Expenditure Bangalore Electricity Supply Company Limited

It has been submitted that this ground is connected with Ground No.3 in assessee’s appeal, which has been dealt herein above in paragraphs 4 and 5. It is observed that Ld. CIT deleted addition in part as assessee had provided certain bills which were relating to year in consideration and was of the opinion that payments crystallised during the year to that extent. 19.1. Assessee submitted before Ld.AO that, these were in the nature of R&D expenses. Ld.Sr.DR submitted that in P&L account R & D expenses of capital nature has been separately claimed by assessee and expenditure incurred on development of prototype is not part of R&D expenses.

loan taken from bank is a capital expenditure

Fixtures of the book value of `2,500 sold off at `1,600 and new fixtures of the value of `4,000 were acquired, cartage on purchase `5. `8,000 custom duty paid on import of machinery for modernisation of factory production. `6,000 loan taken from bank is a capital expenditure paid as compensation to two employees who were retrenched. ` 1,500 paid for servicing the company’s car including ` 500 paid for change of oil. Indiankanoon.org needs to review the security of your connection before proceeding.


We have perused submissions advanced by both sides in the light of records placed before us. InterestRs.12,47,239/-ii. Admn. ExpensesRs. 5,00,000/-iii.Personal expensesRs.

Capital expenditure incurred within 3 years before commencement of business is allowed as deduction in the year of commencement of business. All assessees engaged in business or profession32Additional depreciation shall be allowed at 20% of actual cost of new plant and machinery [other than ships, aircraft, office appliances, second hand plant or machinery, etc.] . Interest accrued/outstanding will also be shown as a liability. ` 2,000 paid for hiring of computer time for the preparation of the accounts of the business is a revenue expenditure. An expenditure incurred to increase the earning capacity of a business is treated as capital expenditure. For example, expenditure incurred for shifting the factory to convenient site is a capital expenditure.


Sale proceeds from sale of goods ` 10,000 is a revenue receipt as it is a receipt in the course of normal business activities of the enterprise. Revenue receipts are the receipts which are obtained in course of normal business activities. They include proceeds from sale of goods, fee received from the services rendered in the ordinary course of business, receipts. In case of not for profit organisation, legacy and life membership are capital receipts. Interest paid `40,000 on loan taken for construction of building and purchase of plant and machinery before the asset is ready for intended use. Overhaul expenses ` 8,200 incurred to put a second hand car in working condition is a capital expenditure.

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  • We have perused submissions advanced by both sides in the light of the records placed before us.
  • Capital expenditure is capitalised.
  • 13.2.
  • The Capital Budget is further categorised into capital receipts and capital expenditure.

Ground No.5 relates to expenses of Rs.1,81,94,891/- on account of commission, discount and brokerage on sales made to government parties. Respectfully following the same this ground raised by revenue stands dismissed. Respectfully following the decision, this ground raised by revenue stands dismissed.

Q. How the capital expenditure loan / Cash Credit Limit be utilized ?

We have perused submissions advanced by both sides in light of records placed before us. Ground No. 6 is in respect of disallowance of Rs.28,56,250/-on account of investments written off. 11.3. Even before us, Ld.Counsel was unable to establish market value of stock to be at ‘nil’, and therefore we do not find any infirmity in the order of Ld.CIT and the same is upheld. Accordingly ground no.5 raised by assessee stands dismissed.

39.2. Revenue has raised following grounds for year under consideration. Ld.Counsel argued that, disallowance though restricted by Ld.CIT to Rs.34,32,239/-, is still on higher side. Alternatively, he suggested for disallowance of token amount would meet ends of Justice. Aggrieved by order of Ld. CIT revenue as well as assessee are in appeal before us now.

He submitted that since these expenses have given rise to increase in knowledge, benefiting assessee. He thus submitted that such expenses should be capitalized, as they gave rise to enduring benefit to assessee. The Ld. CIT also ignored that the assessee had separately claimed deduction of Rs.2,98,46,839/- as capital R&D expense and treated this expenditure of Rs.78,56,810/- only as pre-operative expense.

2) Except for authorized law enforcement investigations, no other attempts are made to identify individual users or their usage habits. Raw data logs are used for no other purposes and are scheduled for regular deletion. Reimbursement of terminal benefits given to the BESCOM employees on behalf of KPTCL and ESCOMs P & G Trusts. CASH MANAGEMENT SECTIONPreparation of daily cash-flow statementThis Section is having Head Office Current Accounts with the following Banks for pooling collection from all the local bank accounts. Any benefit by way of bonus or otherwise over and above the sum actually assured, which is to be or may be received under the policy by any person.

loan taken from bank is a capital expenditure

On the facts and circumstances of the case and law, the Ld.CIT has erred in deleting the addition of Rs.98,25,000/- made by treating 25% of royalty payment as capital expenditure. 29.4. The https://1investing.in/ learned Counsel submitted that complete details of the payment had been filed during the course of assessment proceedings and copies thereof were appended at page 1 to 53 of the Paper Book.

CIT has erred in law in holding that the software expenses amounting to Rs.69,38,000/- are in the nature of capital expenditure instead of revenue as claimed by the appellant. Capital receipts are loans taken by the government from the public, borrowings from foreign countries and institutes, and borrowings from the RBI. Recovery of loans given by the Centre to states and others is also included in capital receipts. In the balance sheet, capital receipts are mentioned in the liabilities section.

Qualifying Assets

However, if the temporary delay is necessary part of the process of getting an asset ready for its intended use or sale, then there will be no suspension of capitalization. Capitalization of Borrowing cost are commenced when the above mentioned 3 points are satisfied. However, if there is a temporary delay in which the active necessary developments are interrupted then then there will be a suspension of capitalization. If an enterprise has incurred any finance/ancillary cost in connection with the borrowings, then it will also be amortised. If an enterprise has incurred any discounts or premiums related to the borrowing cost, then it will also be amortised. We have perused submissions advanced by both sides, in light of records placed before us.


Interest on investments ` 3,000 is a revenue receipt as use of enterprise resources yielding interest is revenue. Sale proceeds from investments ` 40,000 is a capital receipt and capital loss of ` 4,000 is to charged in the Profit and Loss Account. Cash received from debtors ` 20,000 is a revenue receipt as this is in the course of normal business activities of the enterprise.

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