TMI Blog2010 (3) TMI 1142X X X X Extracts X X X X X X X X Extracts X X X X ..... ss of manufacturing and sale of felts used in paper industry. The assessee filed return of income declaring total income of over ₹ 17.48 crores. 3. The first ground of appeal is against disallowance of sum of ₹ 24,33,772/- being claimed as repairs and maintenance expenses of building. 4. The assessee claimed sum of ₹ 40,38,892/- under the head Building repairs . The details were filed and examined. The Assessing Officer carved out certain expenses and required the assessee to explain as to why the same be not treated as capital expenditure. The assessee submitted that sum of ₹ 14,70,455/- was spent on various dates for laying Kota Stones on the floor. The assessee explained that earlier the floor used to gathe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the expenses did not bring into existence any new capital asset and all additions of enduring nature do not bring into existence any capital asset. He submitted that the premises of the assessee are huge and due to movements of trucks floor gets damaged and hence needs to be repaired year after year. Even in earlier year the expenses were incurred for renovating main shed building and for brickwork, water proofing etc. and the same were held to be revenue expenditure by the Tribunal. The order of the Tribunal in assessee s own case for A.Y. 2001-02 was filed before us. It was also submitted that the Hon ble Punjab Haryana High Court in assessee s own case reported in 257 ITR 49, held that the word renovate in its ordinary sense means to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tal expenditure. 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 better placed by laying stones and bricks on the same. As rightly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acement of Kota Stone with Kota Stone or brick with brick. Even if the floor was not covered with any object but is recovered 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. 8. Next ground of appeal is against disallowance of ₹ 6,25,000/- being claimed as modifying existing software which was held as capital in nature. 9. The assessee spent a sum of ₹ 3 lakhs on customizing and modifying existing module of its software so as to make in tune with change in the current taxation or procedural matters according to new requirement. The assessee also spent a sum of ₹ 3,25,000/- to debug the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... From the details filed we find that a sum of ₹ 3 lakh was incurred in relation to change the software to suit the new requirement due to change in taxation or other procedural changes. The software is customized according to new requirement for which the amount is paid. By spending such sum only the existing software is modified and hence are allowable as revenue expenditure. Another sum of ₹ 3,25,000/- was incurred to debug the present software to run it smoothly. By incurring such expenses there were modification in the existing software but not acquisition of new software. Therefore, the expenses are revenue in nature and hence allowable as such. We, therefore, delete the disallowance of ₹ 3,25,000/-. 12. The next g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt in the case of TRS Ltd. held that after the amendment brought in with effect from 1.4.1999 writing off an amount as irrecoverable in the accounts is a sufficient compliance for claiming deduction under sec. 36(1)(vii) of the Act. Similar view has also been held by the Hon ble Delhi High Court in the following cases:- (1) CIT vs. Autometers Ltd., 292 ITR 345 (Del); (2) CIT 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 ₹ 3,79,802/- is allowable as such. We, therefore, delete the disa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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