If the security deposit continues as a liability in the books of the assessee club, the assessing officer could treat as income
DELHI HIGH COURT
PR. COMMISSIONER OF INCOME TAX-5 VERSUS M/S. LANDBASE INDIA LTD.
ITA 80/2021 & CM No.10780/2021
Short Overview:
Addition of security deposit by AO
ITAT has gone on to hold that the security deposits being refundable, it continues to be shown as liability in the books of the assessee club up-until it is paid
ITAT deleted the addition
HC observed as under:
Having regard to the provisions of Articles 2 and 3, which we have extracted herein above, it is clear that the security deposit is both interest free and refundable, which is required to be paid to the member, if she/he opts for its refund or ceases to be a member of the assessee club.
Given this finding of fact, to our minds, since the security deposit continues as a liability in the books of the assessee club, the assessing officer could not have added the same to the income of the assessee club.
The tribunal has correctly, in our opinion, deleted the addition.
These are the findings of fact, which we are not inclined to interfere with, as we find that there is no perversity in the view taken by the tribunal on the given facts.
Decided against revenue.
These are the findings of fact, which we are not inclined to interfere with, as we find that there is no perversity in the view taken by the tribunal on the given facts.
Conclusions :
Since the security deposit continues as a liability in the books of the assessee club, the assessing officer could not have added the same to the income of the assessee club.
The tribunal has correctly, in our opinion, deleted the addition.
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