Per D.C. Agrawal, Accountant Member. - In this case the revenue has raised following grounds:—

"1.On the facts and in the circumstances of the case and in law, the CIT(A) erred in deleting the disallowance of Rs. 61,807 without appreciating the facts that this expense was not for business purpose and was not covered by limits prescribed under rule 6B.

2.On the facts and in the circumstances of the case and in law, the CIT (A) erred in directing the Assessing Officer to tax the amount of Rs. 14,00,000 received on termination of agency as capital receipt. The CIT(A) failed to appreciate the fact that by resources transfer agreement, the assessee continued the business in new set up, and the income earning apparatus remain intact. There was no unabsorbed stock to the business of the assessee as income increased next year. The loss because of loss of agency commission was a loss due to ordinary incident in the course of business (Eillanders Arbuthnot & Co. Ltd. v. CIT 53 ITR 283 and also Kattlewell Bullen Co. Ltd. v. CIT - 53 ITR 261).

3.On the facts and in the circumstances of the case and in law, the CIT(A) erred in directing the Assessing Officer to delete disallowance of Rs. 1,