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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 ..... 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er. 4. Ground No.1 is as under : On the facts and circumstances of the case and in law, the CIT(A) has erred in deleting the disallowance of ₹ 67,46,470/- made on account of forfeiture of security deposit being treated as capital loss. 4.1. The A.O. disallowed the impugned amount on account of forfeiture of security deposit treating the same as capital expenditure. The assessee agitated the addition before the Ld. CIT(A) and placed reliance upon the following decisions : 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 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Ld. D.R. also relied upon Orders of ITAT, Bangalore Bench Dated 15.11.2017 in the case of M/s.GXS India Technology Centre Pvt. Ltd., DCIT, Circle-11(3), Bangalore in Appeal No. IT(TP)A.No.1041/Bang./2016 for the A.Y. 2010-2011 in his written submissions. 4.4. On the other hand, Learned Counsel for the Assessee reiterated the submissions made before the authorities below and submitted that the allegations of the A.O. were that assessee did not filed documentary evidences in support of the contention which fact is incorrect. He 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s were given in earlier year, which have been accepted in earlier year and no disallowance have been made. Copy of the assessment order for preceding A.Y. 2007-2008 was also filed to substantiate the same. The details of the same are noted at Pages 9 and 10 of the appellate order to show that in assessment year under appeal assessee has given loans and advances in a sum of ₹ 62,13,995/- and in preceding assessment year 2007-2008 loans and advances were given in a sum of ₹ 1,77,48,770/-. The assessee also filed copy of the ledger account and copy 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 ₹ 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) ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... usiness 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. Ground No.2 of the appeal of the Revenue is dismissed. 6. Ground No.3 is as under : On the facts and circumstances of the case and in law, the CIT(A) has erred in allowing capital loss of ₹ 1,71,60,922/- 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), howeve ..... X X X X Extracts X X X X X X X X Extracts X X X X
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