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2019 (5) TMI 1691 - AT - Income TaxNature of expenditure - revenue or capital expenditure - Expenses for removing encumbrances, settlement of pending issues in various legal Forums, acquisition of clear development right - HELD THAT:- Assessee incurred/paid expenses of ₹ 50.84 Crore for removing encumbrances, settlement of pending issues in various legal Forums, acquisition of clear development right pertaining to clock underneath the project Fantasia. Therefore, the disallowance made by AO and reducing the same from work-in-progress was not justified. Thus, he we set-aside the order of lower authorities and direct the Assessing Officer to treat the expenses as Revenue Expenditure. In the result, the grounds of appeal raised by assessee are allowed. Accrual of income - addition on account of Capital Expenditure worked out the profit of project and added the same to the income of assessee - HELD THAT:- There is no dispute that initially Occupancy Certificate of the project was issued on 21.10.2011 by NMMC. The operation of Occupancy Certificate was stayed by NMMC on the application of Rohit Reddy. It is an admitted fact that ld. Civil Judge of City Civil Court restrained the assessee and directed to maintain status quo till the disposal of Suit. The Reddy Group withdrew the said suit on 14.12.2012, during the Assessment Year 2013- 14. The assessee has shown the Project Completion in Assessment Year 2013-14. The treatment of revenue recognition on project completion is not in dispute. Therefore considering the facts that the assessee was restrained to handover the units in the project by the order of Civil Court and the occupancy certificate was also stayed by operation of injunction order. The injunction order was lifted on the withdrawal of the civil suit on 14.12.2013. The assessee has shown the completion of the project in assessment year 2012-13, therefore, the action of the assessing officer in bringing the profit in the year under consideration was not justified. Thus, we affirm the view taken by the ld CIT(A). In the result, the grounds of appeal raised by the revenue are rejected. Appeal of the revenue is dismissed.
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