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TMI Blog2016 (1) TMI 216X X X X Extracts X X X X X X X X Extracts X X X X ..... OU clearly shows that the assessee was venturing on a new business and the amount was put as the capital expenditure to acquire capital asset. It is therefore clear that the loss arose from the investment and not given in the course of business being carried on by the assessee. Thus, it is capital loss and not a loss incidental to the business. Deprivation from benefit as a result of such capital expenditure is of no consequence and cannot impact the character of expenditure. The decisions cited by the assessee are distinguishable on facts. In all the decision relied upon, the advance were given in the course of carrying on of the regular business like purchase of raw material or other business expenses, etc. where the loss incurred due to termination of contract. The expenses were incurred in the revenue field. In the present case, the amount was paid with a view to bringing into existence an asset and therefore clearly is in a capital field. Our aforesaid view is supported by the decision of the Hon’ble Delhi High Court in the case of Narang Industries Ltd. vs. CIT (1967 (8) TMI 1 - DELHI High Court ) - Decided against the assessee. - ITA No.867/PN/2013 - - - Dated:- 16-10-2015 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee which could be used in the business in future the Ld. CIT(A) ought to have allowed the 'write off' of such imaginary asset since such asset did not take its birth. The write off in the circumstances be allowed. 5) On the facts and circumstances of the case and in law it is an undisputed fact that in view unilateral renunciation of contract the entire asset comprised in the Wind-Mill was handed over to the owner of the said Mill without any compensation. This leads to only conclusion that there was no any beneficial capital expenditure. The addition confirmed by Ld. CIT(A) on this account is unwarranted and the addition be quashed. 6) On the facts and circumstances of the case and in law the disallowance confirmed by Ld. CIT(A) of ₹ 90 lakhs be deleted. 7) On the facts and circumstances of the case and in law the levy of interest u/s 234A, 234B and 234C is not justified. The levy of interest be quashed. 8) The appellant craves/leave to add, amend or alter any of the above grounds of appeal. 3. The brief facts concerning the issue involved are that the assessee is an individual and is engaged in a civil engineering contract business with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 2009 whereby the seller of the existing windmill project shall be entitled to forfeit an amount of ₹ 90,00,000/-. The forfeited amount has been debited to the windmill expenses and claimed as revenue expenses. 4. The Assessing Officer controverted the aforesaid claim of the assessee as revenue expenditure and held that forfeiture of advance made towards acquisition of capital asset i.e. windmill project tantamounts capital expenditure and accordingly, the assessee is not entitled to claim the windmill expenses as revenue expenses. He accordingly disallowed the entire windmill expenditure of ₹ 97,91,624/- and added to the total income declared by the assessee. 5. Before the CIT(A) in first appeal, the assessee reiterated the submissions and stated that loss on account of forfeiture of advances made pursuant to MOU arose in the ordinary course of business and is allowable under section 28/29 of the Act. The CIT(A), however, granted partial relief towards expenses incurred towards running windmill and sustained the order of the Assessing Officer to the extent of ₹ 90 lakhs treating the expenditure attributable to the windmill project as capital expenditure qu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed upon several judicial pronouncements for this proposition as under :- (i) CIT vs. Ramlinga Choodambigal Mills Ltd., (1999) 239 ITR 120 (Mad); (ii) CIT vs. National Steel General Mills (P) Ltd., (1990) 88 CTR 13 (Del); (iii) CIT vs. Sohanlal Kunwar Sons, (1987) 164 ITR 129 (Raj); (iv) Daulatram Rawatmall vs. CIT, (1970) 78 ITR 503 (Cal); and, (v) Asia Power Projects (P.) Ltd. vs. DCIT, (2014) 49 taxmann.com 428 (Karnataka). 8. In the light of above, the Ld. Authorized Representative for the assessee urged that the action of the authorities below requires to be set-aside and vacated. 9. The Ld. Departmental Representative for the Revenue, on the other hand, submitted that the order of the CIT(A) is well reasoned after analyzing the factual and legal aspect of the matter and therefore should not be interfered with. 10. We have carefully considered the facts involved in the present case, orders of the authorities below and perused the case laws cited. The only controversy involved is whether the payment of advance made for acquisition of existing windmill power project is expenditure in the nature of capital expenditure or to be regarded as revenue expend ..... X X X X Extracts X X X X X X X X Extracts X X X X
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