TMI Blog2022 (7) TMI 164X X X X Extracts X X X X X X X X Extracts X X X X ..... to controvert the findings of the authorities below, specifically, the ld. Commissioner in affirming the addition under challenge and therefore, in our considered view, the conclusion drawn by the ld. Commissioner does not require any interference, as the same does not suffer from any perversity, impropriety and /or illegally. Consequently, ground No. 2 also stands dismissed. Appeal of assessee dismissed. - ITA No. 5263/Del/2017 - - - Dated:- 27-6-2022 - Shri Anil Chaturvedi, Accountant Member And Shri N.K. Choudhry, Judicial Member For the Assessee : None For the Revenue : Shri Zahid Parvez, Ld. Sr. DR ORDER PER N.K. CHOUDHRY, J.M. This appeal has been filed by the Assessee against the order dated 05.05.2017, impugned herein, passed by the learned Commissioner of Income-tax (Appeals)-35, New Delhi (in short ld. Commissioner ) u/s. 250(6) of the Income-tax Act, 1961 (in short the Act ). 2. At the outset, it appears from the case title in the order sheet that the appellant has been shown as DCIT, Circle 4(2), New Delhi and the respondent has been shown as Bharat Light and Power Pvt. Ltd., New Delhi (Assessee) . Even in the cause list, the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , it was not able to successfully develop those clients and thus eventually it had to write such amount as an expense during the year under the relevant provisions of the Income Tax Act, 1961 . The Assessing Officer further observed that the expenditure was not for regular business activities. Thus, the expenses claimed by the Assessee cannot be allowed. 6. The Assessee being aggrieved, challenged the said addition before the ld. Commissioner, who vide para 4.3 in the impugned order, sought the remand report of the Assessing Officer and thereafter rejoinder by the Assessee and affirmed the addition by dismissing the ground raised by the Assessee, by concluding as under : Perusal of these submissions, clearly denotes that the expense of Rs.1,24,25,454/- of capital work in progress pertains to A.Y. 2011-12 and not to the relevant year presently under appeal. This is an expense of A.Y. 2011-12 and as the system of accounting is accrual it should have been debited in last years Profit and Loss account. This expenditure cannot be allowed in A.Y. 2012-13, as it does not pertain to the relevant year. Ground No. 2 stands dismissed. 7. We have given our thoughtful consideratio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4.5.1 4.5.2 4.5.3. Before proceedings further it would be necessary to first analyse the provision of the Act with respect to Capital and Revenue Expenditure Considering the provision of section 37(1) as well as the judgments passed by the Hon'ble Supreme Court of India, and various High Courts, the Ld. Income Tax Appellate Tribunal Kolkata (Special Bench) in case of Pearless Securities Ltd. Vs Joint CIT (2005) 94 ITD 89 (KOL) (SB) outlined certain general principles for making the distinction between the Capital Expenditure and Revenue Expenditure which are briefly explained here below:- i. When an expenditure is made with a view to bring into existence an asset or an advantage for the enduring benefit of a trade, there is good reason (in the absence of special circumstances leading to the opposite conclusion) for treating such an expenditure as properly attributable not to the Revenue but to Capital Expenditure. ii. If the payment is made in the course of and for the purpose carrying on business or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ;capital' connotes permanency. Therefore, capital expenditure is akin to the concept of securing some tangible or intangible property or corporeal or incorporeal right to that they can be of lasting or enduring benefit to the enterprise. Similarly, in Assam Bengal Cement Co. Ltd. V. CIT (1955) 27 ITR 34 (SC), it was held that the expenditure incurred for acquiring or for bringing into existence an asset or advantage of enduring nature of the business is properly attributable to capital and is capital in nature. However, to determine the nature of expenditure, all the facts of a particular case have to be analyzed. 4.5.5. Perusal of various submissions of the appellant reveals that the appellant company is in its nascent stage of business, the company become operational in A.Y. 2011-12 and is in the 2nd year of business, which is also the relevant A.Y. In this year the company is exploring ways and means of revenue generation and to augment its resources. 4.5.6. It follows thereof that incurring of huge expense of Rs.1,20,01,931/- on account of legal professional charges which is not only for auditors fees or legal opinion, has a larger and wider purpose of obta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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