TMI Blog2019 (12) TMI 1261X X X X Extracts X X X X X X X X Extracts X X X X ..... ain object of the business of the company is development of real estate. It made a payment of ₹ 3.50 crores as advance to HDIL for purchase of land to construct commercial complex for the development of real estate. Since it did not make payment of the balance amount - for whatever reason, the advance given was forfeited. In this view of the matter, the advance given in the ordinary course of business has been rightly treated as loss incurred by the company. We are unable to find any material on record to suggest to the contrary. In view of the aforesaid factual findings, the treatment given to the forfeiture of advance ₹ 3.50 crores could not be categorised as capital expenditure. Therefore, the question of law urged by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, claimed as forfeiture of advance for purchase of property. The assessee was asked to justify the offset and to show cause as to why forfeiture of advance should not be treated as capital expenditure. The explanation offered by the assessee was not accepted and the AO observed that forfeiture of advance given in 2004 was a colourable device to adjust capital gains. He accordingly, framed the assessment and characterised the forfeiture as capital expenditure and made addition of ₹ 3.50 crores. 4. On an appeal filed by the assessee, CIT (A) overturned the assessment order and the addition of ₹ 3.50 crores was deleted. Revenue preferred an appeal before the ITAT, which was dismissed and, the findings of the CIT (A) were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... forfeiture of advance. He further argued that the agreement to sell was entered by the assessee-company on 12th October, 2004 and substantial amount of ₹ 3.50 crores had been paid. All of a sudden, when assessee-company sold its Defence Colony property and earned short-term capital gain, the forfeiture of advance was claimed. He further submitted that the document furnished by the assessee in support of forfeiture of advance was a self-serving document. By way of this methodology, both the assessee as well as the intending seller had taken advantage of the Income Tax provisions. There is no explanation as to why the forfeiture was claimed in the year in which short term capital gain had arisen for the assessee. 8. We have gi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed upon by the Ld. DR (supra) would do no good to the revenue. 14. In our considered opinion the Assessing Officer cannot step into the shoes of the assessee so as to hold that when the funds were available why the balance sum of money was not paid. 15. As mentioned elsewhere by treating the forfeiture as a capital expenditure, the Assessing Officer himself has accepted the transaction of adjustment of ₹ 3.50 crores and its write off / forfeiture subsequently. On identical set of facts the coordinate bench in the case of Rekhi Lamba Realtors Vs. ITO in ITA NO.888/Mum/2009 , held as under :- After considering the rival contentions and relevant record. We find that the CIT(A) has not subscribed the vie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecision of the co-ordinate bench we do not find any reason to interfere with the findings of the CIT(A). The appeal filed by the revenue is dismissed. 9. From the facts narrated in the impugned order, it emanates that the transaction between the assessee and HDIL, is not disputed. The transaction, in fact, has also been accepted by the AO while treating the write off as capital expenditure. Thus, the only question that arises for consideration is whether such a transaction could be categorised as colourable device and the forfeiture of ₹ 3.50 crores could be treated as capital expenditure. Since the genuineness of the transaction is not disputed, we are unable to find any cogent ground or reason for the same to be conside ..... X X X X Extracts X X X X X X X X Extracts X X X X
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