- (1.) This appeal under section 260A of the Income-tax Act, 1961 (for short "the Act"), has been filed by the Revenue against the order dated March 5, 2010, passed by the Income-tax Appellate Tribunal Delhi Bench, Delhi Bench "H", New Delhi (in short "the Tribunal") in I.T.A. No. 4380/Del/2009, relating to the assessment year 2006-07. The following substantial questions of law have been claimed for determination by this Court: 1. Whether, on the facts and in the circumstances of the case, the learned Income-tax Appellate Tribunal was right in law in deleting the disallowance of Rs. 24,33,772 made by the Assessing Officer on account of capital nature of building repair expenses even though the expenditure resulted in the improvement in the earning capacity of the assessee by way of improving efficiency of the operations or resulted in creation of new assets and advantage of enduring nature benefit of which cannot be limited to the year under consideration only ? 2. Whether, on the facts and in the circumstances of the case, the learned Income-tax. Appellate Tribunal was right in law in deleting the addition of Rs. 2,50,000 made by the Assessing Officer on account of capital nature of software expenses even though the expenditure was of capital nature and it was not a repair or improvement only of the existing software and both the software were of enduring value and customised for the assessee ? 3 Whether, on the facts and in the circumstances of the case, the learned Income-tax Appellate Tribunal was right in law in deleting the addition of Rs. 3,79,802 made by the Assessing Officer on account of bad debts written off even though the assessee had failed to fulfil the conditions of section 36(1)(vii)/36(2) of the Income-tax Act, 1961, as mere claim for bad debts is not sufficient, particularly, when the case was being scrutinised and the assessee has failed to discharge the obligation to file details both before the Assessing Officer and the Commissioner of Income-tax (Appeals) that the conditions of section 36(1)(vii)/36(2) were satisfied ?
(2.) The facts, in brief, necessary for adjudication as narrated in the appeal, are that the respondent-assessee is engaged in the manufacturing of felts which are used in paper industry. The assessee filed its return on November 28, 2006, declaring taxable income of Rs. 17,48,86,985. The assessment was finalised under section 143(3) of the Act at an income of Rs. 17,77,07,220. It was found by the Assessing Officer that the assessee had mentioned a sum of Rs. 40,38,892 under the head "building repair expenses". Out of this, expenditure of Rs. 24,33,772 was held to be of capital nature and, therefore, 10 per cent, depreciation was allowed thereon. The Assessing Officer, thus, after considering the matter ordered disallowance of a sum of Rs. 21,90,435 being expenses of capital nature by order dated December 22, 2008. The Assessing Officer further ordered disallowance of a sum of Rs. 2,50,000 out of the total amount claimed by the assessee under the head "software expenses". Yet another disallowance was made by the Assessing Officer, i.e., of an amount of Rs. 3,79,802 out of the total claim of the assessee on account of bad debts under the head "Irrecoverable balances written-off". The Commissioner of Income-tax (Appeals) (in short "the CIT(A)") dismissed the appeal preferred by the assessee, by order dated September 15, 2009. The assessee carried further appeal before the Tribunal. The Tribunal accepted the plea of the assessee, vide the order under appeal and this is how the Revenue is now in appeal before this Court.
(3.) We have heard Learned Counsel for the appellant-Revenue and have perused the record.;