TMI Blog1987 (5) TMI 62X X X X Extracts X X X X X X X X Extracts X X X X ..... machine, a new product sought to be developed by the assessee. But this project was abandoned as not technically feasible. The ITO was of the opinion that the claim of bad debt in respect of this amount of Rs. 30,000 was premature and as such he rejected the assessee's claim. On appeal, the CIT(A) was of the opinion that it could not be treated as revenue deduction. So he upheld the order of the ITO. 3. The authorised representative for the assessee contended that this was not a capital expenditure but a revenue expenditure. For this purpose he relied on the decision in the case of CIT v. Sudarshan Chemical Industries (P.) Ltd. [1986] 159 ITR 629 (Bom.). This contention was opposed by the departmental representative who argued that the ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting business cannot be held to be revenue expenditure incurred in connection with the existing business." The decisions of the Hon'ble High Court at Calcutta, being the jurisdictional High Court, are binding on this Tribunal in preference to the decision of the Bombay High Court relied upon by the authorised representative for the assessee. Moreover, it appears to us that the Bombay High Court decision in the case of Sudarshan Chemical Industries (P.) Ltd. relied upon by the authorised representative for the assessee does not really support him. In the said case, the Tribunal held that under the agreement the assessee had received a two-fold advantage : one related to the right to manufacture raw material which it was hitherto importing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in from land and building amounting to Rs. 4,51,593, made in the assessment year under consideration. The capital loss of Rs. 15,318 was incurred in the preceding assessment year 1981-82 on sale of shares. In the assessment year under consideration the assessee made long term capital gains from two sources, namely, land and building, amounting to Rs. 4,51,593 and shares amounting to Rs. 32,970. The ITO adjusted this loss against capital gains from other assets amounting to Rs. 32,970 though the assessee claimed that this loss should be adjusted against the capital gain on transfer of land and building. It may be mentioned that the tax on capital gains on transfer of land and building was 50% and that on capital gains from other assets was 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on to the provision thereof. On such examination we are of the opinion that this action authorises long term capital loss to be set off against the long term capital gains and it does not lay down that long term capital loss from transfer of one particular type of capital asset must be set off against long term capital gains from transfer of similar capital asset. Under the provision as it is the set off is permissible from the capital gains on transfer of any long term capital asset. It is a cardinal principle of interpretation of taxing statutes that an interpretation which is in favour of the assessee should be accepted when the provision is capable of two interpretations. In the present case the provision of section 74(1)(a)(ii) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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