JUDGMENT judgment of court was delivered by S. Ravindra Bhat J.-The Revenue is aggrieved by impugned order of Income-tax Appellate Tribunal ("the ITAT") dated September 6, 2013, in I. T. A. No. 4454/Del/2010. assessee had claimed sum of Rs. 7,03,95,000 as pre-capitalisation expenses towards expansion of its business. This was disallowed by Assessing Officer ("the AO") as well as Commissioner of Income-tax (Appeals) concurrently. Revenue urges that Income-tax Appellate Tribunal's decision, reversing view of lower authorities is contrary to law. Briefly facts are that assessee engages itself in manufacturing of nylon tyre cord fabrics, packaging film, fluorochemicals, chloromethane and refrigerant gases. During year in question, i.e., 2005-06, it sought to expand its business in polyester films at Indore, pharma chemical business at Bhiwadi and industrial fabrics business at Trichy. Towards these, it claimed expenses to tune of Rs. 7,03,95,000 as pre-capitalisation costs. Revenue treated this as properly falling in capital side and disallowed expenditure. At same time, Revenue also permitted allowable depreciation. Commissioner of Income-tax (Appeals) confirmed findings of Assessing Officer. Income-tax Appellate Tribunal, after considering existing business and expansion sought to be urged by assessee in support of its claim, that pre-capitalisation expenditure is really revenue in nature, held that there was element of interlacing and intermingling of funds between new or expanding venture and existing venture, and, consequently, expenses had to be treated as falling on revenue side. Learned counsel for Revenue urges that Income-tax Appellate Tribunal plainly proceeded on erroneous premise and did not properly appreciate decision of Supreme Court in Challapalli Sugars Ltd. v. CIT [1975] 98 ITR 167 (SC). He also urged that setting up of entirely new line of business cannot be treated as expansion of existing business and relied upon judgment of this court in CIT v. Food Specialities Ltd. [1982] 136 ITR 203 (Delhi) and CIT v. J. M. A. Industries Ltd. [1981] 129 ITR 373 (Delhi). He also relied upon decisions of other High Courts. Learned counsel for assessee, on other hand, relied upon judgment in Jay Engineering Works Ltd. v. CIT [2009] 311 ITR 405 (Delhi) to say that seemingly diverse and disparate lines of business can yet be treated as part of same business provided certain important parameters are kept in mind that both should have common management and that funds used for purposes of existing business as well as new entity should be common. Applying these tests, urged learned counsel, assessee was squarely covered by ruling in Jay Engineering (supra). In Jay Engineering (supra), Division Bench of this court relied upon large number of previous judgments, including judgments of this court and held as follows (page 410 of 311 ITR): "Finally, in Veecumsees v. CIT [1996] 220 ITR 185 (SC), assessee ran jewellery business and then commenced business in exhibition of cinematographic films. assessee obtained loans for building cinema theatre and question was whether interest payable on loans borrowed for new business was revenue expenditure or not. While answering question in favour of assessee, Supreme Court found that two businesses were composite in sense that there was interconnection, interlacing or interdependence between jewellery business and cinema business. On appreciation of law laid down by various decisions referred to above, it is clear that nature of new business is not decisive test for determining whether or not there is expansion of existing business. nature of business could be as distinct as jewellery business and business of cinematographic films; it could be as different as manufacture of metal alloys and manufacture of rubber products. What is of importance is that control of both ventures, existing venture as well as new venture, must be in hands of one establishment or management or administration. place of business of existing business and new business may not be in close proximity-it could be as far apart as Baroda and Bangalore. However, funds utilised for management of both concerns must be common as reflected in balance-sheet of company. In other words, there may be several permutations and combinations that may arise for determining whether expenditure is revenue or capital and each case must, of course, be dealt with on broad principles that have been accepted by courts as are mentioned above. Applying these principles to present case, it is quite clear to us that control over two units is in hands of same management and administration. There is no doubt on this score and in fact, annual report of assessee, which has been shown to us by learned counsel, makes reference to project at Hyderabad. There can be no dispute from facts that have been placed before us on record that new venture was managed from common funds and there is necessary unity of control leading to interconnection, interdependence and interlacing of two ventures such that it can be said that fuel injection equipment project is only extension of existing business of assessee and, therefore, expenditure incurred by assessee on this project is revenue expenditure." This court notices that in Jay Engineering (supra) itself, Challapalli's (supra) holding was noticed and at same time distinguished in light of previous ruling in India Cements Ltd. v. CIT [1966] 60 ITR 52 (SC). important point of distinction noted by court in Jay Engineering (supra), to say that Challapalli (supra) was inapplicable, was that in that case assessee had borrowed considerable sums of money for installation of plant and machinery, and interest was sought to be loaded on cost of plant and machinery. Assessing Officer had rejected assessee's claim and held that interest was important part of revenue expenditure and no depreciation could be claimed as was done in that case. assessee's contention in that respect was accepted by Supreme Court. As would appear from Jay Engineering (supra), previous rulings were cited and properly dealt with. Jay Engineering (supra), has affirmed basis of decision of Income-tax Appellate Tribunal impugned in this case. We are, therefore, of opinion that no substantial question of law arises for consideration. appeal is, accordingly, dismissed. *** Commissioner of Income-tax v. SRF Ltd