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TMI Blog2021 (8) TMI 481X X X X Extracts X X X X X X X X Extracts X X X X ..... 2003-04. 2.The Revenue is the appellant before us and the appeal was admitted on 29.06.2009 on the following substantial questions of law : "1.Whether on the facts and in the circumstance of the case, the Appellate Tribunal was right in law in setting aside the order of the Lower authorities, even though the amount written off was incurred in the course of assessee's business and it was a capital item shown in the assessee company's balance sheet? 2.Whether on the facts and in the circumstance of the case, the Income Tax Appellate Tribunal was right in law in holding that the security deposit of Rs. 6 crores written off as irrecoverable was a revenue expenditure is valid?" 3.We have heard Ms.K.G.Usha Rani, learned Standing Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Income Tax (Appeals)-I, Coimbatore, who dismissed the appeal by order dated 01.12.2006. Aggrieved by the same, the assessee preferred an appeal before the Tribunal, which has been allowed by the impugned order. 5.The Tribunal, in our considered view, has done thorough factual exercise as to the nature of business activities of the appellant and this has been brought out by the Tribunal in Para No.16 of the order, the operative portion of which, reads as follows : "16. ... As per the details mentioned in the assessment order, the assessee suffered a loss of more than Rs. 1.19 Crores within 6 months of the operation taken over by the assessee. It is clear that if the assessee continued the business, the assessee had to pay at least Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ms of the agreement, that would certainly disentitle the assessee for claiming the security deposit which was made for performance of its obligation under the agreement. Therefore, even otherwise, on the foreclosing of the agreement by the assessee before the expiry of its terms made the assessee disentitled from recovering the deposit and the same stands forfeited in view of the terms and conditions of the agreement. Though there is no such term about the forfeiture but when assessee agreed to have no right to terminate the agreement before the expiry of terms, then the violation of the said condition automatically led to forfeiture of the security. In these facts and circumstances, we have no hesitation to hold that the security deposit m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ls regarding the income and expenditure furnished by the assessee and the Assessing Officer only concluded that, since the security deposit is in the nature of a capital expenditure, the same cannot be allowed as a business loss. Though the Commissioner of Income Tax (Appeals) had rendered a finding that the transaction itself was a sham transaction, the Tribunal rightly noted that the Assessing Officer has not disputed or doubted the genuineness of the transaction. Furthermore, the Tribunal noted that the income and expenditure from business was accepted by the Revenue authorities for the earlier years treating the business activity of dehydrated vegetables as a separate and discontinuation of the business of the assessee, is not a correct ..... X X X X Extracts X X X X X X X X Extracts X X X X
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