TaxTMI 
TaxTMI 
2019 (2) TMI 1541
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....e Authorities. 2. The assessee inter alia had entered into a lease agreement with M/s. Anand Automotive Systems Ltd. As part of the lease agreement, it was required to pay Rs. 5.8 crores as security deposit. This amount was reflected in its balance sheet and in the capital under assets, as "receivables". On account of unforeseen circumstances i.e. sealing of the premises on account of non-conforming user by directions of the Supreme Court through the Monitoring Committee, the premises could not be used. The petitioner, therefore, sought to vacate it; this resulted in the dispute between the lessor and the appellant/lessee. To end the dispute, the lessee i.e. assessee agreed not to claim the security deposit of Rs. 5.8 crores. As a result, ....
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....ineering (supra) dealt with a similar situation as the present case and held as follows: "15. Coming to the security deposit written off by the assessee, the moot question is as to whether the advances were given for securing the capital assets. It is not disputed by the Department that the payment of security deposit to landlords was for obtaining use of premises for the purposes of business against the payment of rent. The contention of the assessee, in this backdrop, is that this payment was clearly in the revenue field, viz., for facilitating carrying on of business more profitably and efficiently while leaving the fixed capital untouched. Learned counsel for the Revenue, however, argues that the security deposits were given for obtain....
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....dgment of the Supreme Court in the case of Commissioner of Income Tax v. Madras Auto Service (P) Ltd. [233 ITR 468]. However, that judgment would not be applicable to the facts of the present case. The expenditure incurred on the construction of building of a leased property was treated as revenue expenditure by the Supreme Court, as the assessee was getting business advantage and was acquiring the business asset in the context of specific Clause in the lease deed. Therefore, the property was not treated as that of the lessor. Further, the Supreme Court found that by incurring the expenditure of this nature, the assesse had taken the advantage in the form of reduced rent for a much longer period. This judgment is, thus, not applicable in th....