TMI Blog2008 (2) TMI 516X X X X Extracts X X X X X X X X Extracts X X X X ..... the business of the assessee which is engaged in financing and leasing business. Further, the assessee has also not credited the forfeited amount in its profit loss account but in contradistinction to that it has credited the same in capital reserve account. Thus, in our considered opinion the decision of the Tribunal in the case of Prism Cement Ltd.[ 2006 (3) TMI 204 - ITAT BOMBAY-I] is more applicable which was rendered by the Tribunal after duly considering the aforesaid decision of the Hon'ble Supreme Court in the case of T.V. Sundaram Iyengar Sons Ltd. [ 1996 (9) TMI 1 - SUPREME COURT] . Therefore, respectfully following the decision of the Mumbai Bench of the Tribunal we find no reason to interfere with the order of the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d not accept the explanation of the assessee. According to him the decision cited by the assessee was on different facts. He also observed that no specific exemption as provided under the Act in respect of such receipts. According to him definition of "income" under section 2(24) is of inclusive one and the Hon'ble Supreme Court of Emil Webber v. CIT [1993] 200 ITR 483 has held that anything which can properly be described as income is taxable under the Act unless exempt under one or the other provisions of the Act. According to the Assessing Officer even if the amount received on forfeiture of shares is treated as capital receipt learned CIT(A) all capital receives are not exempt from taxation. In view of the above, he treated the amount o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Hon'ble Apex Court in the case of Travancore Rubber Tea Co. Ltd v. CIT [2000] 243 ITR 158 wherein it was held that forfeiture of earnest money and advance were in the nature of capital receipt not chargeable to tax. In this case, the Hon'ble Supreme Court applied the rule laid down in the case of London Thames Haven Oil Wharves Ltd v. Attwooll (Inspector of Taxes)[1968] 70 ITR 460 (C.A.) and held that if the agreed sums of money under the agreement had been received by the assessee they would have been credited in its capital account as capital receipt. That being so the forfeited amounts must also be treated as capital receipt. Reliance was also placed on the decision of the Hon'ble Lahore High Court in the case of Multan Electric Su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be inferred that the application money forfeited by the assessee has to be considered as capital in nature. Hence, he deleted the addition made. 5. The learned DR relied on the decision of the Hon'ble Supreme Court in the case of CIT v. T.V. Sundaram Iyengar Sons Ltd. [1996] 222 ITR 344 and submitted that the Hon'ble Supreme Court has held that the assessee receiving deposits (not being in the nature of security deposit held by the assessee for performance of contract by his constituent) from his customers in the course of his business which depleted by adjustment from time to time, unclaimed balances transferred by the assessee to the profit loss account are his trading receipts, even though the deposits were initially treated as ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ower authorities and the material available on record. In the instant case the assessee was to receive call money in respect of share as per the terms of prospectus and the allotment letters, but the same were not received from some of the shareholders. In this case, the share application money was forfeited as per the terms of the prospectus. The above facts are not in dispute. The short question which fall for our consideration is whether the above forfeiture amount is taxable under the provisions of Income-tax Act, 1961 or not. The learned DR vehemently placed reliance on the decision of the Hon'ble Supreme Court in the case of T.V. Sundaram Iyengar Sons Ltd. for his contention that forfeited amount is taxable as revenue receipt. Howev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng plant at Satna during the impugned assessment year. In these circumstances, we are constrained to hold that the amount received by the assessee in lieu of issuance of NCDs which were forfeited later, on account of non-payment of call money assumes a character of capital receipt which earlier was shown as a loan liability in the books of account of the assessee. If we consider this receipt to be a business receipt even then it would not be taxable to tax under the provisions of section 41(1) of the Act, inasmuch as there was no allowance or deduction of this liability in the earlier years." In view of the above, respectfully following the aforesaid decision of the Mumbai Bench of the Tribunal we find no reason to interfere with the orde ..... X X X X Extracts X X X X X X X X Extracts X X X X
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