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2019 (11) TMI 1670 - ITAT DELHIRevenue expenditure allowance - deduction on account of interest paid towards delayed payment of IDC/EDC charges to the Haryana Government - allowable expenditure u/s 37 or penal in nature as interest has been charged by concerned authority for delay - AO has disallowed the same considering it penal in nature and also on the reasoning that such expenditure should form part of the work-in-progress as assessee is a developer and deduction of same will be available against the sale of the project - HELD THAT:- Such expenditure is penal in nature, the same is covered in favour of the assessee by the judgment of the coordinate bench of the ITAT in the case of M/s Ferrous Township Pvt. Ltd. [2017 (9) TMI 1947 - ITAT DELHI] whereby it was held that interest payable on EDC charges is not penal in nature. Such expenditure should form part of the work-in-progress - As seen that, this interest is in respect of outstanding EDC charges payable for a project the realization of which has already taken place in earlier years - interest is on an amount outstanding and payable for the services availed in respect of the project which stands already completed and sold in earlier years - such an interest cannot form part of the work-in-progress. The interest payment on the outstanding balance in respect of the trade creditors is revenue in nature and allowable expenditure while computing business income - uphold the order of the CIT (A) deleting the above addition. - Decided in favour of assessee.
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