TMI Blog2012 (7) TMI 492X X X X Extracts X X X X X X X X Extracts X X X X ..... tent of the expenditure of Rs. 86,975/- as revenue expenditure u/s 37. Disallowing of repairs and maintenance expenses as “capital” in nature - out of the total expenditure of Rs. 50,35,444/- AO disallowed Rs. 1,66,423/- being capital in nature - Held that:- As regards the expenditure of Rs. 1,35,613/-, pertains to office renovation charges, the same has been incurred by the assessee to make the office premises as fit for business use of the assessee and without bringing any new capital asset into existence; therefore, the same is allowable as revenue expenditure - 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 - partly in fvaour of assessee. Disallowance of trading loss - DR has submitted that the assessee 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 - assessee has claimed bad debts/trading loss being non recoverable depo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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, the Commissioner of Income Tax(Appeals) confirmed the action of the Assessing Officer by following the decision of the Hon ble Rajasthan High Court in the case of Arawali Construction Company reported in 259 ITR 30 and the order of the Tribunal in the case of Maruti Udyong Ltd reported in 92 ITD 119 . 4. Before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 various amounts aggregating to Rs. 1,66,463/- have been debited, which are capital in nature. The said expenditure was incurred in respect of Kandla office renovation of Rs. 1,35,613/- and Kandla Office Split AC office charges of Rs.. 30,850/- total amoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the Assessing Officer on the ground that the assessee itself has not shown this amount as bad debts or trading loss in the books of account; but made a claim only in the form of note. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 fresh claim; it is to be noted that the jurisdiction of the appellate authorities is not barred as observed by the Hon ble Supreme Court in the case of Goetze (India) Ltd. (su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 liability made by the assessee was not loss made in the course of carrying on the business of money lending, then it would not be treated as un-recovered expenditur ..... X X X X Extracts X X X X X X X X Extracts X X X X
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