S.28 – Loss on account of cancellation of lease is “business loss”. Here, lease deposit of Rs.60 lakhs was made in the normal course of carrying on business of textiles and jewellery by opening a shop. As per the leave and license agreement, landlord was to carry out construction and obtain necessary approvals. Landlord failed to get electricity connection and assessee could not agree to landlord’s request to operate using generator. Hence, lease was cancelled and a compromise was arrived at pursuant to which, assessee could recover only Rs.30 lakhs from landlord and balance 30 lakhs was written off. Such loss, being incidental to carrying on business, was allowable u/s 28 of the Act.