TMI Blog2019 (1) TMI 1273X X X X Extracts X X X X X X X X Extracts X X X X ..... oresaid reasoning. In the present case the loss incurred was in the transaction relating to and for acquisition of a capital asset. For some reason, the attempt made by the appellant-assessee to acquire land/plot as a capital asset did not fructify. Hence, the appellant-assessee had asked for refund of the amount, which was paid for acquisition of the capital asset. Forfeiture or deduction made by the HSIDC while refunding the amount would be a capital loss and not a revenue expenditure. - Decided against the assessee. - Income Tax Appeal No. 132/2009 - - - Dated:- 10-1-2019 - MR. SANJIV KHANNA AND MR. ANUP JAIRAM BHAMBHANI JJ. Appellant Through Mr. A.P. Sinha, Advocate. Respondent Through Mr. Ashok K. Manchanda, Sr. Standin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot can be treated as revenue expenditure as was claimed in the return. 6. The appellant-assessee had applied for allotment of an industrial plot in Phase-IV, Gurgaon and had deposited ₹ 10.87 lacs with HSIDC being 25% of the cost of the plot admeasuring 500 square metres. A plot admeasuring 452.10 square metres was allotted to the appellant, which plot, the appellant did not accept as it was not admeasuring 500 square metres. Appellant; had then asked for a refund of ₹ 10.87 lacs. HSIDC had refunded ₹ 6,94,173/- and the balance amount of ₹ 3,93,327/- was forfeited. 7. The Assessing Officer held that the amount deposited with HSIDC was for acquiring a capital asset, and hence the amount deducted by HSIDC on surr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om.). Cases relied upon by the appellant-assessee were distinguished on the ground that in these cases expenditure had been incurred for obtaining a contract thereby expanding the existing business by purchase of raw material etc. and hence the expenditure/loss would be revenue loss/expenditure. Specifically referring to Anjani Kumar Company Limited (supra), the Tribunal preferred to follow decisions of the Allahabad High Court and Bombay High Court in Bazpur Cooperative Sugar Factory Limited (supra) and Fancy Corporation Limited (supra). 10. The principle as laid down in Empire Jute Company Limited versus Commissioner of Income Tax, (1980) 4 SCC 25 reads as under:- 11. When dealing with cases of this kind where ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roperty or of rights of a permanent character, the possession of which is a condition of carrying on its trade at all? It is clear from the above discussion that the payment made by the assessee for purchase of loom hours was expenditure laid out as part of the process of profitearning. It was, to use Lord Soumnar's words, an outlay of a business in order to carry it on and to earn a profit out of this expense as an expense of carrying it on . It was part of the cost of operating the profit-earning apparatus and was clearly in the nature of revenue expenditure. 11. On the application of the said principle, forfeiture of ₹ 3,93,327/- would be a capital expenditure or loss as it was a loss incurred not for the purpose of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dia Limited (supra), reference was made to the decision of the Supreme Court in Oberoi Hotels Private Limited versus Commissioner of Income Tax, [1999] 236 ITR 903 (SC) wherein it has been held that the amount received by the assessee for giving up its right to purchase and/or to operate the property or for getting it on lease, before it was transferred and let out to other persons, was in the nature of a consideration. It would not be for settlement of rights under a trading contract. The injury inflicted was on the capital asset of the assessee. Giving up a contractual right on the basis of the agreement that had resulted in loss of source of assessee s income would be a capital receipt. When payment is made as compensation for term ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... [1982] 136 ITR 742 (Cal.) the assessee had paid damages and interest as he was not able to pay the principal amount for purchase of land under agreement to sell. It was held that as the damages were related to the capital asset of the assessee, the amount paid cannot be allowed as a revenue expenditure. 16. In Anjani Kumar Company Limited (supra), the assessee had paid advance for acquiring agricultural land for setting up a boiler factory. As the land was not acquired, it was held and treated as revenue expenditure. We with respect cannot subscribe the view. The Rajasthan High Court in an earlier judgment in Commissioner of Income Tax versus Jaipur Mineral Development Syndicate, [1995] 216 ITR 469 (Raj.) had examined whether ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
