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TMI Blog2011 (4) TMI 805X X X X Extracts X X X X X X X X Extracts X X X X ..... the money laid out ? Was it to acquire an asset of an enduring nature for the benefit of the business, or was it an outgoing in the doing of the business? If money be lost in the first circumstances, it is a loss of capital, but if lost in the second circumstances, it is a revenue loss. In the first, it bears the character of an investment, but in the second, to use a commonly understood phrase, it bears the character of current expenses. As in the present case Tribunal has rightly observed that the assessee had given all the details to the Assessing Officer regarding the debts and also the steps taken for recovery of those amounts and ultimately failing to recover the same - no substantial question arises. - IT APPEAL NO. 311 OF 2011 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eply thereto, assessee submitted that the Assessing Officer had asked for the details of the bad debts written off vide questionnaire dated 24-8-2006 and the same were submitted to the Assessing Officer vide letter dated 9-11-2006. The assessee also submitted that the issues which had been proposed to be reconsidered by the CIT(A) in its order passed under section 263 of the Act were already considered by the Assessing Officer during the assessment proceedings. However, the CIT(A) allowed the plea of the revenue vide order dated 27-3-2009 observing that the order of the Assessing Officer was erroneous and prejudicial to the interest of revenue and set aside the same on the issue of allowability of claim of deduction of bad debts written off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wed that the assessee had categorically brought the fact that the details of the bad debt had been produced before the assessing authority during the assessment proceedings and the same had been considered by the Assessing Officer. 6. It is against this order of the Tribunal that the revenue is in appeal before us. The submissions made by the learned counsel for the revenue are the same as were raised before the CIT(A) and also the Tribunal. The main submission of the learned counsel for the revenue is that the amounts which were sought to be claimed as bad debts by the assessee were in fact intercorporate deposits and that the assessee could not claim deduction under section 36(1)(vii) since the pre-requisite of section 36(2) was not com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 there was a further reference to the issue of bad debts. The Assessing Officer also maintained order sheets which showed that he had taken the detailed notes of the discussion that took place before finalizing the assessment with regard to the claim of bad debts. In the circumstances, it should not be said that there was lack of inquiry conducted by the Assessing Officer. The assessee had made an alternate prayer also in respect of claim of business loss in the event the CIT(A) felt that the claim was not allowable under section 36(1)(vii) of the Act. However, the CIT(A) rejected the contentions of the assessee only on the ground that the Assessing Officer had not properly examined the details furnished. The non-recording of all these det ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h to emphasise the nature of the question posed, because the central point to decide is whether the money which was given up represented a loss of capital, or must be treated as revenue expenditure. The Supreme Court held as under : "The tax under the head "Business" is payable under section 10 of the Income-tax Act. That section provides by sub-section (1) that the tax shall be payable by an assessee under the head "profits and gains of business, etc." in respect of the profits or gains of any business, etc., carried on by him. Under sub-section (2), these profits or gains are computed after making certain allowances. Clause (xi) allows deduction of bad and doubtful business debts. It provides that when the assessee's accounts in respect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nditure in relation to the business. Since all payments reduce capital in the ultimate analysis, one is apt to consider a loss as amounting to a loss of capital. But this is not true of all losses, because losses in the running of the business cannot be said to be of capital. The questions to consider in this connection are : for that was the money laid out ? Was it to acquire an asset of an enduring nature for the benefit of the business, or was it an outgoing in the doing of the business? If money be lost in the first circumstances, it is a loss of capital, but if lost in the second circumstances, it is a revenue loss. In the first, it bears the character of an investment, but in the second, to use a commonly understood phrase, it bears t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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