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2012 (7) TMI 492 - AT - Income TaxRevenue versus Capital expenditure - AO made out in the assessment order that out of the total expenditure of Rs. 32,80,058, Rs. 1,18,225 was incurred by the assessee for new hardware of the computer to be in the nature of capital - Held that:- Apart from the expenditure of Rs. 32,80,058/- the assessee has also purchased some computer, which were included in the fixed assets as clear from the Schedule C showing the fixed assets at the written down value. The parts like CD ROM Drive, Hard Disk Drive and RAM are only spares of the Central Processing Unit (CPU) of the computer and they cannot be considered as separate and independent machinery. Accordingly, replacement of the parts of the machinery is allowable expenditure. The expenditure incurred on Printer, Scanner and Web Camare cannot be said to be replacement of the spares /defective parts of the computer therefore, the expenditure of Rs. 31,250/- incurred on printer, scanner and Web Camera is capital in nature and accordingly, the addition to the extent of Rs. 31,250/- is confirmed - partly allowed in favour of assessee to the extent of the expenditure of Rs. 86,975/- as revenue expenditure u/s 37. Disallowing of repairs and maintenance expenses as “capital” in nature - out of the total expenditure of Rs. 50,35,444/- AO disallowed Rs. 1,66,423/- being capital in nature - Held that:- As regards the expenditure of Rs. 1,35,613/-, pertains to office renovation charges, the same has been incurred by the assessee to make the office premises as fit for business use of the assessee and without bringing any new capital asset into existence; therefore, the same is allowable as revenue expenditure - As regards the expenditure on split AC of Rs. 30,850/-, it is apparent that the assessee has brought into existence a new asset therefore, the same is capital in nature and only depreciation is allowable. Accordingly, we confirm the disallowance to the extent of Rs. 30,850/ towards spilt air-conditioning expenditure - partly in fvaour of assessee. Disallowance of trading loss - DR has submitted that the assessee has not even claimed trading loss in the return of income but has made a claim only during the appellate proceedings by way of a note - assessee has claimed bad debts/trading loss being non recoverable deposit given to the subsidiary company - Held that:- 0bjection raised by the ld DR that without filing the revised return the Assessing Officer has no jurisdiction to entertain a fresh claim it is to be noted that the jurisdiction of the appellate authorities is not barred as observed in the case of Goetze (India) Ltd [2006 (3) TMI 75 - SUPREME COURT] - When the assessee is holding company and both the companies are controlled by the same management then there was no such need for any deposit. Therefore, the element of commercial expediency does not exist in the case in hand - it was not a case of insolvency of the subsidiary company; but the assessee voluntarily waive off the claim; therefore, when the advance was not given either in the ordinary course of business or in connection with the business, then the loss of the same is loss of capital and is not allowable - against assessee. Since interest u/s 220(2) is consequential in nature; therefore, no specific finding is required.
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