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TMI Blog1982 (2) TMI 85X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee had deducted the forfeited staff service deposit of Rs. 35,856 and credited to Profit and Loss Account while arriving at the taxable income of the company and the ITO had allowed that deduction. The CIT considered the action of the ITO to be erroneous in so far as it was prejudicial to the interests of the revenue for the reason that even though the deposit was not a trading receipt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment for a period of 5 years. It was further stated that as per the provisions of Indian 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 alongwith the deposit was paid back to the employees on completion of the stipulated period of five years. Further, the amount of deposit was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e argument was advanced by the assessee before the CIT 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 CIT (Appeals) and hence there was no merger of the order of the ITO in the order of CIT (Appeals). The view taken by the CIT, in our opinion, is correct and is in accordance with the Guja ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 not a case of a deposit received by a businessman which in substance partakes more of the nature of trading receipts than of security deposits. The subsequent forfeiture of the amount of deposit will also not r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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