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2014 (5) TMI 75 - AT - Income TaxRevenue loss or capital loss - Loss on account of assignment of debt - Nature of sum advanced - Letting or leasing out of premises - Whether the sum advanced by the assessee was toward a fixed or capital asset of its business or a current asset – Held that:- Letting would only involve placing the property in possession of another for a defined (specified) period and user for a charge, and nothing more - to even suggest that in giving a property on rent, there is a change of its masters, or that, therefore, the property becomes a circulating capital of its owner, and no longer a capital asset, is ludicrous – Relying upon CIT vs. Khimline Pumps Ltd. [2002 (9) TMI 94 - BOMBAY High Court] - the payment of lease premium as toward the capital cost thereof, i.e., a capital expenditure. The argument that the loss not on its write off is irrecoverable, but on its transfer to another would be to no effect, as it would not alter the character of the loss incurred, which would continue to be in the capital field - it is not known if the original agreement contains a right to transfer the sub-lease, which would need consent of the principal leaseholder as well, and for all we know the arrangement sought to be entered into may have failed for that reason - there is no assignment deed, bearing reference to the relevant clause of the agreement (or the proposed agreement), i.e., where-under the advance was made - as far as the assessee is concerned, the advance was made to acquire a capital asset - If anything, it puts the assessee's claim of the loss as a revenue loss on an even weaker footing – thus, there is no infirmity in the Revenue's action in disallowing the loss as a capital loss, and not a loss arising to the assessee in the ordinary course of and in carrying out its business - the loss as only on capital account and not on revenue account – thus, it was rightly disallowed in computing the assessee's business income u/s 28 of the Act – Decided against Assessee.
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