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TMI Blog2012 (10) TMI 773X X X X Extracts X X X X X X X X Extracts X X X X ..... ee is in appeal before us against the order of Ld. CIT(A)-IX, New Delhi dated 21.12.2010 passed for AY 2006-07. 2. Ground No -2 is the only substantial ground of appeal raised by the assessee. In this ground, assessee pleaded that Ld. CIT(A) has erred in confirming the addition of Rs.1,57,200/- and Rs.37,000/- by treating the expenses as capital in nature. 3. The brief facts of the case are that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d towards tender fees for securing contracts is in the nature of capital expenditure. Similarly, he treated the bank guarantee fees as well as loan processing charges as capital expenditure. His brief finding on both the issues reads as under:- "1. Tender Fees Expenses During the year, the assessee has claimed and amount of Rs.1,57,200/- towards tender fees expenses. The assessee stated that sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k guarantee for executing works contract. The said expenditure are in the nature of capital expenditure. In the case of CIT vs Vullab Glass Works Ltd. 137 ITR 389, the Gujarat High Court held that the payments made to procured bank guarantee is capital expenditure. Hence the above expenditure claimed by assessee is disallowed. 4. On appeal, Ld. CIT(A) has allowed the claim in respect of bank guar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee has been submitting tender in its day-today business which are basically works contract on turn key basis. The assessee has procured orders for sale of its items manufactured. It has to fulfill the tenders floated by State Governments or Electricity Boards. It is not necessary that it will get the order. The tender fees was paid by it in the day-to-day ordinary business. It does not cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... look into the fact that assessee is in the business of manufacture distributor transformers, HT cable box on job contract basis. It also constructs power houses and lays electrical lines. In connection with these operation, assessee has to purchase all these items. These items were consumed in the ultimate final product, which is the trading stock of the assessee. Ld. First Appellate Authority has ..... X X X X Extracts X X X X X X X X Extracts X X X X
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