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2022 (3) TMI 168 - ITAT MUMBAINature of expenditure - non-recovery of security deposits provided to the landlords written off in the books of account are to be treated as a revenue expenditure - HELD THAT:- The assessee is dutybound to make the rent payment every month/year and the same has been claimed as a revenue expenditure in the books of account and allowable under the Act. We find the security deposits takes the character of assurance and the enduring benefit only if there is direct benefit obtained. But in the present case, the security deposit is provided to landlord and at the same time the assessee is paying the rent. The security deposit cannot be considered as an enduring benefit to the assessee as the rent is being paid. The situation changes if the assessee has provided only security deposit and no rent has been paid. The assessee has provided the security deposit and has been paying the rent regularly. We applying the principles of going concern concept, compare with the debtors, when the recovery is doubtful the claim is written off as bad debts in the profit and loss account. Assessee claim can be allowed as a revenue expenditure in this year and in future if the assessee could able to recover the money from the landlord in the legal suit or any other mode the same has to be offered as an income of the assessee. Accordingly, we set aside the order of the CIT (Appeals) and direct the AO to delete the addition and allow the grounds of appeal of the assessee.
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