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TMI Blog2017 (11) TMI 898X X X X Extracts X X X X X X X X Extracts X X X X ..... isconceiving the facts, making unfounded assumptions and based on that arriving at the conclusion that the expenditure of Rs.47,74,477/- incurred by the appellant is not a business loss to be allowed in computing the income of the appellant. 1.2. Without prejudice to the above, on the facts and circumstances of the case and in law, the Ld.CIT(A), erred in passing the order u/s 250 by misconceiving the facts, making unfounded assumptions on the basis of nomenclature given to the entries in the books of accounts instead of ascertaining the real nature of the transaction which is contrary to law and based on that arriving at the conclusion that the Capital expenditure of rs.47,74,477/- incurred by the appellant is not to be treated as a par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Car Combination switches from Asahi Alpha Limited. Asahi Alpha Limited had in turn obtained the right to use in 1988 from Asahi Denso Limited. In the respective years the cost of Technical know-how, Interest on IFCI Loan and small machine tools were not claimed as revenue as the commercial production had not started. The entire development cost was shown under the head "Deferred Revenue Expenditure" in the Balance Sheet "Asset Side". As per the assessee, all these expenses are allowable in the normal course of revenue expenditure. 4. For the sake of convenience we hereby taking up the facts of A.Y. 2002- 03. During the previous year relevant to A.Y. 2002-03, M/s Yamaha Motors for whom this development was being done switched over from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee failed to clarify the specific section under which such loss was claimed and also failed to establish the necessary conditions for allowing such claim as eligible business expenditure. Accordingly, the claim of 'Lock project written off' amounting to Rs. 47,77,477/- was disallowed by the Assessing Officer. 5. Aggrieved by the order of the A.O, the assessee filed appeal before the CIT(A) and the CIT(A) held as under:- "6.1. As regards ground No. 2 of appeal, it is evident from the records ' that the appellant had incurred expenditure under the head "Lock Project" which included capital work in progress, technical knowhow and deferred revenue expenditure etc. aggregating to Rs.47,74,477/- till 31.03.2002. The same has been writ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been held to be capital in nature, the AO is under no legal obligation to verify reasons and nature of same with Yamaha Motors Ltd. Hence, the ground No. 2 of appeal is dismissed. 6.2. In the ground No. 3 of appeal, the learned counsel has contended that alternatively, the said expenditure may be allowed as business loss. Since, the entire expenditure was on capital work, the same is not permitted to be allowed as business loss under any provisions of the Act. It is correct that the project has not commenced and the entire amount spent on that project has been a loss to the appellant but the said loss is on capital account. The loss is capital in nature. It would be only after the assets representing such expenditure are sold or otherwis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ard unabsorbed losses of Rs. 5.4 crore. The written off was not done to save tax. The Ld. AR relied upon the judgment of Hon'ble Delhi High Court in case of Indo Rama Synthetic India Pvt. Ltd Vs. CIT 333 ITR 18. As relates to Ground No. 2, the Ld. AR submitted that the same is not pressed. As relates to Additional Ground No. 3, the Ld. AR submitted that as the assessee himself has disallowed Rs. 7,66,940/- therefore the disallowance by the A.O, should have been reduced in respect of this amount. 7. The Ld. DR relied on the order of the Assessing Officer & the CIT(A). The Ld. DR also submitted that the issue of expenditure incurred in respect of business or not has to be remanded back to the Assessing Officer to verify the same. 8. We have ..... X X X X Extracts X X X X X X X X Extracts X X X X
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