Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2013 (9) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2013 (9) TMI 152 - AT - Income TaxPreliminary expenditure or not - expenditure relating to acquisition of land - Capital or Revenue expenditure - Section 35D - Held that:- As per the scheme of deduction laid out under section 35D of the Act, the concerned expenditure to be eligible for deduction should qualify the alternate condition stipulated in section 35D(1) and should be one of the items of expenditure specified in section 35D(2). In the present case, evidently the expenses have been incurred after the commencement of business and therefore in order to qualify for deduction under section 35D of the Act, the expenses have to be incurred in connection with the extension of the undertaking or in connection with the setting up of a new unit. As can be seen from the detailed breakup of the expenditure in question at pages 4 to 7 of the order of assessment, these expenses are, essentially towards payment of professional fees related to acquisition of land for setting up of hospitals. As the assessee is already in the business of running hospitals, the expenditure related to setting up of new hospitals are ostensibly only for expansion of the existing business of the assessee - Decided against Revenue. Revenue Expenditure or Capital Expenditure - Expenditure on recruitment of manpower - through an agency - AO was of the view that no company would be interested in spending money on recruitment repeatedly and recruitment made through agencies is not easily terminated because a lot of screening is done at the stage of recruitment itself and as this expenditure is for a long time benefit, held it to be capital in nature. - Held that:- AO has not questioned the genuineness of the expenses or the fact of the expenditure having been incurred and appears to have disallowed the said expenses only on conjectures and suspicion, for which there is no basis, nor is his finding established by any evidence. We are therefore of the considered view that the learned CIT(Appeals) has rightly held that the expenses of Rs.23,57,487 incurred towards recruitment of manpower are attributable to the appellant's business and that recruitment is an ongoing exercise in the assessee's nature of business and therefore is allowable as a revenue expenditure. Loss on disposal of fixed assets - Without any discussion or assigning any reasons, the Assessing Officer observing that the assessee has charged an amount of Rs.39,41,007 to the profit and loss account on account of loss on disposal of fixed assets and proceeded to make the disallowance in a summary manner. The learned CIT(Appeals) has verified the issue and found that since the assessee has made no such claim for deduction in the period relevant to Assessment Year 2008-09 which is the subject-matter of this appeal, no disallowance was called for and therefore deleted the disallowance. Before us, revenue has not been able to bring on record any evidence to controvert the finding of the learned CIT(Appeals) that since no such claim for deduction of Rs.39,41,007 on account of loss on sale of fixed assets was made by the assessee in Assessment Year 2008-09, no disallowance was called for. Deduction u/s 36(1)(vii) - Held that:- Merely because this is the second year of the assessee's operations and the period between the revenue recognition and the decision to write off the debts is short, it does not automatically lead to the conclusion that the debt cannot be claimed as irrevocable, as has been wrongly presumed by the Assessing Officer. We also do not find that the Assessing Officer has disputed the transactions, constituting the debts written off, as not being genuine. The learned CIT(Appeals), on the other hand, has examined the details of these transactions and found them to be comprising of small amounts receivable from various patients who have been discharged and agreed with the claim of the assessee that the amounts totalling Rs.71,228 claimed as bad debts are to be allowed under section 36(1)(vii) of the Act, after recording the finding that the Assessing Officer has not brought on record any specific reason for making the disallowance - Amount claimed as bad debts by the assessee are allowable under section 36(1)(vii) of the Act - Decided against Revenue.
|