TMI Blog2021 (10) TMI 790X X X X Extracts X X X X X X X X Extracts X X X X ..... whether advances made were in the nature of trade and not for earning dividend, and since the same was done in the course of business, it would result in a business loss and the same would be allowable as a Business Loss u/s 37(1) - HELD THAT:- In our opinion, there is a good and sufficient reason in not raising this ground on earlier occasion. Accordingly relying on the judgment of NTPC [ 1996 (12) TMI 7 - SUPREME COURT ] , we admit the additional grounds, as there is no question of investigation of fresh facts on this issue. Accordingly additional ground is admitted. Treatment of investment in shares, lee deposits MDLR airlines and miscellaneous deposits as business loss - With regard to investment in shares as business loss , we have already held in earlier paragraph that it is a capital loss and hence there is no question of adjudicating this ground on this issue by way of additional ground. Accordingly, with regard to the treatment of loss of investment is a capital loss , therefore, additional ground related to this issue is dismissed. MDLR airlines and miscellaneous deposits - Before the lower authorities, the assessee claimed bad debt u/s 36(2) of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not written off in books of Assessee or there is any benefit derived by Assessee by cessation of liability 6. The learned CIT (A) ought to have appreciated the case law relied by the Appellant and ought to have deleted the same. 7. The CIT (A) erred in confirming levying of the interest u/s 244A of the Act. 8. For these and such other grounds that may be urged at time of hearing, the Appellant prays that the appeal may be allowed. 3. The first ground for our consideration is with regard to allowability of sum of ₹ 5 crores advanced to Blue Ocean Cruises Lines Pvt. Ltd., for the purpose of getting 30% shareholding in a joint venture to be set up between assessee-company and Mr.Oneil Raina for investing into M/s Blue Ocean Crusies Lines Pvt. Ltd. 4. The contention of the learned AR is that the said amount has been invested in M/s Blue Ocean Crusies Lines Pvt. Ltd. for allotment of 30% shares in the company vide MOU dated 27/8/2010 entered with triparte agreement between Oneil Raina Khosa and M/s Blue Ocean Crusies Lines Pvt. Ltd. As per this agreement, assessee has to invest ₹ 5 crores in that company i.e M/s Blue Ocean Cruises Lines Pv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve purpose of marketing assessee's products and for promoting its business in US and Latin America. It has further been stated in the note that looking to the stringent norms of product liability in US market, the assessee decided to have a separate Wholly Owned Entity in the US having limited liability. The approval for aforesaid purpose was obtained from the Reserve Bank of India. The assessee therefore, invested funds in equity for meeting the revenue expenses of Wholly Owned Subsidiary Company's balance sheet. However, WOS could not perform upto company's expectations and therefore, it was decided to wind up WOS operations in USA. While granting approval for closure of WOS, RBI permitted the company to write off the whole of investment made in WOS and unrealized export receivables. The assessee therefore, made a claim to write off the loss of ₹ 3,41,23,200/- as revenue expenses allowable under the provisions of the Act. 8. Thus, from perusal of the aforesaid facts, it is evident that the issue involved in this appeal is covered by decision of Bombay High Court in Colgate Palm Olive (India) Ltd. supra, which has been upheld by the Supreme Court. The rati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t was made with a view to creating capital asset in the form of holding shares. Being so, the judgment relied on by the ld.Counsel of the assessee supported the case of revenue rather than assessee s case. 8. We also find that in the case of CIT(A) Vs. United Breweries Ltd., 321 ITR 546 wherein, Hon ble Karnatka judicial high court held as follows:- Even on the accepted legal principles, a 'debt' is an expression well-known in legal parlance and is an amount which is a legal obligation which if not discharged will give rise to a claim in favour of the creditor. An amount which is said to be simply advanced for helping a business associate definitely cannot constitute a debt when the assessee had not placed any material to indicate that the business associate or any associate of the subsidiary of the assessee had a legal obligation for repayment of the amount. The amount advanced is more towards the issue of shares in future if a company is to be brought into existence and in the hope of getting shares allotted in the company. An expenditure incurred for securing shares per se is a 'capital expenditure' and never 'revenue expenditure' and therefor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th regard to treatment of investment in shares, lee deposits MDLR airlines and miscellaneous deposits as business loss . With regard to investment in shares as business loss , we have already held in earlier paragraph that it is a capital loss and hence there is no question of adjudicating this ground on this issue by way of additional ground. Accordingly, with regard to the treatment of loss of investment is a capital loss , therefore, additional ground related to this issue is dismissed. 13. With regard to treatment of loss of Lee deposits and miscellaneous deposits, we will adjudicate this issue along with the main ground of appeal. 14. Next ground is with regard to treating below mentioned amount as capital loss. 1) Lee deposits - MDLR Airlines - ₹ 29,35,650/- 2) Miscellaneous deposits - ₹ 24,73,681/- 15. An amount of ₹ 29,35,650/- was given to MDLR Airlines as a deposit for ticket booking. According to assessee, the said amount became irrecoverable on account of shutdown of airline operation and the same ha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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