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2018 (3) TMI 1646 - AT - Income TaxIssue regarding Under estimation of profit - Held that:- Assessee was considering employees’ remuneration, administrative & general overheads as capital expenditure only when such expenditures were specifically attributable to the construction of a project. This means such expenditures were capitalized only till such time, the capital work was in progress and once the capital work has been completed these expenditures have not been capitalized and treated as revenue expenditure. Land premium received by the assessee company liable to be taxed as an income for the year under consideration - Issue regarding exclusion of lease rent, land premium and interest income - Held that:- It is clear that one time premium received by the assessee would be income of the year of the receipt. It can be safely inferred that the land premium is nothing but a kind of rent, which is certainly taxable. Lease premium income offered by the assessee was a conscious decision and further Article 289(1) of Constitution of India is not applicable on the facts of the present case. Therefore, the grounds raised relating to this issue regarding exclusion of lease rent, land premium and interest income are devoid of merits and therefore, they are rejected. Addition on account of understatement of profit - Held that:- On perusal of the Profit & Loss account it seems that against the credit of receipt of ₹ 7,02,82,708/- expenses of ₹ 5,52,86,310/- only was incurred by the assessee. The expenses as claimed in the Profit & Loss account also having direct nexus of receipt/ income as shown in the Profit & Loss account. Since the expenses as incurred was not for the purpose of addition to the fixed assets, hence, there was no justification for making the addition merely on the basis of remarks in the clause 11[c] of the Tax audit report. The remarks of the Tax auditor which is important piece of evidence but the same is not considered as conclusive piece of evidence. Considering the written synopsis of the assessee and on perusal of the Profit & Loss account, we are of the view that expenses as claimed by the assessee were incurred for day to day maintenance and also incurred for day to day administrative work which was not in the capital nature. We hereby direct the assessing officer to delete the addition of ₹ 2,18,75,469/- as made on account of understatement of profit.
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