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2013 (6) TMI 622 - AT - Income TaxCompensation charges - revenue v/s capital - CIT(A) held the charges as revenue expenditure - Held that:- The transaction entered into by the assessee, shown as payment of compensation and claimed as a revenue expenditure, cannot be said to be a mere camouflage or subterfuge designed by the assessee. The assessee had received advance amounts against the booking of plots. These amounts kept lying with the assessee for over a decade. However, the deals could not finalise and the plots remained under the ownership and possession of the assessee company only. The payment was only a part payment, which was returned by the assessee along with the proportionate interest thereon. This payment of interest is not only payment due to the depositor, but it is also payment made as a sound business policy, lest other prospective buyers be shooed away by the factum of non-payment of interest to the earlier customers, even though the advance amounts kept lying with the assessee for years together. Since the payment was in the course of business of the assessee company, it was rightly claimed as a business expenditure. The nomenclature of the payment being not determinative of the nature thereof, it matters little that it was termed as 'compensation' which, otherwise too, it indeed is, as discussed. The payment, however, has never been shown to be sale consideration for re-purchasing the plots, as tried to be made out by the Assessing Officer. Once the plots never left the ownership and possession of the assessee, there is no question of their being re-purchased by the assessee company. CIT (A) also found the amount paid by the assessee to have been allowed to the assessee as revenue expenditure pertaining to the issue of consistency. In favour of assessee.
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