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2022 (3) TMI 1016 - ITAT CHENNAIInterest Disallowance u/s 36(1)(iii) - As assessee said interest expenditure has been apportioned between the various properties on pro-rata basis and the properties were held as ‘current assets’ for re-sale / development and not as a ‘capital asset’ - HELD THAT:- We find that the assessee is engaged in real estate and procure land for business purposes. The interest paid by the assessee has been added on pro-rate basis to various land owned by it. In the year of sale, cost of land including interest has been debited in the Profit & Loss Account. The assessee has consistently followed this method of accounting for various years and the same has been accepted by the revenue. If the interest cost is not allowed to the assessee, the same would never be allowed to the assessee since it is not the case of Ld. AO that the assessee is claiming double deduction of interest expenditure. It could also be seen that interest cost is a period cost and allowable to the assessee in the year in which it has been incurred - assessee has chosen to claim the same only in the year when the land is sold. Thus, no infirmity could be found in the impugned order, on this issue. The ground thus raised stand dismissed. Disallowance of compensation Paid - joint-owners of this property entered into joint development agreement (JDA) with another entity GHLPL which was unable to progress with development, the agreement was cancelled and the owners entered into another MOU with the assessee for development of the property and compensation was stated to be paid by the assessee to GHLPL and the same was claimed as project expenditure - claim was rejected by AO on the ground that it was the duty of land owners to give possession of the land free from any claim or encumbrance payment was nothing but charity and the payment was not supported by the terms of the agreement / MOU - HELD THAT:- We find that the amount was paid by the assessee in the regular course of its business to settle the claim of the earlier developer. It is also undisputed fact that the amount was subsequently recovered by the assessee and offered to tax during AY 2011-12. Therefore, impugned order does not call for any interference on our part. The grounds thus raised stands dismissed. Bad-Debts written-off - Expenditure was held to be allowable expenditure u/s 37(1) - HELD THAT:- We find that this amount has been lost by the assessee in the regular course of its business. Any such loss has rightly been held to be allowable u/s 37(1). Finding no infirmity in the impugned order on this issue, we dismiss the grounds thus raised by the revenue.
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