9911796707
TMI Blog2019 (12) TMI 1261X X X X Extracts X X X X X X X X Extracts X X X X ..... er referred to as "CIT (A)"), New Delhi has been dismissed. 2. The impugned order upholds the findings of the CIT (A) whereby the addition made by the Assessing Officer (hereinafter referred to as 'AO') under Section 14(A) read with Rule 8(D) (2) of the Income Tax Rules 1962 has been deleted. 3. The Respondent- Frontier Land Development Pvt. Ltd. (hereinafter referred to as 'Assessee') had filed its return of income on 14th March, 2014 declaring loss of Rs. 11,13,970/-. The same was processed under Section 143(1) of the Act and thereafter, the case of the assessee was selected for scrutiny assessment and notice was issued under Section 143(2) of the Act. During the assessment, the AO noticed that the entire capital gain and interest incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 'HDIL') for purchase of Building No. 2, District Thane, Maharashtra, for a consideration of Rs. 11,65,00,000/-. The company paid an advance of Rs. 3.50 crores and thereafter, could not pay the balance amount of Rs. 8,15,00,000/-. Vide letter dated 5th March, 2011 in Financial Year 2011-12, relevant to the concerned assessment year, HDIL forfeited the amount of Rs. 3.50 crores. 7. Mr. Bhatia has argued that the findings of the ITAT are perverse, in as much as, both CIT (A) as well as the Tribunal have erred by failing to take note of the fact that the forfeiture of advance was a colourable device, created by the assessee-company to adjust short-term capital gains earned due to sale of property in Defence Colony, against forfeiture of advan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y that the transaction is a colourable device when the same has been accepted by the Assessing Officer while treating the write off as capital expenditure. 12. We have given a thoughtful consideration to the orders of the authorities below. There is no dispute that the forfeiture of Rs. 3.50 cores claimed by the assessee as revenue expenditure has been treated by the Assessing Officer as capital expenditure. This conclusively establishes the genuineness of the transaction and therefore, cannot be accepted as a colourable device. All that is now required to be decided is whether the write off is a capital expenditure or revenue expenditure. The judicial decisions relied upon by the Ld. DR (supra) would do no good to the revenue. 14. In o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trade of the assessee and not for acquisition of capital asset. Accordingly, loss due to the forfeiture of the earnest money deposited cannot be a capital loss. The earnest money deposit was made by the assessee was not for acquiring of any capital asset for investment of business assets but it was deposit for the business of the assessee i.e. the sale and purchase of land. Accordingly, the forfeiture of earnest money in the case in hand is a business expenditure. Therefore, we set aside the orders of the lower authorities and the claim of the assessee is allowed." 16. Considering the facts in totality, in the light of the decision of the co-ordinate bench we do not find any reason to interfere with the findings of the CIT(A). The appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... engaged in the business of real estate. The main object of the business of the company is development of real estate. It made a payment of Rs. 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 Rs. 3.50 crores could not be categorised as capital expenditure. Therefore ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
