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TMI Blog1990 (4) TMI 104X X X X Extracts X X X X X X X X Extracts X X X X ..... of container expenses. (2) The CIT(A) erred in deleting the addition of Rs. 3,43,750 made by the ITO in the asst. yr. 1977-78 and of Rs. 1,25,000 made by the IAC (Asst.) in the asst. yr. 1978-79 being the income accrued from hiring of a barge. 2. The practice of the assessee company has been that the expenses incurred on purchase of fresh stock of bottles and wooden shells used to be capitalised and no deduction in respect thereof and no depreciation on that account was claimed since depreciation was not allowable on those items. Further, the assessee used to claim breakage of bottles out of that stock as the Revenue expenditure. The breakage of bottles out of that stock as the Revenue expenditure. The breakage of bottle was either in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of such stock which has either perished or become unserviceable and is also entitled to cost of such stock which is replaced in place of the old stock written off. It is also entitled to the expenses incurred on repairs. In view of these facts, there is no reason to interfere with the order of the CIT(A) for both the years. 4. Next we come to the second ground of objection of the Department. The assessee company is owner of a barge called "SNEH IV". It was let on hire to a foreign company Universal Shipping Agency (Bahrain) Limited, Bahrain by an agreement dt. 27th April, 1976 at the rate of Bahrain Dinars (BD) 2,800 per month. The material terms of the said agreement were as under; Clause 3 "The Hirers shall pay hire in respect o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in writing and signed by the parties hereto." Clause 31 "Any dispute or difference arising under this agreement shall be referred to Arbitration in Bombay, and Arbitrator to be nominated by the Owners and the other by the Hirers and in case the Arbitrators shall not agree, then the decision of an Umpire to be appointed by them the award of the Arbitrators or Umpire to be final and binding upon both the parties." 5. The hirer of the vessel paid the hiring charges for first three months in the sum of BD 8,400 equivalent to India rupees 1,87,052 to the assessee which was showed as income by the assessee. The ITO held that the hire charges had accured to the assessee during the entire year. He, therefore, added Rs. 3,43,750 to the in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee. Faced with such a difficulty, the learned counsel for the assessee argued, the assessee lost all the hopes of getting any hire amount, Further, according to him, the assessee took advice of M/s D.M. Harish Company, Advocates, Bombay and it was advised that filing of a suit in Bahrain would not only be Bombay and it was advised that filing of a suit in Bahrain would not only be extremely expensive but would not be fruitful. He in support relied upon CIT vs. SMT. Geeta Sanghi (1983) 36 CTR (MP) 96 : (1983) 142 ITR 834 (MP) which, according to him, is applicable to the facts of the instant case on all fours. 8. We have minutely considered the facts of this case. The vessel was agreed to be let on hire for three years @ BD 2,800 per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as unable to make any payment to the assessee. The hirer made several complaints about the vessel. The letter of the hirer mentioned that though the vessel was new, it gave endless troubles. According to the hirer the vessel needed extensive repairs of the engine. Instead of promising to pay any part of the hire charges, the hirer claimed BD 300 for repairs and maintenance of the vessel. Such type of reply of the hirer was enough for the assessee to lose all the hopes of recovering any part of the arrears of the hire charges from a foreigner. Even if any dispute was referred to any arbitration or a civil suit was filed, it would have remained a paper decree since the decree shall have to be executed in foreign country. The letter dt. 26th M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the instant case squarely fall within this proposition. Having learnt that the owner had no income from the said vessel, the assessee became anxious to get the vessel back rather than to insist on recovery of the hire charges. Under the circumstances of the case, the assessee did surrender the income. The CIT (A), therefore, rightly deleted the additions in both the years. 10. Next we come to the appeal of the assessee for the asst. yr. 1977-78. The ground of objection in the said appeal is that the CIT(A) erred in not allowing investment allowance on additions to the barge of Rs. 3,19,063. According to the assessee, the said expenses were incurred towards improvement of the barge, and, therefore, investment allowance under s. 32A wa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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