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2022 (3) TMI 74 - AT - Income TaxDisallowance of the rent paid to the owners of the property till the date of actual realization of cheques - what is actual date of actual encashment of cheques of the earnest money? - HELD THAT:- As a part of Sale consideration, two cheques dated 13/5/2013 have been issued, total amounting to ₹ 5,00,00,000/- in favour of the owners. The said two cheques issued by the assessee have not been encashed within its validity. Further, on 13/09/2013 the assessee had made the actual payment of ₹ 5,00,00,000/- as part (90%) sale consideration by way of RTGS to both the vendors proportionately. The agreement to sell has been executed on 25.03.2013 but the consideration has not been passed as per the terms of the agreement by encashing the cheques mentioned thereon. The actual part sale consideration (90%) has been passed only on 13.09.2013 by way of RTGS. Thus, the finding of the CIT(A) that 'sale had occurred on 25.03.2013 and the assessee had become the owner of the property' is factually incorrect. Thus in the present case, the rent paid by the Assessee to the owners in respect of the subject property, prior to actual part payment of Sale consideration by way of RTGS is allowable. For above said reasons, we are of the opinion that both Ld. A.O and the CIT(A) have erred in disallowing said rent. - Decided in favour of assessee.
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