TMI Blog1984 (6) TMI 31X X X X Extracts X X X X X X X X Extracts X X X X ..... umstances of the case, the Tribunal erred in law in holding that the amount of Rs. 93,100 expended by the assessee in the purchase of know-how relating to the existing line of business was capital in nature ? " The facts giving rise to this reference as per the statement of facts furnished by the Tribunal are as under: The assessee is a company engaged in the manufacture of densified impregnated and laminated wood products and boards and components. The assessment year concerned is the assessment year 1975-76, the previous year being the year ended September 30, 1974. The assessee had during the relevant year incurred an expenditure of Rs. 1,73,935 by way of repairs and maintenance of buildings which they had purchased by a registered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e ITO for the assessment year 1975-76, he disallowed both these items of expenditure. On an appeal filed by the assessee, the Commissioner of Income-tax (Appeals) confirmed the disallowance of both these items. Against the said decision of the Commissioner of Income-tax (Appeals), the assessee filed second appeal before the Tribunal before which it was contended that the expenditure on repairs was revenue expenditure being in the nature of current repairs. The Tribunal allowed the expenditure of Rs. 2,050 on replacement of A.C. sheets and Rs. 7,801 out of labour charges. In other words, the sums of Rs. 34,234, Rs. 52,200 and out of labour charges a sum of Rs. 4,000 were disallowed as of capital nature and the Tribunal rounded off the amou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 141 ITR 745 (Mad), CIT v. Ciba of India Ltd. [1968] 69 ITR 692 (SC), Kanpur Dyeing Printing Co. v. CIT [1970] 75 ITR 686 (All), CIT v. Sri Rama Sugar Mills Ltd. [1952] 21 ITR 191 (Mad) and CIT v. Kalyanji .Mavji Co. [1980] 122 ITR 49 (SC). On the other hand, on this point, the learned counsel for the Revenue placed reliance on the decisions reported in Ratlam Bone Mills v. CIT[1984] 147 ITR 148 (MP) and Gulamhussein Ebrahim Matcheswalla v. CIT [1974] 97 ITR 24 (Bom), and contended that as the expenditure incurred by the petitioner is for an enduring benefit, the same has been rightly treated by the Tribunal to be capital expenditure. The Supreme Court in the decision in L. H. Sugar Factory and Oil Mills (P.) Ltd. v. CIT[1980] 125 IT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs has to be treated as revenue expenditure and not capital expenditure. As regards the amount of Rs. 93,100 expended by the assessee in the purchase of " know-how " relating to the existing line of business, the case law on this point is now, quite clear according to which it has been held by several decisions mentioned below that it has to be treated as a revenue expenditure and not a capital expenditure: CIT v. Wheels India Ltd. [1983] 141 ITR 745 (Mad), ACC Vickers Babcock Ltd. v. CIT [1976] 103 ITR 321 (Bom), Agarwal Hardware Works P. Ltd. v. CIT[1980] 121 ITR 510 (Cal), CIT v. Oblum Electrical Industries P. Ltd. [1981] 127 ITR 409 (AP), Shriram Refrigeration Industries Ltd. v. CIT [1981] 127 ITR 746 (Delhi), Indian Telephone Industr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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