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11. We now propose to consider the cases cited at the bar. Counsel for the assessee relied upon the decision of the Andhra Pradesh High Court in Commissioner of Income-tax v. 5. Krishna Rao [1970] 76 ITR 664 (AP), the decision of the Allahabad High Court in Security Printers of India (P.) Ltd. v. Commissioner of Income-tax [1970] 78 ITR 766 (All) and the decision of the Gujarat High Court in the case of Commissioner of Income-tax v. Saurashtra Cement & Chemical Industries Ltd, [1973] 91 ITR 176 (Guj). The facts of the Andhra Pradesh decision in Commissioner of Income-tax v. 5. Krishna Rao [1970] 76 ITR 664 (AP) were these. The assessee was the owner of a printing press and attended the International Printers Conference at Amsterdam, representing the Andhra Pradesh Printers Association. Besides attending the conference at Amsterdam, he visited various countries in Europe and utilised his time, for studying various types of printing and machinery. The assessee claimed deduction of a sum of Rs. 7,160 which he had incurred on foreign tour, on the ground that the tour was actuated by business considerations and that it had helped him to get acquainted with development in printing equipment and techniques. The claim was disallowed by the Income-tax Officer on the ground that the assessee had gone as a delegate of the association, though the association was not willing to contribute the expenditure, and that the benefit he drew out of his trip was only incidental. The Appellate Assistant Commissioner allowed a part of the expenditure and disallowed the remaining part on the ground that it was incurred purely for his personal visit. The Tribunal upheld the order of the Appellate Assistant Commissioner. The Andhra Pradesh High Court took the view that inasmuch as the assessee had incurred an expenditure in keeping himself abreast with the latest techniques of his business, and modern development made in printing machines, and to gain experience with a view to improve his own business, the assessee should be deemed to have incurred the expenditure for the purposes of Ms-own business, although, incidentally, he had benefited the other members of the association also. In Security Printers of India (P.) Ltd. v. Commissioner of Income-tax [1970] 78 ITR 766 (All), the assessee-company had been incorporated on the 6th April, 1957, with a view to execute jobs of security printing such as printing of cheques, drafts, fixed deposit receipts and like papers for Indian, banks. The printing of these forms was never before done in India in printing presses. The managing director of a press in India conceived the idea of executing these printing jobs in India, in collaboration with a London company, and; accordingly, he entered into an agreement with the London company to float a private company in India. The assessee-company was as such incorporated in India. It was agreed that a representative of the London company would be appointed a director of the assessee-company to look after the security printing. One Mr. H was appointed as the director for representing the London company, and Mr. M.C.K. was the director of the assessee-company representing the Indian group of shareholders. In the assessment for the assessment year 1958-59, the assessee-company claimed deduction of a sum of Rs. 70,437 being the total of, (1) travelling expenses of Mr. H to explore possibilities of business with Indian banks, (2) travelling expenses incurred by Mr. M.C.K. for procuring import licence of fugitive papers, (3) travelling expenses of Mr. H to collect details of actual orders and quantity to be supplied and expenditure for joining the company as a director, and (4) expenses incurred by Mr. M.C.K. for a trip to England to study techniques of security printing, director's remuneration, and rent of fiat. These claims were disallowed by the Income-tax Officer on the ground that these were pre-incorporation expenses of the company and were of a capital nature. The Appellate Assistant Commissioner held that the expenses were all of a revenue nature, and they had been incurred by the promoters of the assessee-company in connection with business which was subsequently taken over by the company on its incorporation and were allowable as business expenditure. The Tribunal found that before the assessee-company was incorporated, its promoters had not only made preliminary arrangements for obtaining orders for security printing, but they had also actually commenced trading operations, and that, inasmuch as receipts resulting from these transactions which had taken place before the incorporation of the assessee-company had been included in its first assessment for the year 1958-59, the revenue expenses attributable to those receipts should also be allowed in that assessment. The Tribunal held, however, that a part of the sum of Rs. 23,549 incurred by Mr. H as travelling expenses and also a part of Rs. 15,455 spent by Mr. M.C.K. in connection with his trip to England should be regarded as capital in nature, as the assessee-company derived, more or less, an enduring benefit thereby. The Tribunal estimated the amount at Rs. 20,000 and, while setting aside the order of the Appellate Assistant Commissioner, directed that the disallowance should be restricted to this amount in place of Rs. 70,437 disallowed by the Income-tax Officer. This court on reference held that the expenditure incurred by a director of the company to secure orders for the purpose of carrying on the business of the company is entirely of a revenue nature. As regards the expenses incurred by Mr. M.C.K. in connection with his trip to England to study the techniques of security printing, it held that, as it was incurred after the company had started its business, the expenditure was allowable as an expenditure incurred by a businessman or his agent in foreign tours to acquaint himself with new and modern techniques, and was a revenue expenditure. It took the view that such an expenditure was incurred only with a view to earn greater profit in a competitive market and not to acquire a new asset. Taking the same view, it allowed the expenditure incurred by Mr. H to the tune of Rs. 22,549. This court also approved of the decision of the Andhra Pradesh High Court in Commissioner of Income-tax v. S. Krishna Rao [1970] 76 ITR 664 (AP). It also held that though expenses to the tune of Rs. 23,549 had been incurred before the incorporation of the company, yet as business receipts arising out of these transactions had been entered in the accounts for the relevant years and included in its first assessment for the year 1958-59 and were assessable in the hands of the company, the expenditure incurred to earn the profits must also be allowed to the assessee. As respects the expenditure of Rs. 15,455 incurred by Mr. M.C.K, in connection with his trip to England to study the techniques of security printing, it held that there was nothing on the record to show that the study tour was to acquire knowledge of some new techniques in security printing. It found that at that time jobs in security printing were not executed by any printers in India, and the purpose of the visit was to learn methods of security printing which were then in vogue in England. It as such held that it could not be said that Mr. M.C.K. came back with the knowledge of new methods of security printing which enured to the permanent and enduring benefit of the company. Following an unreported decision of the Bombay High Court in the case of Chemical Industries and Pharmaceutical Laboratories Ltd. v. Commissioner of income-tax (ITR No. 14 of 1951 decided by the Bombay High Court on 31-8-1951), where the test laid down was that in such cases one has to find out whether the expenditure was a part of the process of profiting, it held that the expenditure incurred was a business expenditure. The view of the Tribunal that it was an expenditure to bring into existence a new asset was not accepted. In the case of Commissioner of Income-tax v. Saurashtra Cement & Chemical Industries Lid. [1973] 91 ITR 170 (Guj), a company was formed in 1956 for the manufacture and sale of cement. As part of its business, the assessee obtained a mining lease for quarrying limestone and started the mining operations in 1958. The expenditure was claimed by the assessee-company for sums spent on extracting limestone as also depreciation and development rebate for the machinery installed for that purpose. The Gujarat High Court held that the activities which constituted the business of the assessee were divisible into three categories. The first category consisted of the activity of extraction of limestone by quarrying the leased area of land. This activity was necessary for the purpose of acquiring raw material to be utilised in the manufacture of cement; (2) manufacture of cement by the use of the plant and machinery set up for that purpose; and (3) selling the manufactured cement. All the three activities were combined in the business of the assessee. It held that the activity of quarrying the leased area and extracting limestone from it was as much an activity in the course of carrying on the business, as the other two activities of manufacture of cement and sale of cement. The quarrying of limestone came first in point of time, and laid the foundation for the second activity and the second activity when completed laid the foundation for the third activity. Thus, the assessee commenced its business when it started the activity of extraction of limestone. As the assessee was carrying on business in 1958, when the extraction of limestone started, the expenditure incurred for extraction as also depreciation allowance and development rebate in respect of machinery employed in extracting limestone contributed to the trade profits of the assessee and were allowable.

14. Their Lordships also held that once it is found that the expenditure is made for capital outlay or for extension of business or for replacement of the equipment, then whatever the source from which it is drawn, whether it be capital or income of the concern, it is in the nature of capital expenditure.

15. We will now consider the applicability of the cases cited at the Bar to the circumstances of the present case. We have already noticed that the Tribunal has found that the dominant purpose of the visit was to arrange for the setting up of the two new factories, one for the manufacture of electrodes and another for setting up of a steel plant. On these findings, it is clear that the purpose of the business was either initiation of a new business or extension of the already existing business, and this being so, the expenditure incurred would defintely be of a capital nature as has been laid down in Assam Bengal Cement Company Ltd. v. Commissioner of Income-tax [1955] 27 ITR 34 (SC). The dicta of the Gujarat High Court in the case of Commissioner of Income-tax v. Saurashtra Cement & Chemical Indurties Ltd. [1973] 91 ITR 170 (Guj) would also apply. The cases cited by counsel for the assessee, in our view, cannot be appropriately applied to the facts of the present case. In the Andhra Pradesh case of Commissioner of Income-tax v. 5. Krishna Rao [1970] 76 ITR 664 (AP) the trip had not been undertaken for the purpose of setting up any new business or purchasing any new equipment. It had been undertaken only to help the assessee to get acquainted with various developments in printing equipment and technology. Thus, the Andhra Pradesh decision cannot be appropriately applied to the present case. In Security Printers' case [1970] 78 ITR 766 (All) the expenses of Mr. H were allowed on the ground that business receipts arising out of the transaction which he entered into were Included in the assessment year and further that the expenditure was incurred by Mr. H for procuring orders of considerable value and import licence for indent of fugitive papers for the purpose of security printing. Now, expenses incurred for securing orders would clearly be business exp"nditure, as also would be expenses incurred for obtaining import licence for indent of fugitive papers, for, in case, fugitive papers, which were a rare commodity were not available with the assessee, there would have been an impediment in carrying on its business of security printing. The expenses amounting to Rs. 15,455 incurred by Mr. M.C.K. in connection with his trip to England to study techniques, of security printing was also clearly allowable as business expenditure, as it had been incurred to learn method of security printing which would be helpful to the carrying on of the business of the assessee. It will also be noticed that, in that case, it was found that Mr. M.C.K. had not come back with the knowledge of new methods of security printing which enured to the permanent benefit of the company. Thus, the ratio of this case cannot also be appropriately applied to the case in hand. The decision of the Gujarat High Court in Commissioner of Income-tax v. Saurashtra Cement and Chemical Industries Ltd. [1973] 91 ITR 170 (Guj) is hardly to the point. In that case, the expenses incurred in quarrying limestone was held to be deductible as business expenditure, as also depreciation and development rebate for machinery installed for that purpose, as it was found that the business of the company was of manufacture of cement and sale of it. This being so, the expenditure incurred for extracting raw material for carrying on its business would obviously be business expenditure.