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2019 (4) TMI 1178 - HC - Income TaxDeduction of compensation payment u/s 37(1) - assessee had entered into an agreement for purchase of an immovable property - there were number of charges and impediments in the title to the property and to clear this, the Assessee had to incur considerable expenditure - assessee could not provide the land then an MOU was executed to repay the principal with lumpsum compensation - CIT (A) held that the original MOU with the trust and the cancellation deed were executed on the same day on a stamppaper which was by way of an afterthought - HELD THAT:- We find that with respect to the Assessee’s claim of expenditure of ₹ 6,00,60,000/, the Assessing Officer having rejected claim as being nongenuine, the CIT (A) further examined the materials on record. He noted that apparently, the original MOU with the trust and the cancellation deed were executed on the same day on a stamppaper which was by way of an afterthought. He further highlighted the discrepancies emerging from the record and observed that out of the opening balance of ₹ 7.3 Crores received from the said trust, an amount of ₹ 1.64 Crores was adjusted as advance for the land in the year under consideration. It was noted that though such advance of ₹ 1.64 Crores was given on the basis of the MOU dated 26/02/2007, the MOU itself does not mention such payment. The two revenue authorities and the Tribunal concurrently came to the conclusion that the claim of expenditure was not genuine. There were major discrepancies in the accounts and the documents presented by the Assessee in relation to such claim. We do not find there is any question of law arising. It is true that once in course of a business an expenditure is shown to have been incurred for the purpose of business, the Assessing Officer would not substitute his judgment for that of the Assessee in making such expenditure. However in the present case, the very genuineness of the expenditure has been rejected - No question of law arises - Appeal is dismissed. Disallowance of expenditure u/s 37(1) - The revenue authorities and the Tribunal concurrently held that the payments were not genuine. Reference to unregistered document was only by way of additional ground to reject the transaction. It was found that the entire transaction was bogus, was by way of afterthought and created in order to reduce the Assessee's tax liability. No question of law arises - Appeal is dismissed.
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