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The sum of refundable security deposit received from the members of the assessee is a capital receipt and cannot be charged to tax as income.

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Sec. 32 of Income Tax Act, 1961 - Depreciation - The assessee is a company engaged in the business of operation of golf course, construction of hotels, housing complex and merchandising. It filed its return of income at a loss of Rs. 20187486. The assessment under s. 143(3) of the IT Act, 1961 was passed and disallowed depreciation of Rs. 1228317 on golf course. The assessee has claimed depreciation on golf course @ 15 per cent considering it as 'plant and machinery'. AO denied the depreciation for the reason that according to him golf course is developed on the land and whatever improvement is made on that land, it remain as a land. CIT(A), held that the golf course is a 'building' and depreciation should be allowed considering the same as a 'building'. ITAT allowed the appeal of the assessee holding that:- The sum of refundable security deposit received from the members of the assessee is a capital receipt and cannot be charged to tax as income. Accordingly, ITAT directed the AO to delete the addition to the extent of refundable deposit received from the members. LANDBASE INDIA LTD. vs. ASSTT. CIT.[2020] 25 ITCD Online 100 (ITAT-DELHI)