TMI Blog1979 (5) TMI 18X X X X Extracts X X X X X X X X Extracts X X X X ..... ght in law in allowing the sum of Rs. 65,318, deposited by the assessee as security money, as permissible expenditure in computing its income for the year under consideration ? " The facts giving rise to this application are these : The assessee is a registered firm consisting of four partners. The income was derived from the business of selling country liquor as a licensed contractor in Bata Chowk, Faridabad. The ITO completed the assessment on 20th December, 1971, at a total income of Rs. 99,160 as against the declared loss of Rs. 19,045. The ITO in particular made an addition of Rs. 65,318 stated by the assessee to have been forfeited by the excise authorities with whom the said amount had been lying as security for the due payment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence fee. According to the Punjab Liquor Licence Rules, a sum equal to 5% of the annual licence fee had to be deposited in lump sum by the assessee as a security within a week of the date of the excise auction at which its bid was accepted. The amount of security lying deposited in the instant case as on 21st March, 1969, was Rs. 65,318.40. Again, according to condition 15(1) of the excise auction, the amount of security was to be adjusted from time to time against arrears, if any, of licence fee instalments and against the penalty, if any, levied for breach of the conditions of the licence. The balance security (namely, after adjustment as aforesaid) was refundable to the licensee at the end of the financial year, namely, on 31st March, 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntailed a criminal penalty nor was any other breach of the condition of the licence or of any excise law pointed out to them in support of the plea that the forfeiture of security resulted from a violation of law and hence the amount in question could not be allowed as a business expenditure. From this, the Tribunal concluded that just as payment of licence fee would have been an allowable expenditure, the adjustment of security against arrears of licence fee is also equally allowable. Consequently, the appeal of the assessee was allowed and the addition of the security amount made towards the income was deleted. Mr. Awasthy, learned counsel for the revenue, argued that the forfeiture of security amounting to Rs. 65,318 was due to breach ..... X X X X Extracts X X X X X X X X Extracts X X X X
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