TMI Blog1984 (2) TMI 110X X X X Extracts X X X X X X X X Extracts X X X X ..... -9-1973. A certificate of commencement of business was also granted to it. The assessee incurred certain expenditure in connection with incorporation and procurement of land for the newly formed company. From the minutes of the meeting of the Board of the assessee's directors held on 14-11-1973, it appears that the assessee was prepared to spend up to Rs. 2 lakhs for the above purpose. The total expenditure incurred from June 1973 to June 1975 amounted to Rs. 65,309. This was recovered partly by adjustment of consideration amount paid by the new company towards transfer of allotment and reservation money for plot of new industrial area, Panki, and partly by receipt of cash of Rs. 7,465. This left an unrecovered balance of Rs. 18,993. This w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d not result in any capital asset and, therefore, the question of its transfer and consequent loss did not arise. The Commissioner (Appeals) agreed with him. He held that neither, there was any capital asset nor any extinguishment thereof. 6. The assessee is now in appeal before us. The submissions placed before the lower authorities were repeated before us. It was submitted before us that the advances made by the assessee formed part of its capital asset and, therefore, the loss being in the nature of extinguishment of that asset had to be treated as a capital loss to be set off in terms of section 71(3). On behalf of the department reliance was placed on the orders of the lower authorities. 7. After considering the facts of the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r deduction or not will depend on the provision of law relating thereto and not on the view which the assessee might take of his rights ; nor can the existence or absence of entries in his books of account be decisive or conclusive in the matter. In the absence of the acceptance by Forgings and Castings Ltd., we cannot hold that the amounts advanced by the assessee or the expenses incurred by it were in the nature of loan to Forgings and Castings Ltd. As a consequence, we also cannot hold that they were in the nature of any capital asset belonging to the assessee as defined in section 2(14) of the Act. Consequently, the question of transfer of any capital asset resulting in any loss to the assessee also does not arise. We, therefore, confir ..... X X X X Extracts X X X X X X X X Extracts X X X X
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