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2017 (9) TMI 806 - AT - Income TaxDeduction not granted in respect of the Collector's liability - Held that:- As found that the collector had determined the provisional liability to be paid by the assessee on the assessee getting the reversionary right from Mema Engineers by deed dated 17.2.2000, pending final determination by the Assistant Director, Department of Town Planning on behalf of the Collector. This letter shows that though the event which occasioned the payment of a portion of the unearned income accrued in the year 2000 it was only in the year 2003 that the Collector was aware of the event and the occasion was assessee's request to the Collector to allow it use to property commercially. (This is clear from the opening sentence of the letter which refers to the assessee‟s request for commercial use). The assessee has not stated further whether the final determination for the „unearned income‟ for the transfer in 2000 has been intimated by the Government and whether it had made further payments. The assessee had not stated as to how many flats or floors were developed and how many sold or to whom. The liability would crystallize only when the Collector Mumbai Suburban District considers the matter and determines the amount to be paid by the assessee as Government‟s share of unearned income. This is supported by the fact that the assessee itself has not made any provision in its accounts for the liability. The Auditor has stated that the assessee has not made the provision in the absence of a specific demand from the Collector. It is clear from the above that the liability neither accrued nor crystallised nor paid nor accounted by the assessee during the year under consideration. The Bench specifically asked the assessee to furnish any documentary evidence indicating the actual accrual and/or payment of liability till today, however, the assessee was unable to produce any evidence to this fact. Thus the deduction of expenditure cannot be allowed. In the interest of justice, we restore this matter back to the file of the A.O. with a direction to communicate directly to the Collector of Mumbai so as to find out if any liability is payable by the assessee towards this project and to decide the same afresh as per law. Disallowance made u/s. 14A as per Rule 8D - Held that:- In view of the decision of Hon‟ble Bombay High Court in case of Godrej and Boyce [2010 (8) TMI 77 - BOMBAY HIGH COURT] Rule 8D is applicable w.e.f. A.Y. 2008-09. However, the assessment year under consideration is A.Y. 2007-08 wherein Rule 8D is not applicable. As per the facts and figures placed on record we direct the A.O. to restrict the disallowance u/s.14A to the extent of ₹ 3,77,065/- being amount of PMS charges paid to Enam Securities P. Ltd. We direct accordingly.
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