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2021 (5) TMI 590 - AT - Income TaxDisallowance of expenditure on assets transferred to work in progress - looking at the accounting treatment assessee has claimed this amount as deductible expenses - as per assessee cost of parking space for shops already sold cannot be carried on in work in progress but has to be charged to the profit and loss account and therefore the value of this land has not been carried in work in progress at the end of the year - HELD THAT:- Assessee has met its obligation by providing a plot of land to be used as a parking space by the shop owners and therefore the assessee is entitled to claim deduction of the cost of land given for parking space. Even after passing of almost a decade, the assessee has not sold that plot of land, which was used as a parking space by the shop owners. Even if it would be sold at any later point of time by the assessee, as assessee is a legal owner, the necessary profit is required to be charged to tax. In fact in the present case the full consideration received by the assessee would be income of the assessee as assessee has already taken the cost of the plot as a deduction u/s 37 (1) or u/s 28 of the income tax act. By providing the plot of land assessee has incurred a cost of the project for providing the parking space to the shop owners, which was a commercial obligation on the assessee, the above cost is required to be granted as deduction to the assessee. Whether there was any legal obligation on the assessee for providing a parking spaces is also established as the assessee was granted permission to construct shopping mall only if it had a proper parking facility as per HUDA Rules. Thus assessee has also legal obligation to provide parking spaces to buyers of shopping complex. In view of this, we direct the assessing officer to delete disallowance on account of parking space provided to shop owners/office owners of the mall. Therefore, we reverse the orders of the lower authorities and allow the appeal of the assessee.
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