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TMI Blog1991 (8) TMI 154X X X X Extracts X X X X X X X X Extracts X X X X ..... had revised the assessments for the two years under consideration after the expiry of the period of two years, the order under appeal was liable to be set aside on this preliminary ground. In this behalf, Mr. Ranka made reference to the amendment made in s. 263(2) by the Taxation Laws (Amendment) Act, 1984 and submitted that said amendment should be deemed to be effective on and from 1st April, 1985. Since the periods of limitation for revision of the assessments under consideration had started running from 7th May, 1984 for asst. yr. 1981-82 and from 7th Feb., 1985 for asst. yr. 1982-83 the said periods would not be affected and stood enlarged by the above mentioned Amending Act. We, however, fail to agree with Mr. Ranka. 3. It can hardly be disputed that the matter of limitation relates to be filed of procedural law and retrospective or prospective legislation may be made in such a law. An amending Act affecting the procedural law would, therefore be effective from the date the legislature has specified in that behalf. In the case Taxation Laws (Amendment) Act, 1984 amendment made to the provisions of s. 263(2) were given effect from 1st Oct., 1984. There seems to be no reason ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be read and appreciated in the context of all the above mentioned facts and when that is done it comes out clearly that the learned Commissioner intended to disallow the bad debts in asst. yr. 1982-83 and the mention of asst. yr. 1981-82 in place of asst. yr. 1982-83 in para 3 was purely a typographical mistake committed by inadvertence and in good faith. Such a mistake does neither affect the real controversy nor does it make any confusion in the order under appeal. The facts of the case, the issue involved, the decision given and the reasons recorded for the decision on the point remaining into no confusion the said typographical mistake is liable to be ignored for adjudicating the real controversy between the parties and is so hereby ignored by us. The allowance of bad debts was directed to be made by the learned Commissioner for asst. yr. 1982-83 and we shall proceed on that footing. The objection is overruled. 7. Coming to the merits of the case regarding expenditure for asst. yrs. 1981-82 and 1982-83, Mr. Ranka submitted that disallowance of expenses incurred on repairs and maintenance of the cinema building was bad in law and the order of the ld. Commissioner in that behal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rival submissions we are of the opinion that the action of the learned CIT on this aspect of the case in both the years was not justified in law as well as on facts. 10. The principles of law enunciated in the cases cited at Bar by the ld. counsel for the parties is not in dispute. It is by now well settled that the nature of an expenditure is required to be determined after taking into account various factors like business of the assessee, urgency of the expenditure, purpose, etc., etc., and no single factor should be considered as sufficient to decide the issue. The test of enduring benefit may not apply in all circumstances and the concept of acquisition of a new asset should not be misunderstood. Thus, the facts of a given case and not the principles of law would in fact dictate the decision on such an issue. 11. In the instant case the nature of assessee's business is relevant and material. As stated above the assessee runs the cinema theatre under the name of Prem Prakash Talkies. The very nature of assessee's business would require incurring of expenses on repairs of the building, furniture, fittings and fixtures. It could not be disputed that all along the assessee had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ls 620.19 (vii) Titaghur Paper Mills Ltd. 24,866.46 (viii) Claims received account 4,152.96 (ix) M/s. West Cost Paper Mills Ltd. 23,437.71 . 89,681.33 The case put forth by the assessee in support of its claim for bad debts of Rs. 89,681.33 was that goods worth of that amount sent to the aforementioned nine parties by its two sister concerns was found to be short or of inferior quality and since the aforesaid nine parties were valuable clients of the assessee and they did not want to pay the above mentioned amounts the quarrel was not further extended and the amounts retained by them were written off as irrecoverable bad debts. The ld. CIT dealt with this point in the following manner : "The deduction as per the claim was allowed by the ITO without considering the most important fact that M/s Zoraster Co. was a sole selling agent of these two sister concerns and was entitled only to commission on all sales. It had nothing to do with the quantity or quality of the goods sold. M/s S. Zoraster Co. was neither the purchaser nor was it doing purchases of the material from M/s Udaipur Mineral Development Syn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the products. Even this claim will not alter the actual legal position or the terms of agreement. The assessee firm was only sole selling agent and was not free to sell the goods at any rate. Therefore, even if the bills were issued after charging the commission on the sale bills issued by UMDS and JMDS the legal position will not change as the assessee firm was not physically lifting the materials from the sellers for bringing them to its godowns nor the purchasers were physically lifting the goods from the assessee firm. Therefore, neither the qualitative defects nor the shortages could be attributed to the sole selling agent." The contention of Mr. Ranka is that amount in question was allowable as bad debt in the nature of assessee's business and in view of the method of its accounting. It was submitted that the assessee neither wanted to displease its clients nor its principals and, therefore, it has to bear the brunt of the transactions. We, however, fail to agree with him. 15. Admittedly the business relations of the assessee with its two sister concerns were that of agents and principals flowing from the contract of agency between them. The contractual obligations of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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