TaxTMI 
TaxTMI 
2018 (12) TMI 1144
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....u/s 143(3) of the Income Tax Act 1961(In short the 'Act') 2. Assessee has raised following grounds of appeal; "1. That on the facts and in the circumstances of the case and law the Ld. CIT(A) erred in maintaining disallowance of Rs. 31,50,000/- as made by the Ld. A.O u/s 37(1) by treating the earnest money as forfeited by Maruti Suzuki India Ltd as Capital expenditure of the assessee company without properly appreciating the facts of the case, nature of business and submission made before him. 2. The assessee reserve its right to add, alter, modify or amend the grounds of appeal as and when required." 3. Briefly stated facts as culled out from the records are that the assessee is a Private Limited Company engaged in ....
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....plot for setting up the show room for Maruti Suzuki India Pvt. Ltd. He further submitted that these transactions of paying the amount to Maruti Suzuki India Pvt. Ltd as well as to give the advance to Indore Development Authority for purchase of plot were for the purpose of business. Subsequently for unavoidable reasons the required plot was not allotted by Indore Development Authority due to which the dealership was not allotted and the amount deposited in Maruti Suzuki India Pvt. Ltd was forfeited. He further submitted that for the contract for taking the agency of the vehicles manufactured by Maruti Suzuki India Pvt. Ltd was a business contract entered into with a view to earn profit and it was not a deposit made in order to secure any ca....
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....sessee agreed to purchase Plot No. RA-17, Scheme No.71, Gumasta Nagar, Indore from Indore Development Authority. This plot was approved by the officials of Maruti Suzuki India Ltd for the purpose of show room. Assessee applied in the tender with the Indore Development Authority for acquiring the plot but the same was not allotted. For this reason Maruti Suzuki India Ltd failed to allot dealership to the company and as per the agreed terms, the amount deposited with Maruti Suzuki India Ltd was forfeited as the Maruti Suzuki India Ltd has to incur various expenses in relation to sending its officials to visit assessee company and other incidental expenses. Thereafter on 14.9.2012 the Board of Directors resolved to write off of the amount depo....
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.... 2. This timeline as no fulfilled and meeting was held at our HOWEVER, in Delhi on 13th Sept 2010. It was discussed during this meeting that the suitable site options will be provided by 20th Sep. 3. However, there was no revert on the matter. Subsequently, CBH(East) during his meeting with you on 28th Sep extended timeline to 10th Oct. 4. This timeline was not met again and the timeline was extended to 30th Oct vide my mail dated 15th Oct. 5. During my visit to Indore on 30th Oct, there was again no site option shown. Hence, I went along with you and suggested a few sites. You requested for timeline of 10th Nov followed by request for extension till 15th Nov. 6. You had then sent mail on 17th No....
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....le circumstances the deal could not be finalised which lead to loss to the assessee in the shape of forfeiture of amount deposited at Rs. 31,50,000/-. 13. We find that Hon'ble jurisdictional High Court in the case of Thackers H.P. & Co. V/s CIT 10 Taxman 187 has held " It is well settled that the forfeiture of a security deposit under a contract is a business loss and not capital loss. The security amount deposited under a contract is not for obtaining the contract but for the due performance of its terms. More ever, in the instant case, it was obvious that the contract with the corporation was not a new business started by the assessee but was only a venture in the course of business which the assessee was already carrying on and, t....