TaxTMI 
TaxTMI 
2021 (10) TMI 264
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....e 'Act') dated 31.03.2016 framed by ITO-1(2), Bhopal. The Revenue has raised following grounds of appeal in ITANo.170/Ind/2019: "1.On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in deleting the addition of Rs. 33,00,000/- by holding that forfeiture of security deposit was capital in nature and as the amount was never claimed as revenue expenditure in the past, whereas such security deposit forfeited is in the nature of benefit arisen in the hands of the assessee and is liable to tax as business income of the assessee. 2. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in deleting the addition of Rs. 2,33,59,716/- towards the payments made on behalf of M/s. EION Te....
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.... book dated 15.07.2020 page no. 1 to 168 . 6. We have heard rival contentions and perused the records placed before us. As regards the first issue of deletion of addition for security forfeited, we observe that sum of Rs. 33,00,000/- was credited in P & L account under the head of "other income". The assessee while furnishing return of income reduced this sum from profit as per P & L Account in the computation of income. When the assessee was asked to justify the basis for not offering income of Rs. 33,00,000/- to tax it was submitted that the forfeited security deposit is a capital receipts and not liable to be taxed. But Ld. AO was not satisfied and he made the addition against which the assessee preferred an appeal before the Ld. CIT(....
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....CIT(ITANo.1623 of 2010), it is held that the impugned forfeiture of security deposit was capital receipt in nature as the amount was never claimed as revenue expenditure in past. The addition is, therefore, unjustified and is deleted. 7. From perusal of the above finding of Ld. CIT(A) and judicial precedents referred therein we find that the liability under consideration was not on account of any deduction claimed by the assessee against income/gross revenue. It was a write off of capital receipts being security deposit taken from a company for the purpose of giving security for taking a property on lease on its behalf. The company namely M/s Waveset INC from which the security deposits was received, went into liquidation and the said am....
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.... services(reimbursement)". The above position was clearly brought to the notice of the AO during the Assessment proceedings and the submission/ annexure were filed with the AO during the course of assessment proceedings. 10. Thereafter the matter came up before the Ld. CIT(A) who after considering the submissions deleted the disallowance u/s 40a(ia) of the Act observing as follows:- 8.3 The assessee has explained that it provided fund management services to "Eion Telecom P Ltd". Under the arrangement with that client all payments of that company were first paid by the assessee and thereafter were got reimbursed. In addition service charges were received for these services rendered. As per the accounting system consistently follo....
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....tled principle of law that the liability to TDS arises in the hands of the principle and the agent who is making the payment expense on behalf of the principle is not liable to TDS. It is, therefore, concluded that in this case, the assessee was acting as an agent and had got all the payments made, reimbursed from the client. Therefore, qua the assessee, the payments were only reimbursements not liable for TDS deduction at the end of the assessee. 8.5 Regarding, the observation of the AO that various payments are not in the nature of business expenses it is observed that the appellant had provided the services to the said client and all payments made on behalf of the client were got reimbursed from the client along with applicable ....