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2019 (12) TMI 1156 - ITAT BANGALOREDisallowance of liquidated damages claimed by assessee - AR submitted that assessee entered into joint development agreement with M/s.Century Golflinks who were landowners - DR submitted that liability to make the said sum was not on assessee as per the agreement, and therefore, the said sum cannot be said to be an expenditure incurred for purposes of assessee’s business - HELD THAT:- On perusal of agreement, it is observed that 45% of owners share were to be distributed between owner No.1 being S.Shivashankarappa and owner No. 2 being M/s Century Golflinks. In written submission placed at page 1-5 of paper book, assessee at page 2 of written submission gave details of expenditure incurred for power and water charges which in total amounted to ₹ 10,96,33,163/-. It has been submitted that proportionate cost from Mr. Shivashankarappa has been received whereas, M/s Century Golflinks refused to pay their share amounting to ₹ 1,08,11,537/-, which was claimed by assessee as liquidated damages in its P&L account. “Liquidated damages” are compensation paid for breach of contract. We are therefore, unable to understand how the sum paid by assessee on behalf of M/s Century Golflinks being its proportionate share towards incurring of expenses would amount to liquidated damages. Assessee has also not brought on record to show that amount payable by M/s Century Golflinks is by way of compensation. Further, all decisions relied upon by Ld.AR in paper book filed before us emphasises circumstances and tests that has been laid down by various courts to consider any amount received, to be in the nature of compensation, and therefore an allowable deduction. On one breath assessee is arguing commercial expediency to spend such amount on behalf of M/s Century Golflinks, on the other hand, assessee is claiming it as liquidated damages. Assessee relied upon certain decisions wherein reasonableness of certain payments made has to be established by assessee. Also that assessee admitted for the said disallowance before Ld.AO during assessment proceedings, as per the order sheet entry dated 28/12/11 produced by Ld.Sr.DR before us. Ld.AR could not rebut aforestated noting, which is part of assessment records - Decided against assessee.
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