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2020 (10) TMI 502 - ITAT MUMBAIDisallowance of the cost of TDRs - HELD THAT:- Revenue has also proceeded without any definite basis. Sure, there is nothing to show or exhibit the sale of TDRs to RSB, for the assessee to claim the cost thereof, but that does not by itself demonstrate their sale to any other person. Revenue should have insisted on the assessee producing some authentic document/material with regard to the obtaining status of those rights, which could then be verified, before imputing their sale by the assessee during the relevant year. Why, it could itself make enquiry with the registering authority. Non-reflection of the said TDRs in the assessee’s balance-sheet (as on 31.3.2010), on which it relies for the purpose, is of little consequence in view of the admitted position of the assessee having charged their cost to the P&L account for the year, claiming it as a deductible expense. The matter, therefore, is indeterminate, and is accordingly restored back to the file of the AO for consideration afresh. The matter being old, he shall decide the same within a reasonable time. As regards valuation, i.e., where held to be a case of sale, valuation of TDRs shall be with reference to the rate of open land, and not of residential building, inasmuch as these are development rights of land. The land location, in case of estimation, shall not be, as also observed during hearing, where the TDRs arose, but where these are (or would be) utilized and, further, with reference to a land with similar development potential therein. This is as only like can be compared with like. Further, the issue of deduction of the TDR cost (₹ 14.42 lacs), i.e., the first issue, being inter-related, we consider it proper to remit the same along with. We may though make it clear that it is not that we entertain any doubt qua the disallowance of TDR cost (₹ 14.42 lakhs) on the basis of the material on record as not valid. Disallowance of the refundable security deposit in computing the assessee’s business income for the year - HELD THAT:- The assessee has disposed its’ rights in land, encumbered by the obligation to re-compense the displaced occupants/ tenants, so that the cost suffered toward the same, by way of its forfeiture or transfer of the right to receive in favour of the purchaser, whichever way one may look at the transaction, is an associated cost, integral to the said transfer. It cannot, therefore, be regarded as the capital cost. The third objection is of the same arising in the following year. In fact, this is in contradiction of the claim of the loss having already arisen, i.e., independent of, and prior to, the transaction of transfer in March/July, 2010. That apart, when the income arising from the transfer is being subject to tax for AY 2010-11, how could a related cost possibly arise for being claimed/allowed in a subsequent year? The same militates against the concept of income (or income computation), which is (to be) at net of all expenditure incurred in relation thereto. Section 5 of the Act in any case makes it clear that income can be brought to tax either in the year of its receipt or its accrual. The objections by the ld. CIT(A) to the disallowance of the cost of ₹ 54 lakhs are, therefore, not valid. Disallowance is accordingly, i.e., in view of the discussion directed to be deleted. We decide accordingly.
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