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2014 (12) TMI 926 - AT - Income TaxExpenses incurred in connection with extension of existing business at Greater Noida – Capital or revenue expenses allowable u/s 37(1)/36(1)(iii) - Held that:- As decided in assessee’s own case, it has been held that if it is expansion of the same line of business, the expense incurred on obtaining the borrowed funds should be allowed as revenue expenditure - there was no finding regarding the nature of the project being undertaken at Noida - the detail shows only expenditure on acquisition of land and building construction - assessee had itself capitalized the borrowing cost in the preceding as well as current year and only after 12.12.2001 when the project was deferred/suspended, that the assessee has claimed the borrowing cost to be allowable as revenue expenses as per the AS-16 of the Institute of Chartered Accountants of India. The reliance upon A.S. 16 by the assessee is on the premise that the case comes under ‘Suspension of Capitalization” - the matter is remitted back for the issue of allowability of interest expenditure to the file of AO - since there is no finding of the authorities below regarding nature of the project being undertaken by the assessee at Greater Noida, therefore, the issue of suspension of capitalisation also needs examination of facts at the end of AO – Decided in favour of assessee. Advances given during the course of business in earlier years, written off during the year disallowed – Held that:- A proposal of Reconfiguration of IT Set up for the assessee company has been put up by Shri Abir Basak to Mr. Dinesh Chandna with a bottom line that the commercial term for the same has been negotiated to ₹ 5 lacs with M/s IBM Global Services - the assessee has claimed bad debts of ₹ 5 lakh paid to M/s Trivoli Management, ₹ 1,25,000 to M/s IBM Global Services and ₹ 2,10,000 to M/s IBM Global Services & Excel Computer totalling to ₹ 8,35,000/- as per scope of work, certain devices, systems were proposed to be installed for the purpose of reconfiguration of IT set up of the assessee - the amounts were advanced for purchase of capital assets and as decided in Tulip Star Hotels Limited. Versus Additional Commissioner Of Income-tax, Special Range - 1, New Delhi [2007 (6) TMI 238 - ITAT DELHI-D] - advance given for purchase of capital assets are not allowable as bad debts/business loss – thus, the order of the CIT(A) is upheld – Decided against assessee.
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