1981 (8) TMI 83

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.... 15th March, 1980. The only point for consideration in this appeal is the disallowance of Rs.30,000 being forfeiture of deposit paid against the order for purchase of machinery. 2. The brief facts of the case are as under : The assessee paid a sum of Rs. 30,000 as deposit against an order for purchasing machinery worth Rs. 3,00,000. Subsequently, the same type of machinery was purchased for ....

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....ome of the assessee for the relevant assessment year under consideration. 4. The ld. Counsel for the assessee relied on the decision in the case of Empire Jute Co. Ltd. vs. CIT. Reported in (1980) 17 CTR (SC) 113 : (1980) 124 ITR 1 (SC) and in the case of Mahabir Sugar Mills (P) Ltd. vs. CIT reported in (1973) 89 ITR 143 (All). The ld. Counsel for the assessee broadly relied on the principles l....

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....s 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 effic....

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..... 5. We have carefully considered the submissions made by both the sides. As pointed out by the ld. CIT (Appeals) in para 6 of his order that even after forfeiture of Rs. 30,000 the assessee has stood to gain in the commercial sense. It is quite natural that any prudent businessman would prefer to purchase machinery for Rs.1,90,000 than to purchase the same machinery from the other party for Rs....