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TMI Blog2020 (8) TMI 513X X X X Extracts X X X X X X X X Extracts X X X X ..... : "Pyoginam Vs. ACIT reported in 130 TTJ 7 (Del) Forfeiture of earnest money deposit for non fulfillment of the export quota in neither a penalty nor capital expenditure but is in the nature of business loss allowable as a deduction. CIT Vs. Ahmedabad Cotton Mfg. Co. Ltd. & Ors reported in 205 ITR 163 (SC) Payment though referred to as penalty, but in fact made in exercise of option available under statutory scheme, in course of assessee's business, is allowable business expenditure. Thackers H.P. & Co. Vs. CIT reported in 134 ITR 21 (MP) The contract for purchase of tendu leaves was in the course of the same business which was then carried on by the assessee and could not be said to be commencement of a new business. The deposit of security amount was made as business expenditure and its forfeiture was a business loss. Security amount deposited under a contract is not for obtaining the contract but for due performance. Hence the forfeiture of security deposit was a revenue loss. CIT Vs. Balaii Chitra Mandir reported in 154 ITR 111 (AP) Security deposit forfeited by the assessee due to default in payment of rent by the lessee pursuant to the lease agreement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has referred to the replies filed before A.O, copies of which were filed in the paper book along with copies of the agreements and submitted that since assessee did not continue with the rental property, therefore, security deposit given were forfeited. He has also referred to the notice given by the owner, copy of which, is filed in the paper book before forfeiture of the security deposit and reply of the assessee in which assessee has surrendered the possession of the tenanted property prior to the lease period. Therefore, security deposit was forfeited. 4.5. We have considered the rival submissions and perused the material on record. It is not in dispute that assessee has given security deposit for taking the premises on lease. Learned Counsel for the Assessee referred to various replies filed by assessee-company at assessment stage which shows that assessee-company filed all the documentary evidences and explanation before A.O. on the matter in issue. Learned Counsel for the Assessee rightly contended that the security deposit was refundable on completion of the period of the lease. The agreement to this effect was executed and was further supplemental agreements were also ent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessment order for preceding assessment year in respect of the same allegations. It was submitted that even out of the amount given as loans and advances, the amount of Rs. 29,51,517/- is not in the nature of loan. The assessee also submitted that the amount in question have been given out of the amount available to the assessee as on the date of the loan. It was submitted that there is no nexus between the interest bearing funds and advances made by the assessee company. The details of the amount available to assessee and given on loan which also tabulated at pages 12 and 13 of the impugned order. The Ld. CIT(A) accepted the explanation of assessee that assessee-company had given its own funds on the dates when the advances at Rs. 62,73,995/- were given to group companies. Therefore, there is no question of disallowing any interest in question. The Ld. CIT(A) accordingly deleted the addition. 5.2. The Ld. D.R. relied upon the Order of the A.O. as well as relied upon Judgment of Hon'ble Delhi High Court in the case of Punjab Stainless Steel Industries vs., Commissioner of Income Tax [2011] 324 ITR 396 (Delhi) and Judgment of Hon'ble Punjab & Haryana High Court in the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /- incurred by transferring the existing block of assets into a new block of assets but ownership over the assets remained unchanged." 6.1. The A.O. disallowed capital loss of the impugned amount. The assessee filed written submissions before the Ld. CIT(A) to show that assessee is entitled for deletion of the addition and that on the similar facts no addition have been made in the preceding assessment year. The Ld. CIT(A) considering the issue in detail at page-18 held as under : "The disallowance of capital loss made by the A.O. is, therefore, sustained.". 6.2. The Ld. CIT(A), however, considering the aleternate claim of assessee in which the assessee contended that if the claim of capital loss is not allowed, claim for depreciation may be allowed for the year and relied upon Judgment of the Hon'ble Delhi High Court in the case of Oswal Agro Mills Ltd., 341 ITR 467. Ld. CIT(A) following the above decision directed the A.O. to allow claim of depreciation of block of assets which were not used for the purpose of business, after verifying the various evidences filed during the course of proceedings. 6.3. The Ld. D.R. submitted that no depreciation is allowable to the assessee. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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