Tribunal Allows Late Appeals, Treats Rental Deposits as Business Expenditure

The Tribunal condoned the delay of 426 days in filing appeals due to reasons including misplacement of the order and the Covid-19 pandemic impact. The appeals were admitted for adjudication. Regarding the treatment of rental deposits written off as revenue expenditure, the Tribunal allowed the claim, considering it as business expenditure following a precedent set by the Hon'ble Madras High Court. The Assessing Officer was directed to allow the claim in both assessment years.

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Issues:
Delay in filing appeals before the Tribunal, Condonation of delay, Treatment of rental deposits written off as revenue expenditure.

Delay in filing appeals before the Tribunal:
The appeals by the assessee were delayed by 426 days due to various reasons, including the misplacement of the order received by the Chartered Accountant and the impact of the Covid-19 pandemic. The assessee sought condonation of the delay, citing valid reasons for the delay. The Tribunal, considering the circumstances, condoned the delay and admitted the appeals for adjudication.

Condonation of delay:
The delay in filing the appeals was attributed to specific causes, such as misplacement of the order and the impact of the Covid-19 pandemic. The Tribunal, after considering the reasons provided by the assessee and the directions of the Hon'ble Supreme Court regarding the pandemic-related delays, decided to condone the delay and allowed the appeals to proceed for adjudication.

Treatment of rental deposits written off as revenue expenditure:
The main issue in the appeals was the treatment of rental deposits written off by the assessee as revenue expenditure. The assessee had claimed the amount as allowable expenditure under section 37(1) of the Income Tax Act, stating that the deposits were written off due to the failure to finalize a lease agreement. The Assessing Officer had disallowed the claim, considering it a capital loss. The CIT(A) upheld the AO's decision. However, the Tribunal, relying on a similar case decided by the Hon'ble Madras High Court, allowed the claim of the assessee, considering the expenditure as business expenditure. The Tribunal directed the AO to allow the claim in both assessment years, as the facts were identical.

In conclusion, the Tribunal addressed the issues of delay in filing appeals and the treatment of rental deposits written off as revenue expenditure in a detailed manner. The delay was condoned based on valid reasons provided by the assessee and the impact of the Covid-19 pandemic. The Tribunal allowed the appeals by considering the rental deposits as business expenditure, following a precedent set by the Hon'ble Madras High Court in a similar case.

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