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2018 (8) TMI 194 - AT - Income TaxAddition u/s 40A(3) - cash payment against purchase of land - assessee has converted the land in the subsequent year - Held that:- The land was shown in the Balance sheet under "Fixed assets" but not shown in the books of accounts as 'stock-in-trade', hence the provisions of Section 40A(3) would not apply - Held that:- The assessee has not claimed the payment of ₹ 1.50 crores as expenditure or capitalized the same in the value of the land. The assessee has submitted copy of the ledger “land at Saroor Nagar”, as per which, assessee has debited the value as per registered document and further development expenditure in that project. It has not charged the cash payment of ₹ 1.50 crores to the said land at Saroor Nagar. This fact was also confirmed by the AO in his submission which was submitted by ld. DR before us. It clearly shows that assessee has not capitalized the above cash payment in fixed assets. Therefore, assessee cannot claim any expenditure or even convert the same as business assets or stock in trade, the cash payment of ₹ 1.50 crores is not part of value of land. Hence, it cannot be a part of future business expenditure. Therefore, the contention of the revenue authorities is not correct to say that assessee has converted the land in the subsequent year amounts to claim of expenditure in the subsequent AY, as the value of ₹ 1.50 crore is not part of land in first place. Hence, the disallowance u/s 40A(3) is accordingly deleted.
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