Assessee company, engaged in business of real estate development, had entered into a contract with HDIL for purchase of land to construct commercial complex in 2004 and had paid an advance of Rs. 3.50 crores. However, it could not pay balance amount and, therefore, HDIL forfeited advanced amount in 2011. In relevant assessment year, entire capital gain and interest income of assesse company was offset with amount so forfeited. Assessing Officer held that forfeiture of advance was a colourable device to adjust capital gains. He characterised forfeiture as capital expenditure and made addition. Tribunal allowed the claim. On appeal the Court held that since transaction between assesse company and HDIL, was not disputed and was in fact accepted by Assessing Officer while treating write off as capital expenditure and assesse company had produced several documents in support of forfeiture, such a transaction could not be categorised as colourable device.  Since main object of business of assesse company was development of real estate and advance to HDIL was given in ordinary course of business forfeiture of advance could not be categorised as capital expenditure but would be allowed as business expenditure.  (A.Y.  2012-13)