TaxTMI 
TaxTMI 
2013 (9) TMI 301
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....Aggrieved the assessee carried the matter in appeal without success. 4. Further aggrieved the assessee is before us on the following grounds. "1. That the order of the Ld.CIT(A) is bad both in law and on the facts of the case. 2. The Ld.Commissioner of Income Tax (Appeals) has erred in dismissing the ground for claim of ;depreciation on intangible assets viz., trade mark, amounting to Rs.93,75,000/- by merely stating that the appeal in respect of above issue for the Assessment Year 2007-08 is pending at Ld.Commissioner of Income Tax (Appeals) and not deciding the ground. 3. The Ld.Commissioner of Income Tax (Appeals) has erred in upholding the disallowance of Rs.16,26,815/- out of Rs.19,03,561/- claimed on account of security deposits written off as business loss in the normal course of business by erroneously holding the same as capital in nature. 4. The Ld.Commissioner of Income Tax (Appeals) has erred in giving direction to the Assessing Officer to work out the disallowance u/s 14A in accordance with observation of Hon'ble High Court of Delhi in M/s Maxopp vs. CIT and not deciding the issue." 5. We have heard Mr.Rajan Bhatia, the Ld.Counsel for the assessee and....
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....in respect of loss of advance rent but similar claim in respect of security deposit was rejected. (a) The amount of Rs.1,40,520 was the security deposit given by the appellant to KB Mall Management (hereinafter referred as 'KBMM') pursuant to a lease agreement for a store in Ahmedabad which was opened on 24th July,2006. However, owing to less business opportunity in the said store, the appellant decided to close the store and consequently terminated the lease agreement. KBMM has not refunded the said amount on account of damages caused by the usage of the place by the appellant. It is a loss incurred by the appellant in the normal course of the business and being wholly for the purpose of business only, it is claimed as a deduction. The A.O. disallowed the same. (b) The amount of Rs.12,965/- represents payments made to suppliers twice and excess ESI payment and security deposit for telephone, which were not refunded to the appellant. This ;claim of the assessee of loss, was also dismissed. 9. Regarding the amount of Rs.2,76,746/-, it has claimed that the same was short payments received which were written off as unrecoverable. It was submitted that outstanding balances fro....
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....tion vs. CIT, 201 ITR 800 (S.C.). 11. On ground no.3 which is on the issue of quantification of disallowance u/s.14A he submitted that the Ld.Commissioner of Income Tax (Appeals) had directed the A.O. to work out the disallowance u/s 14A, in line with the decision of Hon'ble Delhi High Court in the case of Maxopp vs.CIT. On a query from the Bench he submitted that he would not have any grievance if the Tribunal sets aside the issue to the A.O. as the Ld.CIT(A) has no such power of setting aside. Hence we set aside the issue to the A.O. for de novo ;adjudication in accordance with law. 12. The Ld.Departmental Representative, Ms.Y.Kakkar on the other hand opposed the contentions of the assessee and drew the attention of the Bench to the Accounting Policies of the assessee which are at page 13 of the paper book where it is stated that "buildings including lease hold improvements are being depreciated @ 5% as leases will be renewed and kept for longer period". She relied on Explanation I to S.32 and submitted that the expenditure in question was rightly disallowed. She further referred to page 17A of the paper book which is a schedule in respect of future commitments in respect o....
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....e taken on lease for a period of 5 to 9 years. She submitted that the Ld.CIT(A) without verifying the facts has granted relief. No bifurcation was found. On a query from the Bench she submitted that the AO has made an adhoc disallowance. She relied on the following case laws in support of the order of the AO. - CIT vs. Sri Mangayaricarasi Mills P.Ltd. 315 ITR 114 (SC): Where the issue in question was as to what is current repairs. Replacement of an item of a spinning mill was not considered as revenue expenditure. - Asian Hotels Ltd. vs. DCIT, 268 ITR (AT) 157 (Del): In this case the issue was whether renovation and refurbishment expenditure is in the revenue rield. 14. In reply the Ld.Counsel for the assessee submitted that the AO made an adhoc disallowance which is not in accordance with law. He relied on the order of the Ld.Commissioner of Income Tax (Appeals). He further relied on the following case laws. - CIT vs. Hiline Pens P.Ltd., 306 ITR% 182 (Del, wherein the expression "repairs" and the expression "current repairs" was considered. - Instelment Supply P.Ltd. vs. CIT (Del) 149 ITR 52, wherein it was held that the question of repairs had to be considered in t....
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....nd that the responsibility of getting the lease agreement registered was on both the parties (joint responsibility) and that the lease deed stands finalized and concluded and only the formality of registration was pending. He further stated that the backing out of the lease is a breach of commitment by the lessee. The advance and security deposit, was withheld by Ghaziabad Real Estate P.Ltd. to cover its losses. The assessee claimed this as a business loss which is in the revenue field. 18. On this factual matrix the issue before us is "whether the loss of security deposit in question is a business loss in the revenue field." In our considered opinion the above loss is a business loss ;for the reason that the assessee has taken on lease many premises spread over many parts of the country, and this act of taking this show room on lease is in the normal course of business. In fact 84 show rooms are taken on lease at various places. Six months rent was given as security deposit. This was given in the course of business. The transaction is intimately connected with the business of the assessee. The Assessing Officer has not disputed the genuineness of the claim. The CIT(A) has disal....
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....eceipt in the hands of the recipient is not material in determining whether the payment is revenue or capital disbursement qua the payer. (ii) There may be cases where expenditure, even if incurred for obtaining an advantage of enduring benefit, may, none the less, be on revenue account and the test of enduring benefit may break down. It is not every advantage of enduring nature acquired by an assessee that brings the case within the principle laid down in this test. What is material to consider is the nature of the advantage in a commercial sense and it is only where the advantage is in the capital field that the expenditure would be disallowable on an application of this test. If the advantage consists merely in facilitating the assessee's trading operations or enabling the management and conduct of the assessee's business to be carried on more efficiently or more profitably while leaving the fixed capital untouched, the expenditure would be on revenue account, even though the advantage may endure for an indefinite future. The test of enduring benefit is, therefore, not a certain or conclusive test and it cannot be applied blindly and mechanically without regard to the particu....