Case Law Details
Health and Glow Retailing Pvt. Ltd. Vs. ACIT (ITAT Bangalore)
Assessee has taken premise on rent for which he has given interest-free refundable security deposit of Rs. 11,70,000 to the landlord. When the assessee could not continue with the possession, he claimed the entire amount back which was not given by the landlord, therefore he has filed a Civil Suit in the Civil Court, Bangalore. On account of non-recovery of this amount, he has written it off in the books of account and claimed deduction. Undisputedly, the assessee has given refundable security deposit and on its non-return by the landlord, assessee has filed a Civil Suit and the same is sub judice in the court and therefore the hope of recovery of this refundable security deposit has not been lost. In such circumstances, the business loss claimed by the assessee cannot be allowed in the impugned assessment year. It can only be allowed in that assessment year when the assessee finally fails to recover the said amount. Moreover, it is not a bad debt as it does not fulfill the requisite conditions prescribed u/s. 36(2) of the Act. Therefore, I find no merit in the claim of assessee and accordingly I confirm the order of the CIT(Appeals). However, I direct the AO to allow the claim of assessee only in that year for which the assessee finally loses the hope of its recovery of the said amount.
FULL TEXT OF THE ITAT ORDER IS AS FOLLOWS:-
This appeal is preferred by the assessee against the order of the CIT(Appeals) inter alia on the following grounds:-
“ General Ground
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