Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2019 (6) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (6) TMI 662 - AT - Income TaxDisallowance of claim of business loss on cancellation of lease deposit - HELD THAT:- The lease deposit was made in the regular course of carrying on the business of textiles and jewellery by the assessee by opening a shop at Puducherry and as per the leave and license agreement, the landlord is supposed to carry out the construction as per the specifications of the assessee and obtain necessary regulatory approvals. The assessee had to terminate the lease due to non-performance of the landlord by getting electricity connection for the subject mentioned lease premises and in that process, the assessee had to forego a regular business deposit of ₹ 30 lakhs and consequently had to write-off the same in its books and claim the same as deduction. This, in our considered opinion, would have to be construed only as a loss incidental to the regular carrying on of normal business by the assessee allowable U/s.28. See MYSORE SUGAR COMPANY LIMITED [1962 (5) TMI 3 - SUPREME COURT] - Thus loss on account of cancellation of lease should be treated as business loss of the assessee - Decided in favour of assessee Proportionate disallowance of interest on borrowed funds - HELD THAT:- One of the primary requirement of making disallowance U/s.36(1)(iii) is that the borrowed funds should have been utilized for non-business purposes. In the instant case, we have already held that the payment of higher education fees to Harvard University, USA is for business purposes only. Hence we hold that no disallowance of interest U/s.36(1)(iii) of the Act could become operational. Accordingly the Ground raised by the assessee are allowed.
|