9911796707
TMI Blog2018 (11) TMI 1235X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessing officer and the CIT(A) that assessing officer has himself treated the revenue loss claim of the assessee as capital loss. No infirmity in the decision of the CIT(A) directing the assessing officer to adjust the short term capital loss against the capital gain as per section 70(2) of the act as the Department has treated the claim of revenue loss of the assessee as capital loss. No merit in the cross objection filed by the assessee as the assessee itself had made alternative claim to set off loss against capital gain as elaborated in the findings of the CIT(A). Accordingly, the appeal of the Revenue and cross objection filed by the assessee are dismissed. - ITA No. 16 & CO No. 28/Ahd/2016 - - - Dated:- 9-7-2018 - Shri Rajpal Yadav, Judicial Member And Shri Amarjit Singh, Accountant Member For the Assessee : Shri Anil Kshatriya, A.R. For the Revenue : Shri Krishna Murari, CIT-D.R. ORDER PER : AMARJIT SINGH, ACCOUNTANT MEMBER: - This Revenue s appeal and assessee s cross objection for A.Y. 2012-13, arise from order of the CIT(A)-9, Ahmedabad dated 21-10-2015, in proceedings under section 143(3) of the Income Tax Act, 1961; in short the Act . ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expenditure' when the appellant has not claimed it as revenue expenditure but claimed as loss on account^: of settlement of advances as incidental to the business and admissible u/s 28 of the Act. On that count also, the ground no.2 deserves to be dismissed. 4. The grounds of appeal of the assessee and the cross objections filed by the assessee are interconnected to the identical issue therefore for the sake of convenience both are adjudicated together by this common order. The brief fact of the case is that the assessee has filed return of income declaring income of Rs. Nil on 28th September, 2012. Subsequently, the case was selected under scrutiny by issuing of notice u/s. 143(2) of the act on 23rd September, 2013. The assessee is engaged in the business of manufacturing of GI Pipe Fittings. During the course of assessment proceedings the assessing officer noticed that assessee has debited the P L a/c by an amount of ₹ 6.69 crores as a claim of loss on settlement of advances. On verification of details called for, the assessing officer observed that assessee had entered into agreement for joint venture with R A Business Solution of Bangalore. According to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een two parties and this led to the appointment of Hon'ble Mr. Justice S.M. Soni, as an Arbitrator; (d) although the appellant accepted the arbitration award, in order to settle the debts, it accepted ₹ 66 lacs for this purpose and the remaining amount of ₹ 6.69 crores (Rs. 7.35 crores - ₹ 66 lacs) was claimed as a loss under the revenue account; (e) as per the agreement the contribution of ₹ 7.35 crores by the appellant was a contribution to the capital for the new venture and (f) ₹ 7.35 crores was reflected as investments in the balance sheet of the appellant on the assets side. The A.O. himself at para 3.2 of the assessment order has mentioned that further the investment made in joint venture is capital contribution of the assessee. No income from the joint venture was generated by us. Any loss incurred on capital contribution is not a revenue expenditure. It is a capital expenditure. Bad debts of capital expenditure is not an allowable expenditure. The appellant claimed the loss of ₹ 6.69 crores on revenue account which has been denied by the A.O. I agree with A.O. to the extent that this loss cannot be on revenue account as the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dingly, ground of appeal 2 3 are partly allowed . 6. We have heard the rival contentions and perused the material on record carefully. We have heard the rival contentions and perused the material on record carefully. On scrutiny, it was discerned to the assessing officer that the assessee company had entered into joint venture agreement with R.A. Business Solutions of Bangalore and as per the agreement the assessee was supposed to invest ₹ 15 crore and M/s. R.A. Business Solution was supposed to invest ₹ 7.15 crores. The assessee had invested first part of investment of ₹ 7.35 croes on 24-03-2011, however, the other party to the joint venture M/s. R.A. Business Solution had not invested its part of share as agreed upon between these parties. The dispute was settled by the award of the arbitrator dated 27- 03-2012 as per which the assessee company was to be paid an amount of ₹ 1.225 crore per year starting the installment from 23-03-2022. The assessee had entered into an agreement with other party M/s. R.A. Business Solution Bangalore as per which the assessee was to be paid ₹ 66 lacs immediately and the balance amount of ₹ 6,69,00000/- was ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
