COMMISSIONER OF INCOME TAX Vs. BELAPUR COMPANY LIMITED

JUDGEMENT

(1.) THIS is a reference under S. 256(1) of the IT Act, 1961, made at the instance of the Revenue. It poses the following two questions:

(2.) COUNSEL are agreed that the first question must be answered in the affirmative and in favour of the assessee in view of the judgment of this Court in CIT vs. Shree Changdeo Sugar Mills Ltd. (1982) 31 CTR (Bom) 114 : (1983) 143 ITR 469 (Bom).

(3.) BEFORE us, Mr. Jetly, learned counsel for the Revenue, referred to the words of the Tribunal that the tours had been undertaken "for the purchase of capital asset as also for the study of diffuser, working". He submitted that if the capital asset which was purchased was a diffuser the correctness of the order could not be disputed, but it appeared that the capital asset which had been purchased was not a diffuser in which case no depreciation or development rebate could be allowed on that extent of the expenditure which related to the study of the working of the diffuser. The capital asset which was purchased was a diffuser and this is clear from a reference to the question and the order of the AAC for the asst. year 1968 69. The entire expenditure on foreign tours was, therefore, incurred in connection with the purchase of a capital asset, which was the diffuser. The Tribunal was, therefore, right in upholding the direction of the AAC to capitalise the expenditure on the foreign tours for the purposes of depreciation and development rebate and to allow the same on such figure as the ITO arrived at.