M.B.SHAH, J. - (1.) AT the instance of the assessee, Shahibag Entrepreneurs Private Limited, Ahmedabad, the Income -tax Appellate Tribunal has referred the following question for our opinion : '1. Whether, on the facts and in the circumstances of the case, the foreign tour expenses to the turn of Rs. 1,61,827 were not allowable as revenue expenses? 2. Whether, on the facts and in the circumstances of the case, the weighted deduction under 35B was not allowable in respect of items totalling up to Rs. 1,21,000?'
(2.) THE aforesaid questions of law arise in the background of the following facts : In the return of income for the assessment year 1972 -73, the assessee claimed deduction of various expenses including the deduction of expenses incurred for foreign tours undertaken by the director and the employees of the assessee -company for the purpose of establishing joint venture units in countries such as Malaysia, Indonesia, Philippines, Mauritius, Nigeria, Nairobi, Kenya, etc. The Income -tax Officer disallowed the said claim and the Appellate Assistant Commissioner of Income -tax confirmed the said disallowance. Being aggrieved by the orders of the authorities below, the assessee preferred Appeal No. 220/(Ahd.) of 1977 -78, before the Income -tax Appellate Tribunal. After appreciation the evidence on record, the Tribunal disallowed the claim of the assessee for the expenses incurred for undertaking foreign tours in those cases where they were undertaken for the purpose of setting up joint venture units in the foreign countries with the collaboration of the assessee -company. This aspect is discussed by the Tribunal in detail in paragraph 5 of its judgment and order dated October 31, 1979.
(3.) THEREFORE , the question is : when the assessee has incurred expenses towards foreign tours for setting up new joint venture unit in foreign countries in collaboration with the Government or other persons, can it be said to be of revenue nature or of capital nature? The Tribunal held that the said expenditure would be of capital nature. In our view, the said finding of the Tribunal is justified on the facts and in the circumstances of the present case, because it is not dispute by the assessee that the expenses were incurred for setting up new joint venture units in the foreign countries in collaboration between the assessee -company and the Government or some other persons.;