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2022 (3) TMI 464 - AT - Income TaxDisallowance of expenditure considered as capital-work-in-progress by the AO - Scope of addition u/s 40A(2)(b)assessee has claimed consultancy charges, legal and professional charges and marketing expenses - HELD THAT:- Revenue ground is not clear whether they have challenged the deletion of disallowance by invoking the provisions of section 40A(2)(b) of the Act. The only challenge to the order is deleting the disallowance of expenditure considered by the AO as capital-work-in-progress and accordingly capitalized by the AO. As we have noted that this ground is not clear and according to us, the Revenue has not challenged the disallowance made by the AO u/s. 40A(2)(b) of the Act, as is clear from the Ground No. 2.1 raised by Revenue. Consultancy charges, legal and professional charges and marketing expenses - We noted that the assessee is engaged in the business of infrastructure development and real estate related projects and the assessee prior to launching of real estate project i.e., "Centralis @ ABM Avenue", it is engaged in the business of real estate as it has taken lease of around 81 acres of land from Coromandel Fertilizers Ltd., vide lease dated 27.03.2008, which was notified under SEZ Act, 2005 as Special Economic Zone. This land was sub-leased to Silk Road Sugars Pvt. Ltd., for setting up of sugar refinery. The assessee received lease rental from SEZ and has offered to tax. As regards to the bifurcation of expenditure given by the assessee and the payment made by the assessee, we noted that the payment made to EID Parry India Ltd., being holding company should be considered u/s. 40A(2)(b) of the Act but no other payments as they are not related to the assessee. The assessee has made a payment of ₹ 1.2 crores to EID Parry India Ltd., as per the Business Advisory Agreement dated 04.11.2010 but these cannot be disallowed because these are paid according to agreement and actual services rendered and even the AO has not given any finding as regards to unreasonableness of the payment. Further, the only amount disallowed by AO of ₹ 20,38,461/- the CIT(A) has held only as falling under the provisions of section 40A(2)(b) of the Act which are not challenged by the assessee. Hence, we confirm the order of CIT(A) and appeal of Revenue is dismissed.
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