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25. The Ld. CIT(A) upheld the order of the A.O. holding at para 5.3 of his order as under:

5.3 I have considered the facts of the case, assessment order and appellant's submission.

Appellant claimed advances given for new project for technical collaboration. Undoubtedly this claim is capital in nature and not allowable as revenue. Further it is also not allowable as bad debts since condition of section 36 (2) is not satisfied. Appellant claimed it as business loss but the same is not allowable since it was not incurred for the running of business. Undoubtedly it was incurred for new project in the form of technical collaboration. Therefore this loss is not incidental to the running of business and accordingly not allowable under section 28 also. The decisions relied upon by the appellant are on different facts. The advances were given in those cases for running of the business whereas in the case of appellant; the advance was given for new project which did not commence. Therefore assessing officer is justified in disallowing the claim. The disallowance made is therefore confirmed.

30. We have heard the rival contentions. The solitary issue is whether irrevocable balances written off by the assessee amounting to Rs. 16,26,668/- were capital or revenue in nature. On going through the documents referred to before us and also the orders of the authorities below, we find that none of the parties have been able to bring out clearly the facts to establish the exact nature of the amount which was written off. There is nothing on record clarifying the exact purpose for which the expense was incurred. The assessee has claimed that the same related to the first installment paid in lieu of technical collaboration agreement entered into with a party namely M/s. Consultare Makaya Aso. Ltd. Besides this, the assessee has referred to the Government approval granted for making the payment. We have perused the contents of this document and except for stating that it relates to technical knowhow fees.,there is nothing else in the said document to bring out the exact nature of the payment.Even the Revenue, we find has no basis for treating the same as capital in nature. It goes without saying that the real test for determining whther the payment I.T.A No. 1681/Ahd/2011 A.Y. 2005-06 Page No 34 Atul Ltd. vs. ACIT was revenue or capital in character entirely depends on the pupose for which it was incurred. The same can be determined from the technical collaboration agreement. In the absence of the same, the claim of either of the parties merits no consideration and it is not possible to adjudicate on the issue. We, therefore, considerate it fit to restore this matter to the Assessing Officer to determine the nature of the amount written off by the assessee from the contents of the technical collaboration agreement and any other document which he considers necessary. The A.O. is directed thereafter to adjudicate this issue in accordance with law. Needless to add, the assessee be granted due opportunity of hearing.