2012 (11) TMI 61

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....of the Act." 3. The A.O., while disallowing a sum of Rs.64,05,460/- u/s 37(1) of the Act has observed as under:- "On perusal of the P & L A/c., it is noticed that you have debited an amount of Rs.6405460/- under the head recurring royalty/fees. During the course of assessment proceedings, the assessee was required to explain the nature of such expenditure debited and also asked to explain as to why royalty recurring royalty /fees should not be treated as capital expenditure within the spirit of provisions of section 32(l)(ii) of the I.T. Act. The A.R. of the assessee in response, filed copy of written submission on 04/08/2011 in support of treating franchise expenses as revenue expenses u/s, 37(1) of the I.T. Act, which was filed by t....

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....g on the above decisions of different courts has not been accepted by the department though looking to the smallness of tax effect, appeal to the Hon'ble High Court of Gujarat has not been preferred by the department. Further, it is settled legal principle that if any expenditure is covered under any special/specific provisions of the Act then the allowances or otherwise of such expenses can only be considered under such special/specific provisions. Such special provisions override the general provisions. Reliance in this respect is placed on the decision of the Hon'ble ITAT, Ahmedabad in the case of Dinesh Chandra Chandulal Shah vs. ITO, reported in 40 ITD 483, whereby the Hon'ble Tribunal has held that the claim of bad debt has to be c....