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TMI Blog1997 (2) TMI 156X X X X Extracts X X X X X X X X Extracts X X X X ..... alur. It was stated that the assessee-firm had entered into an agreement on 30-12-1980 with one Shri Puttappa Heggade and others for Purchase of standing timber trees in the land situated at Muduba Village, Sringeri Taluk. However, in violation of the said agreement, the vendors entered into a separate agreement with M/s. Mayura Enterprises, Karkala to sell the standing timber trees remaining in the same land. The assessee filed the above case against the vendors for the purpose of enforcing the agreement. The case was filed on 27-6-1984 and the stamp duty of Rs. 2,49,700 was purchased on 27-6-1984. Ultimately the assessee arrived at a mutual settlement with the vendor and also the other allottee of the standing timber and the amount paid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omise this amount had to be written off. The CIT(A), therefore, allowed the entire amount as admissible expenses or as bad debt written off. 3. The Department challenges the above decision of the CIT(A) by contending that neither was the expense incurred in this particular year and hence, it was allowable in this year nor was the claim of bad debt entertainable. In support of the departmental contentions, the learned DR has firstly placed reliance on the judgment of the Allahabad High Court in the case of Lachhman Das Brijballabh Das, In re [1942] 10 ITR 186. It was held in that particular case that expenses incurred by the purchaser in completing his title and entering into possession after the sale had become absolute are not deductible ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade of the assessee's business. On the other hand, they were merely sources of the stock-in-trade of the assessee's business i.e., timber. Hence, by applying the abovementioned judgment of the Calcutta High Court in the case of Rishabh Investment Ltd., it has got to be held that the expense was certainly of capital nature. In any case, the expense was incurred in some earlier year and not in the year under consideration. Hence, even if the expenses might have been of revenue nature they would certainly have not been allowable in this particular year. The expense can also be not allowed as bad debt written off in this year. The so-called debtor party did not owe this amount to the assessee and the assessee merely debited the account of tha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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