Capital advance written off

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biswojit (Querist)
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04 June 2012 Namaste Experts,

We(Indian Company) had given advance for purchase/development of capital assets to some vendors in F.Y.09-10.We had shown same advance under CWIP (Capital Work In Progress) in our Balance Sheet for FY 09-10 and 10-11. The Contract was was not materialised also there is no chance of recovery in cash or kind.

Our management deceided to written of the same advance in the FY 11-12.
My question is whether the amount charged to revenue in P&L (company's act) will added back for the purpose of computation of Profit & Loss under Income Tax Act,1961.

Whether this expense not allowable under any section in Income Tax Act. Because its our dead loss in other way because, we have not taken any depreciation as it was not capitalised.

please answer..

With Regards
Biswojit