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TMI Blog2016 (12) TMI 168X X X X Extracts X X X X X X X X Extracts X X X X ..... impugned expenditure falsely as revenue expenses. The explanation offered by the assessee being not bona fide, the ld. Authorities below have rightly applied Explanation 1 to section 271(1)(c) of the Act in the peculiar facts and circumstances of the present case. In view of above discussion, it follows that it is not a case where the explanation given by assessee was bona fide and there was full disclosure of facts. The assessee has also not been able to substantiate the explanation offered by any credible evidence. - Decided against assessee - ITA No. 754/Del./2011 - - - Dated:- 16-9-2016 - Shri I. C. Sudhir, Judicial Member And Shri L. P. Sahu, Accountant Member Appellant by : Sh. K. Sampath, Advocate Sh. V. Raju, Advocate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . During the course of hearing, the ld. AR submitted that the appellant is a company which came into existence after demerger of ITDC and as a part of disinvestment of ITDC, the assessee company bought the premises of Ranjit Hotel, New Delhi which was being run by ITDC. It was submitted that as per scheme of demerger policy, the appellant was not entitled to run the hotel business after taking it over. The appellant was in need of vacant possession of the premises for the purpose of its further business. He, therefore, had to pay ₹ 73,60,000/- to the tenants occupying the premises for getting vacant possession of the hotel building. This expenditure was claimed by the assessee as revenue expenditure u/s. 37(1) of the Act on the advice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Authorities below were justified in imposing penalty against the assessee. 5. Having heard the rival submissions and perused the material available on record, we do not find any justification to interfere with the orders of the authorities below. It is notable that the provisions of section 37(1) of the Act are quite unambiguous providing that only such expenditure are eligible for deduction which are laid out or expended wholly and exclusively for the purposes of business or profession, meaning thereby existence of business is sine qua non for the purpose of which the expenditure has to be incurred for deduction. This section also clearly bars the deduction of capital expenditure. In the present case, as per demerger agreement, the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... similar situation though about applicability of section 35D of the Act, against which no contrary decision is brought on record by the ld. Counsel for the assessee. The expenditure so incurred by the assessee are not on revenue account for the simple reason that it was not in respect of any continuing business, but in respect of making asset in a condition to be fit to be utilized for the new business and hence, such expenditure were clearly of capital nature. The ld. Authorities below have distinguished the decision of Hon ble Apex Court in Bikaner Gypsum Ltd. (supra) stating that in that case, the issue of expenditure incurred during the course of continuing business of mining was dealt in, whereas in the present case the impugned expendi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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