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2017 (12) TMI 574 - AT - Income TaxAllowable business expenditure - provision towards the development expenditure - Held that:- As noted that the assessee has prepared an estimate of development expenses from an architect and detailed working has been submitted. It is noted that the development work has to be carried out by the assessee as per the specifications of the JDA and the same have been considered while working out the above estimation which has been worked out at ₹ 15,55,73,066/- and given the total saleable area of 310052.60 Sq. yards, it gives the development cost of ₹ 501.76 per Sq. yard against which the assessee has made a provision of ₹ 500/- per Sq Yard. As contended that the said estimate of development expenditure is also comparable to development expenditure estimated by JDA’s own scheme at Village Prithvisinghpura wherein the JDA estimated the cost of development expenses at about ₹ 1700/- per sq. Mts. as on 14.02.2014, nothing has been brought on record which dispute the specification of development activities which has to be carried out by the assessee and also in terms of quantification thereof. We accordingly confirm the basis and reasonability of such provision towards the development expenditure and a claim towards such an ascertained liability is therefore clearly allowable for tax purposes under the provisions of section 37 of the Act. Further, we note that the assessee has been consistent in its accounting policy whereby it creates provision towards the development expenditure and there is no deviation from the past years. Further, we note that the assessee has been incurring actual expenditure out of such provision account and it is not a case that where the provision has been built over a period of time without any actual expenditure. The AO has allowed the provision for development expenses in A.Y 2007-08, A.Y 2008-09 and A.Y 2009-10 while completing the assessment u/s 143(3) of the Act and we don’t see any justifiable basis to disturb the same for the impunged assessment year. - Decided in favour of assessee.
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