2006 (6) TMI 176

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....t of the material placed before us and the precedents relied upon. The assessee had placed an order on 3-2-1996 with Alps Engineering Services Pvt. Ltd. for the construction of a cold storage plant at its factory at Coimbatore. The assessee had advanced Rs. 7,89,500 for the erection and commissioning of two numbers of Eurostat 1000 refrigeration machine and other installations at the Coimbatore plant. Works could not be executed due to some reasons. A sum of Rs. 2 lakhs was recovered. The balance amount of Rs. 5,89,500 was claimed as a deduction from the total income. 4. It was contended before us that the advance given to the contractor was lost by the assessee. It was not an asset of enduring nature. The advance was made in the normal co....

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....aunched by the same management in relation to the same business. In the instant case the business of the assessee was running of cold storage and not setting up of a new cold storage. 8. In the case of CIT v. Crescent Films (P.) Ltd. [2001] 248 ITR 670 (Mad.) the assessee carried on the business of distribution of films. Loss was caused in relation to advance made to producer to complete film for which the assessee had acquired distribution rights. The loss was held to be deductible. The Hon'ble High Court has considered the factual details. It was noted that credit is an indispensable part of a business. It is not necessary that every business should register itself under the Money Lenders Act and make a claim in relation to any advance m....

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....decision in the case of Empire Jute Co. Ltd. v. CIT [1980] 124 ITR 1 (SC). In this case it is laid down that what is material to consider is the nature of the advantage in a commercial sense and it is only where the advantage is in the capital field that the expenditure would be disallowable on an application of this test. If the advantage consists merely in facilitating the assessee's trading operations or enabling the management and conduct of the assessee's business to be carried on more efficiently while leaving the fixed capital untouched, the expenditure would be on revenue account, even though the advantage may endure for an indefinite future. The test of enduring benefit is, therefore, not a certain or conclusive test and it cannot ....