TMI Blog2010 (1) TMI 869X X X X Extracts X X X X X X X X Extracts X X X X ..... o section 43B with effect from assessment year 2002- 2003. - For the assessment year 1998-99, the ratio of the Hon'ble Supreme Court judgment will apply with full force. - ITA No. 2523/Mum/2005, ITA No. 3078/Mum/2005 - - - Dated:- 13-1-2010 - R.S. Syal, Asha Vijayaraghavan, JJ. S.K. Pahwa (CIT-DR) for the Appellant B.K. Khare for the Respondent ORDER R.S. Syal: These two cross appeals - one by the Revenue and the other by the assessee - arise out of the order passed by the Commissioner of Income-tax (Appeals) on 31.1.2005 in relation to the assessment year 1998-99. 2. The first part of ground no.1 of assessee's appeal about the sustenance of addition of Rs.1,77,470 towards amortization of premium on leasehold land was not pressed by the learned A.R. The same, therefore, stands dismissed. 3. The second part of ground no.1 is against the upholding of addition of Rs.22,99,076 towards capital advances written off. Briefly stated the facts of this ground are that the assessee wrote off the said amount in its profit and loss account by claiming it as business expenditure or loss incidental to carrying on of business. On the perusal of the detail of such amount it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... el Co. Ltd. (supra) is not applicable on the ground that in that case the assessee discarded the plants after claiming obsolescence allowance. The facts of that case are nowhere near to the instant case in which the dispute is about the loss suffered by the assessee on capital account. Neither the amount can be allowed as deduction u/s.36(1)(vii) nor u/s.37(1). In the same manner it cannot be considered as a revenue loss u/s.28. We, therefore, approve the view taken by the learned CIT(A) on this issue and dismiss ground no.1(2) of the assessee's appeal. 6. Ground no.2 of the assessee's appeal is against the confirmation of addition of Rs.8,93,56,131 towards technical service fees paid to various parties. At the very outset the learned Counsel for the assessee contended that similar disallowance was made by the authorities below in the immediately preceding year and the Tribunal vide its order in ITA No.7845/Mum/2004 for assessment year 1997-98 has accepted the assessee's claim on this issue vide its order dated 29th October, 2009, a copy of which was placed on record. The learned Departmental Representative fairly conceded that the facts and circumstances of this ground are mutat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . This ground is not allowed. 10. The last ground of the assessee's appeal is against the claim for deduction of prior period expenses of Rs.26,32,268. The facts of this ground are that the assessee did not raise any claim for this amount during the course of assessment proceedings. However, additional ground was raised before the learned CIT(A) as is evident from the assessee's letter to CIT(A) dated 10.8.2004, copy placed at page 233 of the paper book, which is reproduced as under:- "The learned Additional Commissioner of Income-tax (Addl.CIT) ought to have allowed deduction for the expenses aggregating to Rs.26,32,368 (Annexure I) in determining the assessed income for Assessment Year 1998-99, while disallowing those expenses in the assessments of A.Y. 2000-01 as Prior period expenses'. The Appellant prays that the Addl.CIT be directed to allow deduction of Rs.26,32,268 in the assessment of A.Y. 1998-99 by passing the necessary orders." 11. The learned CIT(A) did not adjudicate upon this ground. The learned Departmental Representative candidly accepted that there was no finding in the impugned order on such ground. In the given circumstances we direct the Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cussed in the assessment order. He, therefore, directed the Assessing Officer to verify these details and allow the deduction. From the facts narrated above it is clear that the learned CIT(A) has directed the Assessing Officer to verify the assessee's claim in this regard and then allow the permissible deduction as per law. We are, therefore, of the considered opinion that there is no infirmity in directing the Assessing Officer to conduct verification of the assessee's claim in this regard, which ought to have been made by the AO on his own, when the issue was raised before him. This ground is not allowed. 15. Ground no.4 is against the deletion of disallowance of Rs.8,89,323 towards old balances written off. The Assessing Officer disallowed the claim of the assessee on the ground that the conditions of section 36(2) were not fulfilled. The learned CIT(A) following the decision taken by him in assessment year 1997-98 directed the Assessing Officer to allow deduction in write off of balances. The learned Counsel for the assessee contended that the department had not preferred any appeal on this issue in the immediately preceding year. 16. After considering the rival submission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n. The total compensation paid by the assessee was claimed as deduction u/s.37(1) of the Act. The Assessing Officer made the addition. However, the learned CIT(A) concurred with the submissions advanced on behalf of the assessee and deleted the said addition. 20. After considering the rival submissions and perusing the relevant material on record it is noted that the said payment was made by the assessee to its employees who opted to get discharged from duty on payment of a particular sum. By no standard such amount can be considered as a capital expenditure. The learned CIT(A) has rightly relied on the judgments in the case of Indian Cable co. Ltd. vs. Their workmen (1972) AIR SC 2195, CIT vs. Ashok Leyland Ltd. 86 ITR 549 and Empire Jute Co. Ltd. vs. CIT 124 ITR 1 (SC). In the light of the above judicial pronouncements by the highest court of the land, we are of the considered opinion that the learned CIT(A) has rightly dealt with this issue in deleting the disallowance. This ground is not allowed. 21. The only other ground which survives for our consideration is against the deletion of addition on account of capital gain on sale of land and building. The facts apropos this g ..... X X X X Extracts X X X X X X X X Extracts X X X X
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