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2021 (7) TMI 1168 - AT - Income TaxDisallowance u/s 37(1) - security deposit encashment claim - AO observed that encashment of bank guarantee being penal in nature on account of nonperformance of contract at assessee’s behest - as per AR impugned encashment of bank guarantee is outcome of failure to perform its contractual obligation only without involving any offence or penal component u/s.37(1) - HELD THAT:- Faced with this issue, we find that a catena of case law (GUJARAT STATE FINANCIAL CORPORATION [2013 (8) TMI 78 - GUJARAT HIGH COURT], NEO STRUCTO CONSTRUCTION LTD. [2013 (7) TMI 851 - GUJARAT HIGH COURT], REGALIA APPARELS (P.) LTD. [2013 (7) TMI 114 - BOMBAY HIGH COURT], Jamna Auto Industries[2008 (1) TMI 62 - PUNJAB & HARYANA HIGH COURT] and Green Delhi BQS Ltd. [2018 (5) TMI 632 - ITAT DELHI] holds that such an encashment of bank guarantee is incurred in the normal course of business than involving any penalty element at all. We adopt the very reasoning herein as well and direct the Assessing Officer to delete the impugned disallowance/addition in issue - Decided in favour of assessee.
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