TMI Blog1998 (6) TMI 101X X X X Extracts X X X X X X X X Extracts X X X X ..... 4" brick work pillar, front side cement jally fixing with both sides plaster and finishing work". According to the AO this makes it evident that the new wall has been constructed and the expenditure has to be capitalised because as a result of this expenditure new asset of enduring nature has come into existence. Likewise, an amount of Rs. 30,000 is incurred towards carpeting on ground and preparing road with silcot. According to him this is also for new asset of enduring nature. He, therefore, disallowed Rs. 97,950 aggregating of these two amounts and opined that this is not a case of current repairs. 4. The learned CIT(A) confirmed the opinion of the AO. 5. The learned counsel for the assessee submitted that the facts of the case have not been properly appreciated by the AO or the CIT(A). The assessee is carrying on business of manufacturing diamond cutting tools and the said factory is situated at GIDC Industrial Estate, Umergaon, for over a period of ten years. Old compound wall had to be repaired since it was badly damaged on account of adjacent nallah overflowing during the monsoon. Similarly, Rs. 30,000 was paid on resurfacing and carpeting approach road which had fall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... can be considered under s. 37 of the Act. The decision cited by the learned Departmental Representative is in respect of current repair and not in respect of an expenditure in the parlance of s. 37 of the Act. One of the reasons given by the AO in disallowing the expenditure is that by this expenditure, the assessee obtained enduring nature and therefore it cannot be of revenue nature. In this respect we may refer to the decision of the Supreme Court in the case of Empire Jute Co. Ltd. vs. CIT (1980) 17 CTR (SC) 113 : (1980) 124 ITR 1 (SC), where it has been held that there may be cases where expenditure, even if incurred for obtaining an advantage of enduring benefit, may, nonetheless, be on revenue account and the test of enduring benefit may break down. If the advantage consists merely in facilitating the assessee's trading operations or enabling the management and conduct of the assessee's business to be carried on more efficiently or more profitably while leaving the fixed capital untouched, the expenditure would be on revenue account, even though the advantage may endure for an indefinite future. The test of enduring benefit is, therefore, not a certain or conclusive test an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payment was to be made against delivery the assessee approached Cholamandalam Investment Finance Co. Ltd. for finance available to the extent of 80 per cent. The company agreed for car lease and certain terms and conditions were agreed between the parties. The lease agreement, dt. 14th May, 1990, was entered into and the transaction of sale and lease-back was entered into. The lease rent amounting to Rs. 92,160 was actually paid by the assessee and other incidental expenses on stamp duty, etc. was also incurred for Rs. 9,600. On receipt of the car it was transferred to said company as per the lease agreement. The original car owner is not related to any of the partners of the assessee-firm. Similarly the assessee and its partners are not interested in the finance company or the car dealers. Only with a view to seek finance the assessee had entered into this transaction similar to many such transactions in vogue on a very large scale in India in view of globalisation, liberal import policy, rapid expansion of industry business and commerce, etc. could not have been viewed prejudicially as has been done by the authorities below. The learned counsel for the assessee relied on the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee's claim of Rs. 92,160 the lease-rent paid to the lessor company along with the incidental expenses of stamp duty, etc. This ground is allowed. 13. The next ground is in respect of bad debt. The AO observed that this represents mainly on account of Jyoti Diamonds and a copy of its accounts reveals that an amount of Rs. 20,849 is shown as a closing balance as on 31st March, 1990, as also the opening balance as on 1st April, 1990. In view of this the debt cannot be said to have been written off in the books of accounts during the year under consideration. Thus the prima facie condition of deduction of bad debt that an amount had been written off in the accounts is totally absent. No evidence is laid to establish that the debt was Rs. 4,726 in respect of L. M. Van. It was claimed that due to weak financial position the amount could not be recovered and hence written off. According to the AO mere writing off the debt as bad debt does not in itself make the debt admissible as deduction. In respect of balance of Rs. 49,002 no details worth-the-name nor the copies of other accounts have been furnished and as such the entire claim for bad debt was not accepted. 14. Before t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 20,849 has not been written off and secondly for Rs. 49,002 no details worth-the-name nor the copies of other accounts have been furnished. 17. We have considered the rival submissions, facts and materials on record. We feel that the issue should be restored back to the file of the AO in view of the fact that in respect of Rs. 49,002 he mentions that no details worth-the-name had been filed before him. The above words are therefore qualified. What are the details filed he had not mentioned. However, in respect of Rs. 4,726 we are of the opinion that the assessee should get relief on this point in view of the amended provisions and in view of the decision cited by the assessee's counsel. This ground is partly allowed for statistical purposes. 18. The next ground relates to disallowance of Rs. 20,000 on account of sales promotion. The AO observed that the assessee had claimed an amount of Rs. 1,73,628 under the head "sales promotion expenses". He observed that details furnished in this regard revealed that these expenses related to distribution of presentation articles, cost of which was less than Rs. 50. No evidence was led to establish that these presentation articles wer ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
