U.B.S. Bedi, JM. - (1.) THIS is assessee's appeal directed against the order of CIT(A)-XII, New Delhi dated 4-3-1993 relating to assessment year 1989-90 and following grounds have been raised : "1. That the CIT(A) erred on facts and in law, in not allowing a deduction of Rs. 71,204 in respect of sales tax written off, instead in restoring the issue back to the Assessing Officer for fresh consideration.
(2.) 1 That the CIT(A) erred on facts and in law, in confirming the action of the Assessing Officer in not allowing deduction for Rs. 51,168 in respect of security deposit forfeited, written off in the books of the appellant, or either business loss or short-term capital loss. 2.2 That the CIT(A) erred on facts and in law in observing inter alia that there was no transfer of any asset'." 2. At the time of hearing it was submitted by learned counsel for the assessee that assessee does not want to press ground No. 1 of the appeal as this issue was restored back to the file of Assessing Officer for fresh consideration and after re-assessment Assessing Officer has allowed the relief to the assessee. Ground No. 1 as such is dismissed as not pressed. As regards ground Nos. 2.1 and 2.2 relevant facts are like this that in March, 1986, assessee had applied for a plot of industrial land at Panoli Gujarat, and for that purpose made a security deposit of Rs. 51,168 with Gujarat Development Industrial Corporation (GIDC). GIDC allotted the said plot of land to the assessee for a total sum of Rs. 17,75,397 and directed it to make payment of Rs. 3,03,911 within 30 days from the date of letter and the balance of Rs. 14,20,318 after two years along with 14% interest in 32 quarterly instalments. The terms of allotment had specified that the said plot was to be used within a period of 3 years and the transfer of unutilised plot was not permitted. At the time of allotment of the plot, the assessee felt that it had no possible use for the land in near future and considered the payment of the price of the land at that moment to be against its business interest. Under the circumstances, the assessee thought it prudent not to go ahead with the purchase of the plot and requested, GIDC to refund the security deposit. In doing so, the assessee was taking a risk because their was a condition in the allotment letter that assessee was not entitled to revoke its offer to buy the land before the expiry of 21 months. The offer could not in any way be considered to have been revoked unless the assessee had paid Rs. 3,03,911 within 30 days from the date of allotment. Considering the fact that assessee could not use the plot of land within 3 years and also considering the fact that it had to pay a huge sum of money which would have remained blocked had the land been purchased, it was expedient for the assessee to revoke the offer and lose the security deposit amounting to Rs. 51,168. Thus, this bona fide short-term capital loss is entitled to be claimed as a deduction on relinquishment of the rights in the land allotted to the assessee and assessee made claim, which was rejected by Assessing Officer. In appeal, it was pleaded that the Assessing Officer in spite of being apprised of the background of this claim, did not consider the facts in the proper perspective and made an addition of Rs. 51,168 merely on suspicion and surmises but remained unsuccessful before the first appellate authority. The assessee preferred second appeal and is before us. It was contended by learned counsel for, the assessee that since forfeiture of security amount of Rs. 51,168 was a bona fide short-term capital loss which assessee is entitled to claim as a deduction on relinquishment of rights in land allotted to the assessee so same should be allowed as claimed or in the alternative it should be allowed to be carried forward. So far as surrendering of right to purchase plot of land is concerned, same amounts to relinquishment of right while placing reliance on CIT v. A. R. Damodara Mudaliar & Co. [1979] 119 ITR 583 (Mad.), CIT v. Tata Services Ltd. [1980] 122 ITR 594 (Bom.), CIT v. Rasiklal Maneklal (HUF) [1989] 77 ITR 198 (SC), Kartikeya V. Sarabhai v. CIT [1997] 228 ITR 163/94 Taxman 164 (SC) and CIT v. Sterling Investment Corpn. Ltd. [1980] 123 ITR 441 (Bom.), it was pleaded for allowing the claim of the assessee.
(3.) ON the other hand, learned DR while relying upon the basis and reasoning as given by authorities below has pleaded for confirmation of the order of learned CIT(A). So far as case law as relied upon by assessee's counsel is concerned it was submitted that in all these cases, ownership is a precondition whereas by mere issuance of letter of allotment, in the absence of any physical allotment or other documents, it cannot be said that assessee bought any asset or acquired any right in the capital asset and therefore, ratio of these decisions is not applicable to the facts of the case. Suo motu surrender of right or self-created surrender cannot amount to transfer or extinguishment of right. While relying upon Ahmedabad Bench decisions as in Patel Brass Works v. Asstt. CIT [1994] 50 ITD 322 and Delhi High Court decision as in CIT v. J. Dalmia [1984] 149 ITR 215/20 Taxman 86, it was pleaded for confirmation of order of authorities below. It was also submitted that statutory right to purchase is not a right in property and Delhi High Court as referred to supra has discussed in detail while relying upon certain Supreme Court decisions the meaning of right in property. Since there was no right in the property nor any agreement or any other document produced which conferred any right in the plot of land for which application was made by the assessee and only earnest money was deposited, so, on forfeiture extinguishment or relinquishment of right of the assessee which was not there at all.;