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2016 (6) TMI 532 - ITAT MUMBAIDisallowance of demolition expense - non business expenses - Held that:- The demolition expenses were incurred by the assessee company to remove illegal structure in the portion of the plot of land granted by Collectors office in favour of the assessee company in 1968 as set out in SOF above and in our considered view, this is a normal business expenditure although it is incurred through chartered architect which was reimbursed by the assessee company. Hence, we hold merit in the contentions of the assessee company and allow the expenses incurred by the assessee company as business expenses through its architect paid to BMC towards demolition of illegal structure on its plot of land. We donot find any merit in the contentions of the Revenue as on the one hand development expenses and evacuation expenses with respect to the same piece of land was allowed by learned CIT(A) as business expenses , which orders of the learned CIT(A) is not contested by the Revenue as no second appeal is filed by the Revenue against the orders of learned CIT(A) before the Tribunal , and merely because the receipt for demolition expenses for demolishing the illegal structure on the same piece of land is in the name of the architect, the same cannot be held to be non-business expenses and disallowed by the Revenue. - Decided in favour of assessee Disallowance u/s 43B - Held that:- The Revenue failed to bring on record provisions of any law in force under which this liability of sharing of 50% unearned increase in the land on sale or transfer with the Government can be crystallized or fastened on the assessee company , rather it is a contractual liability arising from contract between the two contracting parties viz. the assessee company on the one hand and Government on the other hand through Collector. In our considered view, the afore-stated amount of ₹ 4,55,422/- stated to be payable towards unearned increase in the plot of land in the event of sale or transfer vide clause 2(g) of Schedule II of the agreement dated 03-07-194 entered into by the assessee company and Additional Collector of Bombay for grant of land in favour of the assessee company is not hit by provisions of Section 43B of the Act as the liability has not arisen on account of any sum payable by the assessee by way of tax, duty, cess or fee, by whatever name called, under any law for the time being in force , but the liability has arisen out of the contract between the two contracting parties and not arising out of any law in force. Thus, we hold that this amount stated to be payable of ₹ 4,55,422/- to Collector towards unearned increase in the land on sale of reversionary rights in the plot is not hit by provisions of Section 43B of the Act. There is another aspect to this issue which also needs to be dealt with is with respect to the verification of the computation of ₹ 4,55,422/- as computed by the assessee company, i.e. whether or not a correct amount of liability albeit not paid which has accrued and crystallized in favour of the Collector vide agreement dated 03-07-1964 with respect to the sale of reversionary rights in the two plots and hence limited verification is required to be done by the Revenue on the computation of working of ₹ 4,55,422/- which has been produced before us as the authorities below have not accepted the claim of the assessee company of ₹ 4,55,422/- being payable to the Collector and allowed the actual amount of ₹ 64890/- paid to the Collector which was computed by the Architect vide working enclosed in paper book page 44-45 filed with the Tribunal . Accordingly, we set aside and restore this issue to the file of the A.O. with limited direction to verify the computation of the working of the unearned increment of ₹ 4,55,422/- made by the assesseee company with respect to the sale of the reversionary rights in the two plots by the assessee company and corresponding existence of liability of the assessee company to the tune of ₹ 4,55,422/- in favour of the Collector in accordance with the agreement dated 03-07-1964 .
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