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[2008] 166 Taxman 161 (Delhi)/[2009] 311 ITR 401 (Delhi)/[2008] 219 CTR 308 (Delhi) [2008] 166 TAXMAN 161 (DELHI) HIGH COURT OF DELHI Commissioner of Income-tax * v. R.G. Scientific Enterprises (P.) Ltd. MADAN B. LOKUR AND DR. S. MURALIDHAR, JJ. IT APPEAL NO. 1473 OF 2006 OCTOBER 3, 2007 Section 36(1)(vii) of the Income-tax Act, 1961 - Bad debts - Assessment year 1995-96 - Two Directors had, on behalf of assessee-company, made down payment of Rs. 9 lakhs to one company 'K' for purchase of a premises for assessee - Later, they resigned and transaction for said purchase could not be completed - Since 'K' refused to return money, after waiting for three years, on advice of its auditors, assessee wrote off said amount as bad debt - Assessing Officer disallowed claim - Commissioner (Appeals) dismissed appeal filed by assessee by holding that since money was paid for purchase of a capital asset and after purchase would have been shown in balance sheet as such, said sum constituted a capital loss and not a business loss - Tribunal took view that since asset was in fact not purchased and any hope of money being recovered was lost, said sum constituted only a business loss and had to be allowed as such - Letter written by assessee to Assessing Officer revealed that amount had been advanced to 'K' for purchase of a capital asset for assessee - Whether conclusion arrived at by Tribunal that non-recovery of said sum was a business loss was contrary to assessee's letter which made position explicit that it was advanced for purchase of a capital asset - Held, yes - Whether, therefore Commissioner (Appeals) was justified - Held, yes CASE REFERRED TO CIT v. Abdullabhai Abdulkadar [1961] 41 ITR 545 (SC) [Para 5]. Ms. Sonia Mathur for the Appellant. Satyen Sethi for the Respondent. ORDER 1. In this appeal under section 260A of the Income-tax Act, 1961 ('the Act'), the revenue has challenged the dated 24-2-2006 passed by the Income-tax Appellate Tribunal, Delhi Bench "F" ('Tribunal') in ITA No. 4045/Delhi/1999 for the assessment year 1995-96. 2. Admit. 3. The following question of law arises for consideration : "Whether on the facts and in the circumstances of the case, the…

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