Case Law Details
Vardhaman Axles & Wheels Pvt. Ltd. Vs DCIT (ITAT Kolkata)
The only effective issue raised in this issue is disallowance of expenditure of Rs. 5 lakh claimed towards forfeiture of earnest money deposit by Orissa Minerals & Development Co. Ltd. (in short “OMDC”). The lower authorities have denied the said deduction considering it as not for business purposes. We, after considering the submissions of both the parties and also the copy of intimation letter dated 09.06.2010 issued by OMDC placed at page 11 of the paperbook, notice that the assessee gave a deposit to OMDC with reference to Auction No. OMDC/65Lumd10-200/02/09-10 page 11 towards sale of iron ore. However, since the assessee failed to lift the material against the allotment of the E-auction issued by OMDC, the earnest money deposit of Rs. 5 lakh was forfeited by OMDC vide letter dated 09.06.2010. Based on this letter ld. CIT(A) has observed that the assessee ought to have claimed the said expenditure for forfeiture of earnest money deposit as an expense for AY 2011-12.
We, however, find merit in the contention of ld. Counsel for the assessee wherein it has been stated that the assessee was trying to recover the forfeited money from OMDC and when all the efforts of the assessee to recover the said forfeited money went in vain the said sum has been claimed as an expenditure. We, under the given facts and circumstances of the case are of the considered view that the assessee has rightly claimed the expenditure of Rs. 5 lakh towards forfeiture of earnest money deposit by OMDC.
FULL TEXT OF THE ORDER OF ITAT KOLKATA
This appeal filed by the assessee pertaining to the Assessment Year (in short “AY”) 2014-2015 is directed against the order passed u/s 250 of the Income Tax Act, 1961 (in short the “Act”) by ld. Commissioner of Income Tax (Appeal)-1, Kolkata [in short “ld. CIT(A)”] dated 14.01.2020 arising out of the Assessment Order framed u/s 143(3) of the Act dated 30.06.2016.
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