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2010 (1) TMI 148 - HC - Income TaxAssessment under section 143(3)- Capital or revenue expenditure- The assessee filed its return of income and the assessment was completed under section 143(3) of the Income Tax Act, 1961. The assessee initially declared the total income of Rs. 40,20,690/-. In the revised return the assessee claimed a loss of Rs. 32,39,614. The principal reason for revising the return was that in the original return it could not claim expenses debited under the head “Capital work in progress” which had been duly claimed in the revised return. The Assessing officer held that in the original return the assessee had identified Rs. 72.60 lakhs for diversification and expansion of new projects and was of capital nature. The Commissioner (Appeals) held that no capital assets has been created out of these expenditures thus it is not capital nature. The Tribunal bifurcated the sum of Rs. 72,60,300, out of total expenditure on salary and wages, telephone, traveling expenses and other administrative expenses and allocated to the modification of existing products/developments of new products with the asset under the same management, with the same work force and expertise. It also observed that the revenue did not ever doubt that the expenditure was exclusively and wholly for the purpose of business. The Tribunal accepted the approach adopted by Commissioner (Appeals). Held that- findings of the Tribunal that the expenditure incurred was revenue expenditure and/or for business purpose, had not been challenged, nor was there any challenge to the finding that no capital asset come into existence. Further held that Tribunal had remanded the matter on account of bed debts write off Rs. 10,72,917 to the file of the Assessing officer with a direction to adjudicate the same afresh. Thus the issue was yet to be finally determined and whenever it was finally determined the aggrieved party would be entitled to avail of remedies in accordance with law.
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