In order to correct this, there is an additional setting on the PC side of Handheld Contact.

1. Open Handheld Contact Classic on the PC/server side.
2. Click on Tools, choose Manage, select Databases. 
3. Choose the database and click Edit.
4. There will be a box that reads, “When deleting from handheld, DELETE from Act!”.  This will need to be selected.  Once done, press OK to save.

Note: This change is not done on a per user basis, but it is universal, and all Handheld Contact users within this database will have this updated.  Therefore, if a deletion of 1 (or 10) items happens from the device, it will also delete in Act! with no ability to retrieve it.  We suggest if you do not want to make this change you can utilize a 'clear' function of the activity on the device as it will perform a similar task in removing the item from the Calendar/Task List.