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2020 (8) TMI 513 - ITAT DELHIDisallowance of forfeiture of security deposit being treated as capital loss - CIT-A deleted the addition - HELD 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. Assessee rightly contended that the security deposit was refundable on completion of the period of the lease. Agreement to this effect was executed and was further supplemental agreements were also entered into and ultimately the assessee-company did not continue with the period of their lease and hence, the security deposit was forfeited by the owner/landlord. These facts clearly show that assessee-company filed sufficient documentary evidences before A.O, which have not been property considered and at the appellate stage the A.O. did not rebut the submissions of the assessee-company to prove that security deposit was forfeited which is a business loss as the same was arising out of the business activities of the assessee. CIT(A), therefore, correctly following the material on record in proper perspective, rightly deleted the addition. We do not find any infirmity in the Order of the Ld. CIT(A) in deleting the addition. - Decided against revenue. Disallowance of interest expenses u/s 36(1 )(iii) - A.O. disallowed the impugned interest on interest free loans and advances - assessee submitted before the CIT(A) that A.O. could disallow the impugned amount under section 36(1)(iii) when borrowed funds were not utilised for the purpose of business and were utilised for the purpose of interest free loans and advances for non-business purposes - HELD THAT:- As per balance sheet of the assessee company [PB-32], assessee-company was having sufficient own funds to give the impugned amount as loans and advances to group concerns in assessment year under appeal. There is a presumption that assessee has not used any borrowed funds for giving the interest free loans and advances. A.O. has not brought any evidence on record if borrowed funds have been used for advance, or non-business purpose or were given to the group concerns as interest free loans and advances. No disallowance have been made by A.O. in preceding A.Y. 2007-2008. Therefore, on the same set of facts, A.O. was not justified in making the disallowance which have been rightly deleted by the Ld. CIT(A). We do not find any infirmity in the Order of the Ld. CIT(A) in deleting the addition - Decided against revenue. Disallowance of capital loss on new block of assets.- Capital loss incurred by transferring the existing block of assets into a new block of assets but ownership over the assets remained unchanged - CIT(A) 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 - HELD THAT:- Ground No.3 raised by the Revenue is totally irrelevant and is liable to be rejected. There is no grievance raised by the Revenue in the ground of appeal because whatever A.O. has done, has been confirmed by the Ld. CIT(A). Therefore, there is no question of challenging the Order of the Ld. CIT(A) in allowing capital loss, which fact itself is incorrect because capital loss have not been allowed by the Ld. CIT(A). The Ld. CIT(A) has allowed the depreciation on block of asset on this issue against which there is no ground of appeal raised by the Revenue. Since there is no challenge by the Revenue in allowing of the depreciation by the Ld. CIT(A), subject to verification by the A.O, therefore, no further contention can be raised by the Revenue/Ld. D.R. Further the Ld. CIT(A) has allowed the claim of depreciation on block of asset by directing the A.O. to verify the evidences filed during the course of proceedings. Thus, the matter was still with the A.O. to verify the claim of the assessee and allow depreciation as per Law. - Decided against revenue.
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