Expenditure incurred by assessee company towards joint venture was capital in nature and was part of cost of improvement and, therefore, same was to be disallowed. Tribunal held that expenditure incurred by assessee company on travelling related with mergers and acquisitions of entities engaged in similar business, was to be treated as capital expenditure and as part of cost of improvement. Tribunal held that consultancy fees as capital in nature however staff cost as revenue expenditure. (AY. 2005-06)
Mahindra & Mahindra Ltd. v. ACIT (2020) 184 ITD 621 (Mum.)(Trib.)
S. 37(1) : Business expenditure-Capital or revenue-Expenditure towards joint venture-Held to be capital in nature-Travel expenses-mergers and acquisitions of entities engaged in similar business-Held to be capital in nature-Consultancy fees-For developing new range of tractors and also upgradation of existing range of tractors, said expenditure was to be treated as capital in nature-Staff cost revenue nature.