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2015 (10) TMI 401 - HC - Income TaxAddition on account of advance against order - nexus between sending of money as against sale was not established and no service was rendered by the foreign buyer/receiver of the money and that too without deduction of tax at source as required under section 40(a) - ITAT deleted addition - Held that:- The loss has been caused to the appellant due to the fraud which he fell victim to in the course of his business. The Hon'ble P&H High Court in the case of CIT vs. Pukhrajwati Bubber [2006 (11) TMI 179 - PUNJAB AND HARYANA High Court ] on which the appellant has also relied, while allowing the loss caused due to embezzlement observed as though there is no provision for allowing deduction of a trading loss on account of embezzlement, section 37 of the Act provides for any expenditure for the purpose of business and there has to be nexus between the business operation and the loss. If the loss was directly connected with the business operation and incidental to carrying on of the business, the same has to be allowed as a deduction. Therefore, keeping in view the facts of the case and also the ratio of Hon'ble Punjab and Haryana High Court decision in the case of CIT vs. Pukhraj Wati Bubber (supra) the loss so incurred is held to be an allowable business loss. The addition made by the Assessing Officer is therefore deleted - Decided in favour of assessee. TDS liability on forfeiture of advance security against rent - Addition on account of payment of rent made in contravention to provisions of section 40(a)(ia) - ITAT deleted addition - Held that:- There is no dispute that the amount paid by the assessee was a refundable security. The only dispute raised by the Assessing Officer is that the assessee failed to deduct the TDS. Learned first Appellate authority confirmed the disallowance on the ground that it is capital expenditure. We are of the view that refund was adjusted towards rent in peculiar facts and circumstances When assessee made the payment of refundable security, as per circular, he was not supposed to deduct the tax at source. The security was paid in order to cover such type of unforeseen circumstances. The landlord has forfeited it and adjusted it towards the rent. Thus, it was a revenue expenditure in the hands of the assessee and it did not deserve to be disallowed. We allow this ground of appeal and delete the disallowance - Decided in favour of assessee.
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