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2016 (3) TMI 500 - AT - Income TaxAddition of expenditure towards payment of NPV - allowance u/s 37(1) - revenue v/s capital expenditure - Held that:- Considering a decision of the Hon'ble ITAT, Kolkata Bench in the case of ACIT vs M/s. Ghanashyam Mishra [2014 (1) TMI 1581 - ITAT KOLKATA] for A.Y.2005-06 and 2006-07 order dated 27.01.2014 wherein in respect of an identical payment made by an assessee engaged in the business of mining this Tribunal had allowed the deduction holding that the same as revenue expenditure. - Decided in favour of assessee Addition of amount utilized for starting a new project - Held that:- The facts of the assessee's case are identical to the decision rendered by the Hon'ble Bombay High Court in the case of CIT-5 vs M/s. Essar Oil Ltd [2008 (10) TMI 649 - BOMBAY HIGH COURT]. In the aforesaid decision the Hon'ble Bombay High Court took a view that the expenditure of a similar nature was revenue expenditure. The assessee in that case was in the business of operation of rigs for extraction of oil. The assessee explored the chances of development in the field of oil exploration for which it had to submit tenders and incur expenditure in that regard. The assessee was not a successful bidder. The expenditure in question was disallowed by the revenue by treating them as capital expenditure. The Hon'ble Bombay High Court upheld the order of Tribunal holding that the expenditure was revenue expenditure. In our view the facts of the aforesaid case are identical to the case of the assessee. - Decided in favour of assessee Addition of bad debts written off' although it does not qualify the provisions of Sections 36(2) read with Section 36(1)(vii) - Held that:- We are of the view that the amount in question was admittedly connected with the business of the assessee and the sum in question was spent by the assessee for the purpose of business. The assessee could neither get refund of the aforesaid sums nor the services for which the aforesaid payments were made. We are therefore of the view that the CIT(A) rightly treated these expenditure as one incurred for the purpose of business of the assessee and allowable as deduction u/s 37(1) of the Act. We do not find any ground to interfere in the order of CIT(A).- Decided in favour of assessee Addition on or period' expenses - Held that:- The sum of ₹ 2,00,000/- was incurred as consultation charges paid as advance in the financial year 2004-05 for implementation of ERP and in the financial year 2005-06 was implemented and advance payment adjusted as part of software expenses. The accrual of expenditure was therefore rightly shown in A.Y.2006-07 by the assessee and also a sum of ₹ 3,474/- was treated as allowable in A.Y.2006-07, when the sum in question was ultimately settled.- Decided in favour of assessee
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