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2015 (9) TMI 1301 - AT - Income TaxDisallowance of legal & Professional Expenses - CIT(A) deleted the addition - Held that:- We respectfully note the ratio of the judgement of Hon’ble Supreme Court in the case of Ashish Plastic Industries vs ACIT (2015 (4) TMI 16 - SUPREME COURT) wherein it was held that if the appellant assessee is able to prove that the tax on the penalty from sale of material has been paid by the payee, then the benefit thereof should be extended to the appellant assessee. Ld. CIT(A) further noted that the impugned amount has been offered to tax by the payer M/s DLF Home Developers Ltd. as its income and has paid taxes thereon and both the companies viz. the assessee company and the payee company are assessed to tax and paying taxes on the same rate, therefore, there was no case of evasion of tax or diversion of income by the payer assessee company. On careful consideration of aforesaid observations and conclusion of the CIT(A), we are of the opinion that the view taken by the first appellate authority finds support from the ratio of the judgment of the Hon’ble Apex Court in the case of Ashish Plastic (supra) hence the legal preposition adopted and followed by the CIT(A) is correct and uphold the same. However, we find it appropriate that this issue requires examination and verification at the end of the AO as to whether the payee recipient Co. M/S DLF Home Developers Ltd. had paid tax on the receipts. The issue is restored to the file of the AO for limited purpose as indicated above - Decided in favour of revenue partly for statistical purposes. Disallowance of Internal Development Cost Expenses - CIT(A) deleted the addition - Held that:- CIT(A) was right in holding that the assessee has incurred impugned amount on IDC and the same has been claimed in the P&L account as actual expenditure incurred. We are also in agreement with the observations of the CIT(A) that where one follows project completion method or percentage of completion method, the element of cost cannot change and once IDC is accepted to be an element of cost, then whichever method one applies, it has to be allowed as a cost of the project for working out the true profit and loss account in respect thereof. Under above noted facts and circumstances, we are inclined to hold that the AO was not justified in disallowing the IDC cost incurred during the year for carrying out facilities like roads, sewage, lighting, park, water supply line etc. The Budgeted IDC was a part of cost and the same has to be accepted for recognizing revenue as per POCM method which was consistently accepted by the department in the assessee’s case. We cannot ignore that similar claim of the assessee group company in similar facts and circumstances was accepted by the Tribunal and in the present assessee’s own case, assessee also allowed similar claim for subsequent assessment years and the rule of consistency requires to be followed unless there are substantial changes in the facts and circumstances and in law position for taking a deviated or different view - Decided against revenue. Disallowance u/s 40(a)(ia) - CIT(A) deleted the addition - Held that:- We are in agreement with the view taken by the CIT(A) that when it is established that the brokerage expenses of ₹ 1,15,90,431 have actually been claimed by the assessee in the profit and loss account and the same amount was disallowed in the computation of income on the ground that the TDS was not paid on the same, then further addition of ₹ 10 lakh was not justified and the same was rightly deleted by the CIT(A) - Decided against revenue.
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