowance holding that this is a capital expenditure. We are of the view that the Appellate Tribunal has not analysed the matter and made an in-depth study into what is revenue expenditure as distinguished from capital expenditure. The latest landmark decisions of the Supreme Court in Empire jute Co. Ltd. v. CIT [1980] 124 ITR 1 ; CIT v. Associated Cement Companies Ltd. [1988] 172 ITR 257 and Alembic Chemical Works Co. Ltd. v. CIT [1989] 177 ITR 377 have laid down the law on the point. This Bench had occasion to consider the matter in a recent decision in Plantation Corporation of Kerala v. C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , we are inclined to hold that the expense incurred for services in connection with the application for alteration of the memorandum of association of the company is really an expenditure incurred for carrying on the business of the company and is an integral part of the profit-earning process, and not for acquisition of an asset or a right of a permanent character. In this view, the sum of Rs. 2,020 incurred for alteration of the memorandum of association of the company is revenue expenditure. We hold so. The Appellate Tribunal was in error in taking the view that the expenses incurred in that behalf is a capital expenditure. We answer question No. 2 referred to this court in the negative- against the Revenue and in favour of the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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