TMI Blog2015 (1) TMI 864X X X X Extracts X X X X X X X X Extracts X X X X ..... ity charges are eligible for deduction u/s 80-IB except share money, society formation charges, electricity meter charges, water meter charges, legal charges and maintenance charges for 12 months which are all post completion of project activity and cannot be treated as part of the construction project. Accordingly, the income in respect of above said work are not eligible for deduction u/s 80-IB. Since the other income received for A.Y. 2006-07 is only regarding society formation and share money, therefore, the same is not eligible. - Decided in favour of assesse. Proportionate allocation of indirect expenses - Held that:- indirect expenses should be apportioned in proportion to the cost incurred on various projects during the year, as represented by the work in progress in the different projects. The figures supplied by the assessee before us however need verification. We therefore restore the issue to the file of the Assessing Officer for the limited purpose of verifying the figures of work in progress in the various projects undertaken by the assessee. - Decided in favour of assessee for staistical purposes. - ITA No. 1068/Mum/2010, ITA No. 1736/Mum/2010, ITA No. 5536/Mum/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w the facilities provided by M/s Kukreja Services Pvt. Ltd. The assessee relied upon the order of this Tribunal in the case of another group concern M/s Tolaram Company and M/s Vazirani Land Developers Pvt. Ltd., wherein the identical issue of payment of business centre facility and administrative charges to M/s Kukreja Services was considered and decided by the Tribunal. The Assessing Officer did not accept the contention of the assessee and observed that there has been a steep increase in the expenses under the head business centre and administrative charges in comparison to the expenses in the A.Y. 2005-06 and 2006-07. Accordingly, the Assessing Officer disallowed the entire expenses of ₹ 21.50 lakh. 4. On appeal, the CIT(A) has followed its order for A.Y. 2005-06 and 2006- 07 and accordingly confirmed the disallowance of ₹ 19.70 lakh out of 21.50 lakh and consequently allowed the claim the extent of ₹ 1.80 lakh. Thus for both the A.Ys i.e. 2006-07 and 2007-08, the Commissioner has allowed a sum of ₹ 1.80 lakh and balance disallowance was confirmed. Therefore, both assessee and revenue filed cross appeals for these two A.Ys. 5. Before us, the Ld ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds reimbursement of expenses to the sister concern vide order dated 27.10.2004. The Ld. Authorized Representative has then pointed out that even for the A.Y. 1998-99 and 1999-00, an identical issue came before the Tribunal in the case of another group concern M/s Vazirani Land Developers Pvt. Ltd., wherein the Assessing Officer disallowed a sum of ₹ 36,36,636/- which was allowed by this Tribunal vide order 7.11.2006 and on further appeal by the revenue, the Hon'ble Jurisdictional High Court has confirmed the order of this Tribunal vide order dated 12.02.2009. He has filed the copy of the order of the Hon ble High Court. In case of M/s Motiram Tolaram for the A.Y. 2006-07and 2007-08, the Tribunal has again deleted the addition of ₹ 14 lakh and ₹ 19 Lakh respectively on this account vide order dated 8.5.2013. Further for the A.Y. 2008-09 an addition of ₹ 10,80,000/- was deleted vide order dated 24.12.2013. Thus the Ld. Authorized Representative has submitted that the issue involved in the assessee s appeal as well as revenue s appeal are covered by above mentioned various decisions of this Tribunal including the decision in assessee s own case for A.Y. 200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer has not conducted any enquiry to make out a case of excessive or unreasonable payment by the assessee to the sister concern. Even the CIT(A) has not conducted any enquiry or brought any material on record to show that how much of the expenses paid by the assessee to the sister concern are excessive in comparison to the fair market price . We note that in assessee s own case for the A.Y. 2003-04, an identical issue was considered and decided by this Tribunal vide order dated 24.02.2009 in para 11 as under:- 11. We have considered the rival contentions and perused the material available on record. Admittedly, both the asscssees' cases. viz. M/ s Tolaram Co M/ s vazirani Land Developers Pvt. Ltd. cited before us, are group concerns of the assessee where identical issue is involved. While in the case of M/s Tolaram Co, the D Bench of the Tribunal decided the issue in favour of the assessee, another bench of the Tribunal decided the issue in favour of the revenue by upholding a partial disallowance by the CIT(A) in the case of M/s Vazirani Land Developers Pvt. Ltd. However, this decision of the Tribunal in the case of Vazirani Land Developers Pvt. Ltd. cannot p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y adopted by the assessee to appoint the staff of his sister concern for its work and make the reimbursement to its sister concern cannot be doubted as this type of practice is permissible under the law. Assessee has also placed the debit note and the vouchers before the Assessing Officer in support of his claim. The assessee and other group concern whom the payments were made are assessed to tax and Assessing Officer has not brought out a case that the other group concern to whom the payments were made was as.sesseed at a loss and these payments were made to reduce the tax liability. The CIT (A) has partly accepted the claim of the assessee but has not accepted the claim in toto. He simply estimated the disallowance without any basis. Since nothing has been brought out on record on behalf of the Revenue that the assessee has raised the bogus claim of reimbursement of expenditures, we do not find any fault therein in the light of explanations furnished by the assessee. we, therefore, do not find any merit in the disallowance made by the err (A). Accordingly, we set aside the order of the CIT(A) in this regard and direct the Assessing Officer to allow the claim of the assessee. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... harges namely development charges, electric meter charges, extra work charges, grill charges, legal charges, water meter charges, share money charges and society formation charges, Gas charges, car parking charges, interest received on delayed payments, video door monitor and maintenance for 12 months charges. The assessee claimed deduction u/s 80-IB in respect of these charges received from buyers of the flat. The Assessing Officer disallowed the claim of the assessee on the ground that above said items of other income had no direct nexus with assessee s core construction activity. Accordingly, the Assessing Officer held that the said income has not been derived from the construction activity but from amenities/other services provided by the assessee to the buyers and therefore, not eligible for deduction u/s 80-IB(10). 13. On appeal, the CIT(A) has confirmed the disallowance of deduction u/s 80-IB for both the A.Ys i.e. A.Y. 2006-07 and 2007-08. 14. Before us, the Ld. Authorized Representative of the assessee has submitted that the CIT(A) has followed the order for A.Y. 2006-07, wherein the other income received by the assessee was only in respect of share money, society de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of Luv Kush project and orichid project as under:- Items of other income Luv kush project Orchid project Car parking charges 2630000 - Development Charges 1107516 53064 Extra work charges - 77000 Electric meter charges 1427500 90000 Gas charges 348000 - Grill charges 1147975 68320 Interest received 148115 - Legal charges 82500 4500 Share money - 2166 Water meter charges - 44220 Maintenance 12 months 2262767 - Video door monitors 1350000 - Water meter charges 922930 - Total other income 11427303 348270 18. We find that the development charges, extra work charges, grill charges, gas charges, car parking ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00.00 Extra Work 1,387,216.00 Interest received 336,892.00 Water charges 429,680.00 Society deposit 1,275,000.00 Society maintenance received 949,300.60 Share money 21,771.00 Society formation 88,500.00 Car parking charges 545,000.00 Grill charges 494,739.00 Video door security charges 1,425,000.00 Legal charges 44,250.00 Total 8,382,964.00 7. Present assessee has collected the different charges from the flat buyers as builder for the specific purposes but as comparative expenditure is lesser hence, the balance credit was taken to the profit and loss account. No further description is available before us to clarify the nature of the receipts. So far as development charges are concerned. as explained by the Ld. Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 80-IB. Since the other income received for A.Y. 2006-07 is only regarding society formation and share money, therefore, the same is not eligible. Revenue s appeal 20. The revenue has raised common grounds in the appeals for all the three A.Ys. The ground raised for A.Y. 2007-08 are as under:- 1. The ld. Assessing Officer erred in disallowing a sum of ₹ 17,20,000/- towards business centre charges and ₹ 4,30,000/- for administrative charges paid to M/s. Kukreja Services Pvt. Ltd. u/s. 40A(2) of the Income Tax Act . 2. the ld. Assessing Officer further erred in reducing the indirect expenses of ₹ 5,75,769/- from the deduction u/s. 80-IB in respect of Orchid Project . 3. The Ld. Assessing Officer further erred in reducing the deduction u/s 80-IB in respect of Orchid Project by ₹ 3,48,270/- being income received under the head Other income received from the buyers of the flat. 4. The Ld. Assessing Officer further erred in reducing the proportionate indirect expenses of ₹ 72,94,470/- while granting deduction u/s. 80-IB in respect of of Lav Kush Project. 5. The Ld. Assessing Officer further erred in reducing the deduction u/s. 80- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owed in the present case also. Accordingly, respectfully following the said order, we hold that the indirect expenses should be apportioned in proportion to the cost incurred on various projects during the year, as represented by the work in progress in the different projects. The figures supplied by the assessee before us however need verification. We therefore restore the issue to the file of the Assessing Officer for the limited purpose of verifying the figures of work in progress in the various projects undertaken by the assessee and thereafter to apply the rule laid down in the order of the Tribunal in the case of M/s Ganga Developers (supra). The appeal of the assessee is allowed in part with no order as to cost. 26. Accordingly, we direct the Assessing Officer to apply the same basis as directed by this Tribunal for A.Y. 2005-06 for allocation of indirect expenses among various projects for the purpose of deduction u/s 80-IB. We find that there is no error in the order of CIT(A) in directing the Assessing Officer to follow the ratio of the decision of this Tribunal in the case of Ganga Developers (supra). 27. In the result, appeals of the assessee are allowed and that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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