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2022 (12) TMI 992 - AT - Income TaxExpenditure on Land Acquisition for Border Out Posts (BOPs) - Expenditure as a part of project cost during the course of business - expenditure for land acquisition and connection charges for electrification at Border Out Post for the client (Ministry of Home Affairs) during execution of Indo Bangladesh Border Fencing work (IBBE ) - assessee was executing the Border Out Post (i.e. BOP) works for the Ministry of Home Affairs (Gol) - as argued AO has admitted that no title of land was executed in the assessee’s favour and expenses were incurred on behalf of the third entity i.e. Ministry of Home Affairs thus added the same stating that it is of capital nature and not allowable as revenue nature - HELD THAT:- As evident that the amount incurred for land acquisition and the assessee Company was executing the Border Out Post (BOP) Works under Phase-11 as per MOU signed in between NPCC and MHA (GoI) on Dt. 14.07.2010. Serial No. 17 of MOU clearly state that, "Land Acquisition for al l BOPs will be made by NPCC and cost of the land acquisition shall be included in the cost estimates. BSP will provide necessary help to NPCC in land acquisition" and serial No.7 of the same MOU clearly mentioned that "NPCC shall hand over the BOPs and allied works after their completion to the designated agency nominated by MHA". The expenditure incurred towards land acquisition compensation was part and parcel of the contact agreement and the same was included in the project cost. The expenditure on service connection charges were paid to Tripura State Electricity Board (TSEB), Agartala for border flood lighting works in the state of Tripura as per MOU signed between assessee and MHA (GoI) dt. 30.09.2009 and the estimates of the expenditure were revised in the 22nd/2010 HLEC meeting held on 17.09.2010 vide agenda item No. IBB/9. It is also evident that the assessee has booked the corresponding income against these expenses in its turnover in the profit and loss account during the year under consideration. Hence, the expenditure done on behalf of MHA (GoI) as project cost was not asset creation in the name of the assessee company, and cannot be treated of capital nature. Therefore on the basis of above facts and legal position, we decline to interfere with the order of the ld. CIT(A) in deleting the addition. Appeal of the Revenue is dismissed.
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