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2018 (9) TMI 1547 - AT - Income TaxAdvance received by the assessee from the customers to allot plots in future - capital receipt or revenue receipt - expenses collected in connection with receiving advances has to be treated as revenue receipts - Held that:- The revenue receipts admitted from other sources during the year relevant to Assessment Year 2009-10 was ₹ 48,11,812/-. The expenditure incurred towards earning of the above receipts could be reasonably estimated at 30% which would be ₹ 14,43,543/-. Thus, the income from other sources to be subjected to tax would be of ₹ 33,68,269/-. We find that the CIT(A) by considering all the facts and relevant material, he came to a conclusion that the amount collected by the assessee for allotment of the plots in future, though not allotted, has to be treated as a capital receipt because the assessee has collected the deposits from various customers to acquire the capital asset and therefore, the amount received by the assessee has to be treated as a capital receipt. So far as expenditure incurred by the assessee in relation to acquire of the capital asset, it cannot be considered as a revenue receipt. We find that ld. CIT(A) has correctly directed the Assessing Officer to delete the addition and also directed corresponding expenditure would not be allowed as revenue expenditure. Disallowance under section 40(a)(ia) - as submitted before the ld. CIT(A) that TDS was effected and remitted to government account - CIT(A) directed the Assessing Officer to verify the claim and if it is found that TDS was effected and remitted to government account within the time prescribed, then the impugned addition may be deleted - no infirmity in the order passed by the ld. CIT(A). Thus, this ground of appeal raised by the revenue is dismissed. Allowable revenue expenditure incurred towards collection of deposits - Held that:- Assessing Officer treated the plot advance received by the assessee from the customers is a revenue receipt and taxed accordingly. The assessee only received advance and not allotted any plot to the customers and the assessee also not started any developmental activity. Therefore, it has to be considered that assessee not started its activities for which the advance received from the customers. The ld. CIT(A) has rightly held that the advances received by the assessee from the customers is only a capital receipt. So far as expenditure claimed by the assessee is concerned, we find that these expenditure claimed by the assessee in connection with the plot advance received by the assessee. Therefore, the plots advance has already treated as a capital receipt, therefore, this cannot be considered as a revenue receipt. The ld. CIT(A) rightly held that the expenditure incurred towards collection of these deposits would not take the character of revenue expenditure and accordingly, directed the Assessing Officer to estimate the income. We find no infirmity in the order passed by the ld. CIT(A). Unverifiable expenses - CIT(A) has observed that the above expenses are apparently found to be incurred towards collection of deposits and are not to be allowed as a revenue expenditure, the addition made towards disallowance of expenditure is not warranted, hence, directed the Assessing Officer to delete the same. No infirmity in the order passed by the ld. CIT(A). - Appeal of revenue dismissed.
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