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Showing 61 to 80 of 1739 Records
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2017 (8) TMI 1684
Charging of interest u/s 201(1A) - Period of limitation - Whether there is any period of limitation which can be applied in respect of proceedings under Section 201(1)/201(1A)? - HELD THAT:- As decided in Mass Awash Private Limited [2017 (7) TMI 664 - ALLAHABAD HIGH COURT] In State of Orissa Versus Debaki Debi [1963 (10) TMI 17 - SUPREME COURT], S. B. Gurbaksh Singh Versus Union of India [1976 (1) TMI 153 - SUPREME COURT] and CST Versus Halari Store [1997 (9) TMI 516 - SUPREME COURT] Court said that a power conferred without any time limit, if not exercised within reasonable time, unreasonable delay in exercise may effect its validity. However, it also held that what would be reasonable time is not to be fixed by Court since delay depends upon facts of each case. Though there are otherwise judgments in Uttam Namdeo Mahale Versus Vithal Deo and others [1997 (5) TMI 427 - SUPREME COURT] and Ishar Singh Vs. Financial Commissioner and others [1984 (7) TMI 396 - SUPREME COURT] but for the purpose of the present case, we proceed to hold that if a power is not exercised within a reasonable time, unreasonable delay which is not capable of explanation may affect validity of such power.
Then next question would be, whether in exercise of power under Section 201 and 201(1A) of Act, 1961, in the case in hand, can it be said to be an exercise of power with unreasonable delay so as to invalidate such exercise of power.
In the light of aforesaid we answer the question in favour of Revenue and against Assessee.
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2017 (8) TMI 1683
Computation of deduction u/s 10A - reduce expenditure incurred in foreign currency in the form of insurance, freight and telecommunication to be reduced from total turnover as well as export turnover - HELD THAT:- The direction of the CIT(A) is in consonance with the law laid down by the Hon'ble jurisdictional High Court in the case of CIT vs. Tata Elxsi [2011 (8) TMI 782 - KARNATAKA HIGH COURT] wherein it has been held that if the expenditure is to be excluded from the export turnover then the same has to be excluded from the total turnover as well. This ground of appeal is accordingly dismissed.
TP Adjustment - Comparable selection - exclude comparables on the ground that turnover of those companies fall outside the range of Rs. 1 to Rs. 200 crores or they earn abnormal profits or incurred abnormal losses - HELD THAT:- As regards turnover filter, learned counsel for the assessee not pressed during the course of hearing. As regards filter of abnormal profits or losses as held in the case of DCIT v. Quark Systems P. Ltd. [2009 (10) TMI 591 - ITAT, CHANDIGARH] no comparable can be excluded on the ground that the company is earning abnormal profits or incurring abnormal losses. Accordingly, ground are allowed.
We uphold the action of the TPO/AO to include in the list of comparables the comparables Bodhtree Consulting Ltd. and Geometric Software Solutions.
Exclusion of companies as functionally dissimilar with that of assessee.
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2017 (8) TMI 1682
No proper representations by the assessee - HELD THAT:- As observed that three notices dt. 19-12-2016, 14-02- 2017 and 19-05-2017 were issued to assessee for appearance before the Bench to prosecute his cases, but there were no proper representations by the assessee. It appears that the assessee is not interested in prosecuting his case(s). In view of the above, following the decisions of the ITAT, Delhi Bench in the case of Multiplan India (P) Limited [1991 (5) TMI 120 - ITAT DELHI-D] and case of Estate of late Tukojirao Holkar [1996 (3) TMI 92 - MADHYA PRADESH HIGH COURT] we dismiss the appeal of the assessee in limine for want of prosecution.
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2017 (8) TMI 1681
Nature of income - Revenue v/s capital field - Appeal admitted on following substantial question of law-
Whether on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the benefit received by the appellant by way of sales tax waiver was in the revenue field and not in the capital field, and therefore, the appellant was not entitled to reduction of such benefit from the total profits of the year?
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2017 (8) TMI 1680
Territorial Jurisdiction - Dishonor of Cheque - whether Writ Petition under Article 226 is maintainable as against a criminal court which is situated outside the territorial jurisdiction of this Court? - HELD THAT:- A Full Bench of this Court had occasion to consider that pertinent issue in Meenakshi Sathish v. Southern Petrochemicals Industries reported in [2007 (1) TMI 644 - KERALA HIGH COURT] and it was held in paragraphs 9 and 10 thereof that in view of clause (2) of Article 226, if part of the cause of action had arisen in the State, writ could be issued against an authority, though the seat of that authority is outside the territorial jurisdiction of this Court. But, the cause of action which must arise in Kerala for issuing the writs of certiorari or prohibition, must relate to the commissions or omissions of an inferior court or Tribunal amenable to the writ jurisdiction of that court and not that of a private party. This Court cannot judicially review the actions of the first respondent therein (the complainant concerned) and that if a complainant files any complaint before any court it may do it rightly or wrongly and the complainant in a complaint alleging offence under Section 138 of the Negotiable Instruments Act, being a private party is not amenable to the writ jurisdiction of this Court under Article 226 and therefore, this Court cannot judicially review the actions of such a complainant by invoking the powers conferred under Article 226 of the Constitution of India.
It is well settled law that a High Court shall have judicial superintendence over all courts and Tribunals throughout the territories in relation to which it exercises its jurisdiction. In other words, the subordinate court/Tribunal concerned which is sought to be supervised under Article 227 of the Constitution of India should be one which is situated and functioning within the territorial jurisdiction of the High Court concerned. In the instant case, it is not in dispute that the complaint has been entertained by the Metropolitan Magistrate Court concerned based at New Delhi which is indisputably not within the territorial limits of this Court - the alternate plea made by the petitioner that this Court should invoke jurisdiction under Article 227 of the Constitution of India is not maintainable.
The place of commission of the offence is the place where the dishonour of the cheques occur, but that the only court which is having jurisdiction as the competent court to try the offence is the Magistrate Court having territorial jurisdiction over the collection Bank area.
This Court need not pronounce any final opinion on this issue, as this Court is not vested with the jurisdiction to entertain these petitions and all those issues raised by the petitioner are left open to be appropriately raised and decided before the competent fora concerned - petition dismissed as not maintainable.
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2017 (8) TMI 1679
Maintainability of petition - recognition as a charitable institution for granting exemption u/s 10(23C)(vi) denied - alternate remedy - HELD THAT:- The order impugned in this appeal is an order passed under Section 10(23C) (vi) of the Income Tax Act 1961, dated 03.08.2015 passed by the Chief Commissioner of Income Tax, Allahabad.
Section 253 (1)(f) which was inserted with effect from 01.06.2015 vide Finance Act 2015 provides for an appeal against the order passed by the Prescribed Authority under Section 10(23C) (vi) of the Act.
In view of the above provisions, there is a clear statutory remedy of appeal available to the petitioner which has not been availed.
The mere fact that the department may or may not have raised the above objection earlier would not obliterate the legal position as the right to file appeal available under the Act. Thus, irrespective of the fact that there was no objection earlier regarding alternate remedy as undisputedly the petitioner has a remedy of filing an appeal against the impugned order, we do not deem it proper to proceed further and to adjudicate the rights of the parties involving factual aspects in exercise of extraordinary jurisdiction.
Accordingly, we dismiss the petition on the ground of alternate remedy with liberty to the petitioner to avail the remedy of appeal. It is expected that in case any application for condoning the delay on account of the fact that the petition was incorrectly filed and was pending in the High Court, the Appellate Authority would consider the delay condonation application sympathetically.
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2017 (8) TMI 1678
Attachment of movable and immovable property - grievance of the appellant is that the movable and immovable property of Guarantor (promoter) has been attached pursuant to Corporate Resolution Process initiated under section 10 against the Appellant-Corporate Applicant - HELD THAT:- Section 60 of the I & B Code, as per which under sub-section (2) if Corporate Insolvency Resolution Process, or liquidation proceeding of a corporate debtor is pending before the 'Adjudicating Authority', an application relating to the 'insolvency resolution' or 'bankruptcy' of a personal guarantor required to be filed before the same Bench of Adjudicating. Authority, meaning thereby, separate application for initiation of resolution process require to be filed against the guarantor before the same very Bench of the Adjudicating Authority who is hearing the corporate resolution process or liquidation proceeding against principal corporate debtor.
Sub-section (3) of Section 60 further makes it clear that if an insolvency resolution process or bankruptcy proceeding of a personal guarantor of the corporate debtor is pending before any other court of law or Tribunal, such as "Debt Recovery Tribunal", who is the Adjudicating Authority for the purpose of Part-III- Insolvency Resolution and Bankruptcy for Individuals and Partnership Firms all those proceeding shall also stand transferred to the Adjudicating Authority, dealing with insolvency resolution process or liquidation proceeding of the Corporate Debtor - Sub-section (5) of Section 60 further makes it clear that the Adjudicating Authority has jurisdiction to entertain and dispose of an application or proceeding by or against the Corporate Debtor or corporate person including any claim made by or against the Corporate Debtor or Corporate person, including claims by or against any of its subsidiaries situated in India.
The appeal is dismissed.
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2017 (8) TMI 1677
Jurisdiction - proper officer to issue SCN - Notice issued by DRI - HELD THAT:- Similar issues have been dealt with in various cases by the Tribunal recently. It is held that the matters have to be remanded back to the original authority for a decision after the legal issue is settled by the Hon’ble Supreme Court.
By following the ratio laid down by the Hon’ble High Court of Delhi in the case of BHARAT SANCHAR NIGAM LIMITED VERSUS UNION OF INDIA & ORS [2017 (6) TMI 688 - DELHI HIGH COURT] as well as by considering totality of facts and circumstances, we set aside the impugned order and remand the matter to the original adjudicating authority to first decide the issue of jurisdiction after the availability of Hon’ble Supreme Court decision in the case of UNION OF INDIA VERSUS MANGALI IMPEX LTD. [2016 (8) TMI 1181 - SC ORDER] and then on merits of the case but by providing an opportunity to the assessee of being heard. Till the final decision, the status quo will be maintained.
The appeal filed by the assessee is allowed by way of remand.
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2017 (8) TMI 1676
Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - HELD THAT:- To fulfill the requirement of showing the record of default the Financial Creditor has annexed status classification report of corporate debtor dated 21.6.2017 issued by CIBIL. Copies of entries in Bankers book in accordance with the Bankers Book Evidence Act, 1891 showing the detail account of Corporate Debtor maintained by the State Bank of India have also been placed on record - The Financial Creditor in its capacity as trustee of other trusts has separately acquired financial assets and loan accounts of the Corporate Debtor to enable it to file claim for financial default on behalf of such other trusts for the financial assets acquired by such other trusts in accordance with the provision of sections 13 & 15 of the Code and to enable the Interim Resolution Professional to perform his duties envisaged under section 18(1) (b) of the Code.
The Financial Creditor has proved by overwhelming evidence that default has occurred, which meets the requirement of Section 3(11) & (12) read with Section 7(3)(a) and Section 7(5) of the Code - the application is complete in all respects as the Insolvency Professional, Mr. Venkatesan Sankaranarayanan has also been proposed who has filed his written communication.
Petition admitted - moratorium declared.
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2017 (8) TMI 1675
Territorial Jurisdiction - seeking transfer of the case to the Delhi High Courts - HELD THAT:- It is stated by the learned Solicitor General that a large number of petitions are pending in several High Courts including High Courts of Calcutta, Kerala, Gujarat, Telangana & Andhra Pradesh, Allahabad, Madras, Punjab & Haryana and Delhi on the imposition of service tax on legal services rendered by Senior Advocates.
It would be appropriate if all these cases are transferred and dealt with by one High Court - all the matters stands transferred to the Delhi High Court for adjudication on merits.
Transfer petition allowed.
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2017 (8) TMI 1674
TP Adjustment on account of Restricted Stock Units (RSU) given to Employee which was reimbursed by the Associated Enterprise (AE) - TPO noted that the assessee has made payment to only one employee in the entire year comprising of the salary and RSU - value of the stocks granted to the employee as charged by the AE to the assessee at Rs.6,94,57,483 whereas the assessee has valued the stock granted and vested to employee at Rs.15,93,80,905 being perquisite for the purpose of deduction of tax at source - HELD THAT:- Method of valuing the stock option it is settled proposition that prior to the vesting date on which the options granted to the employee vest with him there will be no liability accruing to the assessee. The liability on account of stock option accrued only on the date when the employee becomes entitle to exercise the option at the end of the vesting period and it is only when the actual amount of discount at the hand of the employee would be determined for the purpose of quantifying perquisite. Hence at the end of the each anniversary 20% of the total stock option granted would be treated as the expenses incurred on account of perquisite / cost of employee and the value of the said perquisite will be difference between the market price of the units on the date of vesting and the price at which the shares were granted. Prior to the date of vesting neither the assessee has incurred any liability to issue the shares nor the employee is entitled to exercise such option.
Therefore only on the date of vesting this liability accrued/incurred and the assessee becomes liable to issue the shares at the time of exercise of option. Though the definite value of the shares can be quantified only at the time of exercise of option by the employee however, market price at the time of vesting can be considered for working out the amount of discount which is being perquisite during the vesting period. Thus an appropriate adjustment on account of difference in the market price at the time of vesting the right and at the time of exercise of option can be made in the accounts.
In the case on hand the assessee has accounted the value of the RSU on the basis of market price at the time of grant whereas the perquisite in the hand of the employee is valued on the basis of the market price at the time of vesting date and exercise of option. Therefore in case if the action of the TPO/A.O. is accepted that the assessee has received benefit from its AE of Rs.15,93,80,905 instead of Rs.6,94,57,483 then the said amount of Rs.15,93,80,905 is required to be charged to the profit and loss account being perquisite to the employee so that there will be resultant benefit being income of the assessee. But the TPO has considered only one side of the transaction and overlook another side being expenditure charged to the profit and loss account. Hence we direct the Assessing Officer / TPO to verify the fact whether the assessee has charged more than Rs.6,94,57,483 to the profit and loss account as against the payment to the AE resulting benefit or income to the assessee. Accordingly, for the limited purpose of verification we remand this issue to the record of the TPO/A.O.
TP Adjustment on account of notional interest on the outstanding receivable - HELD THAT:- As decided in M/S. TALLY SOLUTIONS PVT. LTD. VERSUS ASST. COMMISSIONER OF INCOME TAX [2016 (8) TMI 774 - ITAT BANGALORE] we direct the TPO/A.O. to consider the outstanding period as part of the main international transaction and then make necessary and appropriate adjustment in the margins by taking LIBOR + 1.5% as arm’s length interest.
As regards the transaction of loan and advances the same is international transaction in itself and therefore the interest chargeable to the AE has to be decided as per the arm’s length interest. However, there are various decisions on the point that the advance is given in foreign exchange therefore the arm’s length interest has to be applied on the basis of LIBOR + 1.5%. Accordingly, the TPO/A.O. is directed to recompute the arm’s length interest on loans and advances on the basis of LIBOR + 1.5% and consequent adjustment if any.
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2017 (8) TMI 1673
NCLT has not ascribed reasons whether it is just and equitable in the controversy involved to pass an interim order for conduct of company affairs - HELD THAT:- On a perusal of the order passed by the NCLT, it is found that certain reasons have been given. In such a case, it is opined that the NCLAT should not have cryptically set aside the order and remanded the matter with a direction that the main petition shall be decided along with the prayer for interim relief. Whether circumstances exist to arrive at a reasonable conclusion for regulating the conduct of the company affairs to pass an interim order on such terms and conditions as appeared to be just and equitable are to be appositely appreciated. Needless to say the words 'just and equitable' are associated with the terms and conditions but not with the reasons for passing an interim order. A case has to be made out by the applicant for getting an interim order.
When the matter is remanded to the NCLAT, the main proceeding before the NCLT shall remain stayed till the NCLAT decides with regard to the justifiability of the interim order. The NCLAT may be well advised to deal with the issue of maintainability of the original proceedings or that comes within the sweep of prima facie case for entertaining the prayer for interim relief.
Appeal allowed.
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2017 (8) TMI 1672
Revision u/s 263 - AO while passing the impugned order has not disallowed the amount paid by the assessee towards 'Compounding Fine' and penalty to the Bangalore Mahanagar Palike and claimed it as an allowable expenditure in its profit & loss account under the name "Building Approval Fees" - CIT was of the view that as this amount represented the compounding fine and penalty, it is not allowable for a deduction as per explanation below sec. 37(1) - HELD THAT:- It is fact that at the time of approval, the corporation and the builders aware that it is not possible to complete the project as per the proposed plan as there are certain adjustments need to be made at the time of actual execution. As long the actual completion of the projects are within the parameters of approval, the corporation/approving authorities permit the projects as approved with the nominal fine or compounding fee. This is the reason, the corporation has the clause intact in the rules books.
If the projects are illegal, which is an offence and cannot be cured, the whole project cannot be approved by the approving authorities, as the same is subject matter of public safety. The penalty can be classified as two types; one charged for violation of law in the nature of offence, which cannot be pardoned by compounding and the second is charged for violation of certain rules which are not in the nature of offences and can be cured by compounding. In the case of housing/commercial projects, the corporation aware that there will be certain deviations at the time of approval and no project can be completed without any deviation.
The question is, the extent of deviation. In case it is within the permissible limits, the approving authorities, allow with compounding the deviation by levying compounding fees. In the given case, the project was completed and the deviations are within the limits, for which the Bangalore Mahanagar Palike has approved the project by compounding fees, which is not in the nature of offence nor prohibition of any law. Hence, it is allowable u/s 37(1) of the Act.
Adjustment proposed by the CIT will have impact on the tax credit available to the assessee in the subsequent AY. Hence, this ground is dismissed.
Since there is no impact on the original assessment, the proceedings u/s 263 is quashed.
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2017 (8) TMI 1671
Estimation of income - bogus purchases - HELD THAT:- CIT(Appeals) as well as Tribunal both have accepted the assessee's contention that adding the entire amount of bogus purchases would give a completely distorted figure and the gross profit would be higher than the total turnover. Such bogus purchases were for offsetting the purchases from producers and agriculturists directly who would not have the billing facility. Only question seriously paused before us was, was the Tribunal justified in adopting the gross profit rate of 8% as against 25% adopted by CIT (Appeals)?
When additions are made on the basis of gross profit rates, a limited amount of estimation and gross work is always inbuilt. The assessee had pointed out that without the additions, the gross profit for the year under consideration was approximately 7%. Tribunal therefore, did not commit any error in accepting the gross profit rate of 8% on the purchases which was otherwise found not genuine.
No question of law arises. The disclosure made by the assessee in his statement pertained to the bogus purchases and was therefore rightly assessed by the CIT (Appeals) and the Tribunal. No question of law arises. Tax Appeals are dismissed
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2017 (8) TMI 1670
Jurisdiction of the impugned order - assignment of debts - convention of meeting of a few creditors of the company (in liquidation) without even indicating the values of the debts of such creditors - HELD THAT:- Section 391 of the Companies Act, 1956 permits a compromise or arrangement to be proposed between a company and its creditors or a class of creditors or between a company and its members or a class of members on the application of the company, or any creditor or member of the company. However, "in the case of a company which is being wound up", Section 391(1) of the Act permits only an application "of the liquidator" to be received under such provision.
Applications for meetings to be held of creditors of a company (in liquidation) ought to be seen with a lot more circumspection than is evident from the order impugned. In the scheme of things that existed prior to the Companies Act, 2013 and as is still applicable to the company (in liquidation), this Court is in seisin of the company (in liquidation) and its assets and properties and is answerable to all its creditors. A bystander or a passerby cannot be allowed to hijack the assets of the company (in liquidation) by convening an illegal meeting. The Court has to guard against such mala fide attempts as the present one and the Court is duty-bound to do so. Since the very application carried to the company Court, without any reference to a company petition number, was under a provision that does not authorise the making or the receipt of such application, CA No. 107 of 2016 is dismissed with costs assessed at Rs. 1 lakh for such irresponsible application.
The order impugned dated December 5, 2016 stands set aside - Application disposed off.
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2017 (8) TMI 1669
Disallowance u/s 80IC - remission of VAT granted by the State Government - HELD THAT:- In the light of the ratio laid down by the Tribunal in assessee’s own case and that of identical cases, we are of the considered opinion that the VAT remission is akin to the issue of Central Excise Refund we concur and allow the deduction u/s. 80IC of the Act claimed by the assessee in respect to the VAT remission. Therefore, we allow all the appeals of the assessee.
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2017 (8) TMI 1668
Permission for withdrawal of Bail application - application has been filed seeking interim bail on the ground of illness of the mother of the petitioner who has recently suffered a fracture in the neck - HELD THAT:- The regular bail application is dismissed as withdrawn.
Seeking grant of Interim Bail - It has been submitted on behalf of the petitioner that he is the only son of his mother who has suffered a fall and has got a fracture in her neck - HELD THAT:- Taking into account the facts, specially the period of incarceration of the petitioner, submission of the charge sheet in the main case and the illness of the mother of the petitioner, this Court is inclined to grant interim bail to the petitioner for a period of 3 weeks - Let the petitioner be released on interim bail for the period of 3 weeks, to be counted from the date of his release, on his furnishing a bond in the sum of Rs. 25,000/- with two sureties of the like amount to the satisfaction of special court and subject to the conditions imposed.
Bail application allowed.
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2017 (8) TMI 1667
Penalty u/s 271(1)(c) - Addition on account of non-genuine/bogus purchases - assessment was reopened on the basis of the information received from the DGIT (Investigation) that during the impugned assessment year, the assessee made purchases from the dealers, who were shown as hawala dealers in the website of the Sales tax Department of State of Maharashtra - HELD THAT:- AO on the basis of the gross profit percentage, disallowed 12.5% out of the total purchases made from the four such hawala dealers. Admittedly, the addition was made on estimation basis.
As in the case of Ruchi Developers [2015 (6) TMI 1094 - ITAT AHMEDABAD] and Earthmoving Equipment Service Corporation [2017 (5) TMI 474 - ITAT MUMBAI], has taken a view that when a assessee made a bona fide claim coupled with documentary evidence but the same remained inconclusive for want of confirmation from the suppliers and the Assessing Officer has not made further inquiry to verify the correctness of the confirmation, the imposition of penalty is not justifiable. Thus, respectfully following the decisions of the co-ordinate Benches of this Tribunal, we find that the penalty made on estimated disallowance is not sustainable. As a result, the penalty levied is set aside and the appeal of the assessee is allowed.
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2017 (8) TMI 1666
Tax Appeal is admitted for consideration of the following substantial questions of law :
“(1) Whether the Appellate Tribunal was right in treating business income of Rs.46,36,048/as Short Term Capital Gain and Rs.1,80,73,418/as Long Term Capital Gain?
(2) Whether the Appellate Tribunal was right in deleting the addition of Rs.5,37,79,887/made u/s. 28(iv) of the Act?”
Revenue has suggested one more question which reads as under :
“Whether the Appellate Tribunal was right in deleting the disallowance on account of bad debts written off amounting to Rs. 6,65,78,426/?”
From the record, however, it emerges that the assessee had actually written off the said amount of Rs.6.65 crores (rounded off). No question of law therefore, arises.
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2017 (8) TMI 1665
Deduction u/s 80IB(10) with respect to the profits earned from Housing Project namely “Kamadhenu Siddhi” at Kothrud, Pune - HELD THAT:- It is an undisputed fact that the project of the assessee was on a piece of land having area of more than one acre and the area of flats is within the prescribed limit of the Act. The only reason for denial of deduction by the AO was on account of non-completion of the Project before 31.03.2012. It is an undisputed fact that the first completion certificate in respect of 46 flats was granted by Pune Municipal Corporation on 11.10.2010 with reference to its application dt.16.08.2010 and the final completion certificate with respect to 15 flats was granted vide certificate dt.21.07.2012 with reference to the application made by the assessee on 27.03.2012.
Thus it is an undisputed fact that the application for granting of completion of certificate was made by the assessee before the due date being 31.03.2012. On the issue of the claim of deduction, when assessee has made application to the concerned authorities before the due date find in the case of CIT Vs. Hindustan Samuh Awas Limited [2015 (10) TMI 2306 - BOMBAY HIGH COURT] has held that when assessee undertook a Project which was completed on time and an application was moved for seeking completion certificate from Municipal Authority but the same was issued to the assessee after delay and then the delay could not be attributed to the assessee and the assessee is entitled for exemption u/s 80IB(10) of the Act.
Before us, Revenue has not placed any contrary binding decision in its support nor has demonstrated as to how the ratio of decision in the case of Hindustan Samuh [2015 (10) TMI 2306 - BOMBAY HIGH COURT] is not applicable to the preset facts. In view of the aforesaid facts, we are of the view that assessee is entitled to deduction u/s 80IB(10) of the Act. We thus direct accordingly. Thus, this ground of the assessee is allowed.
Disallowance in respect of compensation paid to flat owners - AO noticed that assessee had debited as compensation to flat owners and had claimed it as deduction - HELD THAT:- Whether the covenant for payment of compensation for delay in handing over of possession of flat is contained in the agreement or not, the assessee was bound to compensate the flat owners in the case of delay in handing over of possession of the flats beyond a reasonable time - In the present case the delay in handing over of flats was almost 2 years.
The Courts are now taking a very serious view against the delay in handing over of possession of flats by the builders. The Consumer Courts as well as Civil Courts are directing the builders, promoters to pay heavy compensation to the flat holders for delay in handing over of possession of flats. Recently, the Parliament has enacted the Real Estate (Regulation and Development) Act, 2016 to leash the builders and put on hold the unethical practices followed by developers to harass the consumers. The Real Estate Act also aim to curb the practice of delay in handing over of possession of flats to the flat holders. Section 18 of the Real Estate (Regulation and Development) Act, 2016 provides for the payment of compensation by the developer to the allottees of the flats in case the developer fails to complete or is unable to give possession of the apartment/flat, in accordance with the terms of the agreement on or before the specified date - Decided in favour of assessee.
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