2015 (6) TMI 177

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....ies and Sales tax Authorities, without appreciating that advance given is capital in nature and the same cannot be claimed as bad debt as per the provisions of sec. 36(2) r.w.S 36(1)(vii).            2. On the facts and in the circumstances of the case and in law, the Ld. Cl'T (A) erred in treating the value of the property at' 1,40,00,0001- instead of at its stamp value of' 3,07,71,0001-, as done by the AO uls SOC, by placing reliance on the decision of Hon'ble Tribunal in the case of Atul G. Puranik vs. I.T.O ITR (Trib) 120, without appreciating that the case relied upon is distinguishable from the facts of the assessee's case in as much as in the case relied upon there was transfer of lease rights for 60 years in the plot and not land itself whereas in the present case the assessee is holding land on lease deed signed with MIDC which is sold for Rs. 1,40,00,000/- thereby attracting the provisions of sec. 50C.          3. The appellant prays that the order of CIT(A) on the above ground be set aside and that of the Assessing Officer be restored." 3. Ground no.1, i....

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....eposits made by the assessee with MSEB and Sales Tax Department can be treated as non-recoverable amount and, consequently, the same can be allowed as business loss under section 28 or 37(1) of the Act on being written-off by the assessee. It is pertinent to note that the two amounts being deposits with the Government Department cannot be treated as bad debt or the amounts become irrecoverable. Even otherwise when the assessee has sold its factory where this electricity connection was installed, then the deposit with the MSEB is part of the sale consideration of the factory premises. We do not agree with the findings of the learned CIT(A) as well as the contention of the assessee that since the assessee has sold the business premises / factory and, therefore, the amount of security deposits with the MSEB and Sales Tax Department become irrecoverable. If the assessee decided to disconnect the electricity connection and take back the security deposit amount, then there is no impediment in the right of the assessee to receive back the amount. It appears that the assessee has transferred the factory premises along with the electricity connection. Therefore, no separate claim of busines....

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....0C, cannot be applied in case of transfer of lease hold rights. He has relied upon the following decisions:- i) ITO v/s Pradeep Steel Re-rolling Mills Pvt. Ltd., [2013] 155 TTJ 294 (Mum.); ii) Atul G. Pauranik v/s ITO, ITA no.3051/Mum./2010, order dated 13th May 2011; and iii) Shri Hemant R. Tandel, ITA no.1934, 1835, 1935, 1836, 1941, 1837/Mum./2012, order dated 16th April 2015 14. We have considered the rival contentions as well as the relevant material on record. There is no dispute that what is transferred by the assessee is the lease hold property and, therefore, until and unless the property is converted into free hold the lessee holds only lease hold rights over the property. In the case of ITO v/s Pradeep Steel Re-rolling Mills Pvt. Ltd., the Tribunal, while dealing with an identical issue, has held as under:-              "4. The revenue is in appeal. We are unable to find fault with the decision of the CIT(A) that section sac cannot be invoked to a transfer of leasehold rights. The section applies only to capital assets being land or building or both. It does not in terms include leasehold rights i....

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....tten off in respect of old/Ex-employees balances appearing in their impressed/advances accounts, without appreciating that there is no evidence furnished by the assessee to show that the amount has been offered to tax in earlier years as per the provisions of sec. 36(2). c) On the facts and in the circumstances of the case and in law, the Ld. CIT (A) has erred in deleting' 3,75,888/-, being deposits made to EGIL, without appreciating that there is no evidence furnished by the assessee to show that the amount has been offered to tax in earlier years as per the provisions of sec. 36(2). 17. Ground no.1(a) is regarding deduction claimed on account of disallowance written-off in respect of the tender amount due from the Government. 18. We have considered the rival contentions as well as the material on record. Since this was a deposit with the Government, therefore, the said amount cannot be treated as either bad debt or irrecoverable amount. In view of our findings given above on the similar issue for the assessment year 2006-07 regarding deposits with the MSEB and Sales Tax Department, we set aside the order of the learned CIT(A) qua this issue and restore the order of t....

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....onstructing the factory building and other structures. The assessee, in pursuance of other agreements entered in advanced moneys which were in the beginning to be adjusted against the future rents, but subsequently were agreed to be refunded to the assess on a fixed date. It is true that if the landlord had failed to construct t, factory building and other structures as agreed to, the agreements would have fallen through and there was no penalty clause as such. However, one cannot get away from the fact that all this was done by the assessee with a view to acquire the factory premises on lease. The mere fact that the factory would be ready in a year or so would not make any difference. We are in agreement with Shri Dastur that the principles in this regard are laid down by the Supreme Court in its judgment in CIT v. Mysore Sugar Co. Ltd. [1962] 46 ITR 649. The relevant observations in this case have already been noted by us earlier in Empire Jute Co. Ltd. v. CIT, [1980] 124 ITR 1 (SC). Apart from the fact that this court had already held that the length of the lease agreement is not very material for the purpose of determining the nature of the expenditure incurred on lease agre....