TMI Blog1979 (1) TMI 85X X X X Extracts X X X X X X X X Extracts X X X X ..... ee for this year, the ITO noticed that the travelling expenses claimed by the company included various expenses of directors and their relations for trips to foreign countries which were in connection with acquisition and launching of new ships. In his order, the ITO observed that necessary details were not available for the expenses in the aggregate amount of Rs. 56,000. These expenses were as follows : (a) Expenses incurred by Mrs. V.J. Sheth (wife Rs. of the director) in U.K. and Continent in connection with acquisition of new ships (November 4, 1958, to December 10, 1958). 1,069 (b) Expenses of Mr. Sudhir Mulji, brother of Shri Vasant J. Sheth, director, to attend the launching of Jag Jiwan 217 (c) Expenses of Mr. T. M. Sanghav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ost which was to be recovered from the previous owners. The ITO considered that these expenses could not be allowed as a revenue expenditure and were incidental to the acquiring of the ship. The assessee carried the matter in appeal to the AAC. The AAC went through each item of expenditure claimed. In respect of three of them, viz., expenses incurred by Mrs. V. J. Sheth, in the amount of Rs. 1,069 (item (a)), expenses incurred by Sudhir Mulji, brother of Shri V. J. Sheth, in the amount of Rs. 217 (item (b)), and the expenses of Dr. and Mrs. Corlette and Mr. and Mrs. Mc'Eachaer in the amount of Rs. 2,185 (item (f)), he held that the ITO had rightly disallowed the same. However, as regards the balance of the expenses amounting to Rs. 53,03 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion only item (g), viz., expenses of Rs. 16,703, incurred by Mr. V. J. Sheth and Mr. J. J. Mulji in connection with the launching of Jag Jiwan and taking delivery of Jag Mata and Jag Doot, respectively. Mr. Sheth, who happened to be one of the directors of the assessee-company, had undertaken the foreign tour in connection with the launching of the ship M. V. Jag Jiwan. According to the AAC, the process of launching a ship was necessary before the same could actually be acquired by the company and the expenses, therefore, should be considered as capital in nature. The AAC further directed that the same should be added to the capital cost of the ship for the purpose of depreciation. A similar view was expressed regarding the expenses incurre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT v. Polychem Ltd. [1975] 98 ITR 574 (Bom), and we had based our decision on the earlier Bombay decision in Habib Hussein v. CIT [1963] 48 ITR 859 and the decision of the Andhra Pradesh High Court in CIT v. Challapalli Sugars Ltd. [1970] 77 ITR 392. From the latter decision of the Andhra Pradesh High Court an appeal was preferred to the Supreme Court and the decision of the Supreme Court is reported in Challapalli Sugars Ltd. v. CIT [1975] 98 ITR 167. In Polychem Ltd.'s case [1975] 98 ITR 574 (Bom), the view has been expressed that all expenditure incurred directly or indirectly or intimately on the capital assets acquired by the assessee-company would be required to be included in the term " actual cost " of the asset. It was further ob ..... X X X X Extracts X X X X X X X X Extracts X X X X
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