TMI Blog2011 (2) TMI 143X X X X Extracts X X X X X X X X Extracts X X X X ..... im of bad debts - the cheque which was issued by the party was dishonoured and it was recorded that the amount was not recoverable by the assessee - claim of bad debts allowed. - Appeal of revenue dismissed. - 777 of 2010 - - - Dated:- 7-2-2011 - MR. JUSTICE ADARSH KUMAR GOEL, MR. JUSTICE AJAY KUMAR MITTAL, JJ. Ms. Urvashi Dhugga, Senior Standing Counsel for the appellant-Revenue. AJAY KUMAR MITTAL, J. This appeal under Section 260A of the Income-Tax Act, 1961 (for short the Act ) has been filed by the Revenue against the order dated 5.3.2010, passed by the Income Tax Appellate Tribunal Delhi Bench, Delhi Bench H , New Delhi (in short the Tribunal ) in ITA No. 4380/Del/2009, relating to the assessment year 2006-07. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e obligation to file details both before the A.O. the CIT(A) that the conditions of Section 36(1)(vii)/36(2) were satisfied? The facts, in brief, necessary for adjudication as narrated in the appeal, are that the respondent-assessee is engaged in the manufacturing of felts which are used in paper industry. The assessee filed return on 28.11.2006, declaring taxable income of Rs. 17,48,86,985/-. The assessment was finalised under Section 143(3) of the Act at an income of Rs. 17,77,07,220/-. It was found by the assessing officer that the assessee had mentioned a sum of Rs. 40,38,892/- under the head Building Repair Expenses . Out of this, expenditure of Rs. 24,33,772/- was held to be of capital nature and, therefore, 10% depreciation w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich are: (A) Disallowance of Rs. 21,90,435/- on account of repair of road etc. 7. We have considered the rival submissions. Looking to the nature of business and volume of operation, the assessee is maintaining huge premises for its manufacturing process. The road which was uneven within the factory premises, is required to be evened out for the smooth operation and functioning. However, by laying down such stones, the assessee merely facilitates the carrying on the existing business more efficiently but did not acquire any new building or road. The road was existing in the premises but due to the fact that the same was not conducive to use it in a way, it is desired that the road within the factory and department was required to be b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th Kota Stone or brick with brick. Even if the floor was not covered with any object but is covered with laying stone or brick on the same, still the road remains the road and do not bring into existence any capital asset. We, therefore, hold the expenses to be revenue in nature. (B) Expenditure incurred by the assessee on Software 11. We have considered the rival submissions. The issue before us is, whether the expenses are capital or revenue expenditure and not whether how short period the expenses are allowed to be amortized. From the details filed we find that a sum of Rs. 3 lakh was incurred in relation to change of software to suit the new requirement due to change in taxation or other procedural changes. The software is cus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Del); and (2) IT vs. Morgan Securities Credits P. Ltd. 292 ITR 339 (Del). Since the amount has been written off in the accounts as bad debt and since debt pertains to the sales made earlier, conditions of section 36(1(vii) as well as Section 36(2) are fulfilled and hence, the claim of bad debt of Rs.3,79,802/- is allowance as such. We, therefore, delete the disallowance in respect of bad debts claimed. A perusal of the aforesaid finding clearly shows that the assessee had incurred expenses on account of repair of road in its factory premises and said expenses had not been incurred for acquiring a new building or the road. It was further recorded that the road was existing in the premises and since the same was not conducive ..... X X X X Extracts X X X X X X X X Extracts X X X X
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