9911796707
TMI Blog1982 (2) TMI 83X X X X Extracts X X X X X X X X Extracts X X X X ..... ating to the assessment year 1975-76. The Commissioner on examining the records noticed that the assessee had deducted the forfeited staff service deposit of Rs. 35,856, and credited the same to profit and loss account while arriving at the taxable income of the company and the ITO had allowed that deduction. The Commissioner considered the action of the ITO to be erroneous insofar as it was preju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fter gaining experience in the organisation and for this purpose a security deposit was taken at the time of appointment for a period of 5 years. It was further stated that as per the provisions of the Companies Act, the deposit was required to be deposited in a separate bank account and could not be used for the purpose of the business and the interest earned thereon along with the deposit was pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peals) who passed his appellate order on 23-1-1980 and, therefore, the ITO's order had already merged in the order of the Commissioner (Appeals). Same argument was advanced by the assessee before the Commissioner who rightly repelled it by pointing out that the point of deduction of forfeited staff service deposit had never been the subject-matter of appeal before the Commissioner (Appeals) and he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... usly the liability of the company and no subsequent operation or alteration in accounts could turn it into a trading receipt. It is obvious that the security deposit when received was not a trading receipt. The subsequent forfeiture of the amount on the happening of the prescribed contingency in the facts and circumstances of this case will not convert that receipt into a trading receipt. This is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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