9911796707
TMI Blog2014 (8) TMI 237X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 3. Briefly stated, the assessee is an individual having income from house property, business and other sources. The AO in his assessment order u/s 143(3) of the Act, disallowed the municipal taxes of Rs. 41,78,756/- claimed as expenditure against the income under the head 'other sources'. Further facts are that the assessee had taken the land on lease for 99 years, from one M/s. Hapra Investment P. Ltd., by paying a premium of Rs. 65 lakhs, vide agreement dated 1.12.2003. The assessee constructed super structure on the said lease hold land by incurring additional cost of Rs. 2,43,09,099/-. The assessee gave the premises so constructed to M/s. Kiran Retail P. Ltd to carry on its business as per agreement dated 12th April, 2007. The said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Municipal Taxes was on the owner of the land i.e. Hapra Investment P. Ltd. The AO further observed that the payment of municipal taxes was not a necessary expense in earning the 'income from other sources' since the impugned income was not offered under the head 'house property income' where it is necessary to pay municipal taxes. The AO was of the opinion that the assessee could have earned the impugned income even without paying any property taxes. Accordingly, the AO disallowed the claim of the assessee. On appeal, the Ld.CIT(A) directed the AO to allow the claim of the assessee. According to the Ld.CIT(A), the payment of the municipal taxes by the assessee had arisen out of contractual obligation between the assessee and the land owne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in specific, provides that the assessee has to pay and discharge all rates, taxes, charges, dues outgoing and assessments of every description of whatsoever nature charged and imposed at present or hereafter become payable either by the lessor or the lessee. It is only in pursuance of this agreement that the assessee has invested an amount of Rs. 2.43 crores towards building construction expenses on the above lease hold land, apart from paying a premium of Rs. 65 lakhs. Thus a new structure has been brought into existence and the assessee further entered into an agreement with M/s. Kiran Retail P. Ltd. to exploit the said building and to receive compensation thereof in the agreed manner. In the aforesaid agreement with M/s. Kiran Retail P. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hand to consider that the income arising out of the agreement has a relation to the quantum of municipal taxes payable and on the other hand in finally not allowing the municipal taxes paid by the assessee. Thus, we are inclined to agree with the observation of the Ld.CIT(A) that the AO is self contradictory in the stand taken by him. It is also observed that in the subsequent year, (AY 2010-11), the AO, vide assessment order dated 05.02.2014, passed under section 143(3) of the Act has allowed a similar deduction of Rs. 77,98,047/-claimed by the assessee. 4.1 However, from the perusal of the relevant records and the orders of the authorities below, it is not clear whether the assessee has actually paid the municipal taxes of Rs. 41,78,756/ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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