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TMI Blog2006 (6) TMI 176X X X X Extracts X X X X X X X X Extracts X X X X ..... nnot be allowed as a revenue loss. Since it was not a debt, it cannot be allowed as bad debt - the Commissioner (Appeals) took a correct view in the matter and his order calls for no interference on this count - the same is upheld. Allowability of PF and ESI contributions made at the end of the assessment year - HELD THAT:- The assessee raised this issue in the grounds taken before the Commissioner (Appeals). This issue was not adjudicated. In the interest of justice this issue restored to the file of the Commissioner (Appeals) with a direction to decide the same in accordance with law after providing adequate opportunity to the assessee of being heard. The appeal of the assessee stands partly allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... and the other installations. It was not part of the cost of operating the profit earning apparatus. The expenditure was incidental to the acquisition of profit earning apparatus. As such it was clearly in the nature of capital expenditure and therefore the same cannot be allowed. 6. We now propose of discuss the precedents relied upon by the learned counsel for the assessee. In the case of I.B.M. World Trade Corpn. v. CIT [1990] 186 ITR 412 (Bom.) the assessee advanced money to the landlord for construction of a factory shed. The landlord leased that shed to the assessee. Thereafter the landlord became insolvent. The assessee written off the amount along-with interest. The Hon'ble High Court has held that the loss in question was deductibl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the rapid advances in research in antibiotic medical microbiology. It was held that the knowhow could not be said to bear the element of the requisite degree of durability and nonephemerelity to share the requirements and qualifications of an enduring capital asset. 10. The concept of capital and revenue created chaos in the judicial cosmos. Various theories were propounded to make distinction between capital expenditure and revenue expenditure. But no test can be applied blindly and mechanically. Each case is to be decided on its own facts. The general tests to be applied to distinguish capital expenditure or revenue expenditure have been enumerated in various decisions. There is no difficulty in enumerating those tests. But the difficu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee deposited Rs. 20 lakhs with the licensor company for the purpose of securing the licence under which the assessee had acquired the right to work the licensor's cotton mills. The deposit was made pursuant to a clause in the leave and licence agreement. Had a deposit as required by that clause not been made the assessee would not have secured the licence of the cotton mill. At that time the assessee was doing no business in cotton. The deposit was clearly made for the purpose of acquiring a profit making asset to carry on business in cotton. It cannot, therefore, be held that the deposit was made on the revenue account or that the loss thereof must be treated as business loss. The loss thereof was a loss suffered on the capital acc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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