TMI Blog2013 (6) TMI 790X X X X Extracts X X X X X X X X Extracts X X X X ..... 08. 2. The principal issue arising in the instant appeal concerns the validity in law of the assessee s claim for loss sustained on the write off of non-recoverable advances made for the purchase of machinery (at ₹ 32.60 lacs) and that incurred due to the non-acceptance by it of the delivery of the machinery imported for its business (at ₹ 57.50 lacs), claimed per its return of income for the current year. 3. The facts, in-so-far as are relevant, are that the assessee is a company engaged in the business of a sub-distributor to the sole selling agent (Best Co.) for online lottery run by the State of Nagaland. Besides, it also provides professional services to various companies by way of consultancy and data processing. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on record, including the case law cited by the parties. 4.1 Our first observation in the matter is that the primary facts are on record and undisputed. 4.2 We may proceed by first delineating the respective cases of both the parties. As regards the assessee s case, it claims the said loss as on account of bad debts u/s. 36(1)(vii); the same having been written off in its accounts for the current year. Alternatively, the assessee claims the said losses by way of business loss; the same being incidental to its trade. Reliance is placed on a host of case law in the matter. The Revenue s case, on the other hand, is that the question of the claim being exigible to deduction u/s. 36(1)(viii) does not arise, as the same is neither a debt go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k the licensor s cotton mills. The deposit, it was held, was made, clearly, for acquisition of a profit-making asset, to carry on the business in cotton. The loss of such deposit, on it remaining unpaid, following the liquidation of the licensor company, was suffered on capital account and not on revenue account, so as to be treated as a business loss. Even as the ld. AR sought to distinguish the said case law, upon being confronted with the said decision - of course on the basis of facts, which would be specific and unique to the fact situation of each case, in our clear view, the same is squarely applicable in its ratio, even as observed during hearing. Rather, first principles admit of no difference, so that the said decision was put for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on is a business decision, taken in its interest. That would not, however, convert the character of the loss sustained on capital account to one on revenue account. The capital expenditure, it may be appreciated, is incurred as much for business as is the revenue expenditure. However, it is only the latter which is deductible in computing the business income, while specific allowances, as u/ss.32, 35, 35D, etc. are provided for under the Act in respect of the former. In the instant case, the transaction not fructifying has led to a loss of capital, so that the Revenue s stand is in agreement with the settled position of the law, which we have sought to emphasize with reference to the two decisions by the apex court, also enumerating their f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the terms of the relevant contract/s (due to the changed circumstances perhaps), forfeiting the balance amount which stands written off, taken place in the earlier years. The warehousing period, as per the notice u/s.72(1) of the Customs Act (which appears at PB pgs.1 2), stands expired on 15.10.2003, so that the Bond Department of the Customs issued notice for the levy of rent and interest, besides duty; the said notices being dated 30.11.2004 and 14.01.2005. The foregoing, however, is stated only by way of an alternate argument, without prejudice to our clear view of the loss suffered being only in the capital field, and which though would stand modified in the light of the same, so that the said loss cannot be said to have arisen in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the apex court, to three of which reference has been made by us in the preceding paragraphs of this order (refer paras 4.3 4.4), besides to two others by the Revenue (refer para 4.2 supra). The decisions by the tribunal in the case of Pik Pen Private Limited vs. ITO (in ITA No.6847/Mum/2008) and Dy. CIT vs. Edelweiss Capital Limited (in ITA No.3971/Mum/2009) stand rendered following the decision in the case of Anjani Kumar Co. Limited (supra), which we have found as being contrary and inconsistent to the binding decisions by the hon ble apex court. The said reliance would thus be of little moment. The decision in the case of CIT vs. Triveni Engg. Industries Ltd. [2012] 343 ITR 245 (Del.) is in respect of advance to employees, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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