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TMI Blog2012 (7) TMI 492X X X X Extracts X X X X X X X X Extracts X X X X ..... as the case may, be under the relevant provisions of the Act. (d) Charging interest under section 220(2) amounting to Rs. 1,05,330/- as there was no demand outstanding, which was payable. 3. Ground 1(a) is regarding disallowance of computer expenses being capital in nature. 3.1 The Assessing Officer has noted that the assessee has debited an amount of Rs. 32,80,058/- on account of computer expenses. The assessee was asked to explain as to why the computer expenses should not be capitalised. In response, the assessee has filed the details of computer expenses. From the details filed by the assessee, the Assessing Officer found that some of the expenses are in relation to CD Rom Drive/Hard disk drive/RAM of Rs. 86,975/- and Printer/Scanner/Web Camra of Rs. 31,250/-. Accordingly, the Assessing Officer held that the expenditure of Rs. 1,18,225/- is capital in nature being computer hardware acquired by the assessee, which is depreciable asset and disallowed the same. The Assessing Officer accordingly allowed proportionate depreciation @ 60%. Because CD Rom Drive/Hard disk/RAM were purchased after 30.9.2003; therefore, 30% of Rs. 86,975/- was allowed in this respect. 3.2 On appeal, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rocessing Unit (CPU) of the computer and they cannot be considered as separate and independent machinery. Accordingly, replacement of the parts of the machinery is allowable expenditure. The expenditure incurred on Printer, Scanner and Web Camare cannot be said to be replacement of the spares /defective parts of the computer. The printer, scanner and Web Camera are independent and separate device; therefore, the expenditure of Rs. 31,250/- incurred on printer, scanner and Web Camera Is capital in nature and accordingly, the addition to the extent of Rs. 31,250/- is confirmed. This issue is partly allowed to the extent of the expenditure of Rs. 86,975/- as revenue expenditure u/s 37 of the I T Act. 6. Ground no. 1(b) is regarding disallowance of repairs and maintenance expenses by treating as capital in nature. 6.1 The Assessing Officer noted that the assessee has accounted for repairs and maintenance expenses of Rs. 50,35,444/-. The assessee was asked to furnish the details and the statement of expenses incurred with regard to the repairs and maintenance. In response, the assessee filed the details. From the details filed by the assessee, the Assessing Officer observed that vario ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee and without bringing any new capital asset into existence; therefore, the same is allowable as revenue expenditure. 8.3 As regards the expenditure on split AC of Rs. 30,850/-, it is apparent that the assessee has brought into existence a new asset; therefore, the same is capital in nature and only depreciation is allowable. Accordingly, we confirm the disallowance to the extent of Rs. 30,850/ towards spilt air-conditioning expenditure. 9. Ground no. 1(c) is regarding disallowance of trading loss. 9.1 The assessee made a claim of Rs. 2,80,31,905/- as bad debts. The Assessing Officer noted that the said amount represents part of deposits given by the assessee in the earlier years to its subsidiary company M/s NOL Properties (India) Pvt Ltd against the lease of premises. The said NOL Properties India P Ltd have refunded part of the total amount of advance. Since the amount received back by the assessee has not been shown as income, therefore, the Assessing Officer disallowed the claim of bad debts or trading loss or expenditure incurred for business as claimed by the assessee. 9.2 On appeal, the Commissioner of Income Tax(Appeals) has confirmed the disallowance made by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee has not even claimed trading loss in the return of income but has made a claim only during the appellate proceedings by way of a note. Thus, in the absence of revised return , the assessee cannot make a fresh claim and the Assessing Officer has no jurisdiction to consider a fresh claim. He has relied upon the decision of the Hon'ble Supreme Court in the case of Goetze (India) Ltd. v. Commissioner of Income-tax reported in 284 ITR 323. The ld DR has also referred the order of the Commissioner of Income Tax(Appeals) and submitted that when the assessee has not debited the bad debts or trading loss in the profit & loss account and also not shown any income in respect of the advance then the conditions for allowing the claim are not fulfilled. 10.2 In rebuttal, the ld AR has submitted that the assessee has not claimed bad debts or trading loss in the return of income to avoid levy of penalty. Therefore, the assessee has made the claim by way of a note. 11. We have considered the rival contention as well as relevant material on record. As regards the objection raised by the ld DR that without filing the revised return the Assessing Officer has no jurisdiction to entertain a fres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... both the companies are controlled by the same management then there was no such need for any deposit. Therefore, the element of commercial expediency does not exist in the case in hand. 12.2 The decision relied upon by the ld AR of the assessee are clearly on the point when the advance or loan was given by the assessee in the ordinary course of business or in relation to the business of the assessee, then the loss on such advance was allowable as business loss. Therefore, the decision relied upon by the ld AR will not helps the case of the assessee. Even in the case of I.B.M. World Trade Corporation (supra), the advance was given for timely and speedy construction of the factory premises; but subsequently, the Landlord become insolvent and the entire amount inclusive of interest was written off by the assessee. 13. In the case in hand, it was not a case of insolvency of the subsidiary company; but the assessee voluntarily waive off the claim; therefore, when the advance was not given either in the ordinary course of business or in connection with the business, then the loss of the same is loss of capital and is not allowable. 14. It is settled proposition of law that when the l ..... X X X X Extracts X X X X X X X X Extracts X X X X
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