TMI Blog2015 (6) TMI 941X X X X Extracts X X X X X X X X Extracts X X X X ..... not by the assessee, therefore, no disallowance should be made in the hands of the assessee. Accordingly, we direct the AO to delete the said disallowance after verifying the contention of the assessee that the amount of donation has not been claimed by the assessee. - Decided in favour of assessee. Estimate of net profit rate of 8% from the sale of development rights - Held that:- There is no allegation that the payment made by the assessee in the earlier years have been claimed by the assessee. These costs are always taken to work-in-progress. The assessee had spent money to made the payments to the members of co-operative housing to the CIDCO to acquire the rights to develop, then such a payment has to be allowed as cost. No proper b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the estimate of Net Profit @ 8% from the sale of development rights when all the details were submitted to the CIT(A). 2. At the outset learned counsel, Dr. P. Daniel submitted that ground no. 1 is not pressed and accordingly, the same is dismissed as not pressed. 3. In Ground no. 2 the assessee has challenged the disallowance of ₹ 29,965/- made u/s 40A(3). The Assessing Officer noted that assessee has made cash payment exceeding ₹ 20,000/- for sums aggregating ₹ 3,16,666/-, relating to payment made to labourers, telephone charges, purchase of steel, gardening and plantation, vehicle expenses, etc. Accordingly, he disallowed 20% of the said amount which worked out to ₹ 63,333/-. Before the Ld. CIT(A), the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that as regard the payment relating to gardening and plantation, the payment was made to Kerala Forest Department for the purchase of seedlings. In support, he referred to bills and vouchers along with the letter of the Forest Range Officer which was filed before the authorities below. Accordingly, he submitted that the payment is made to the Government Department and therefore, no disallowance u/s 40A(3) should be made as per Rule 6DD. Regarding telephone charges, the submitted that the same pertained to telephone bill of Director and has not been claimed as expenditure by the assessee, therefore, no disallowance is called for. Regarding purchase of steel from Panvel office, he submitted that the same was on account of imprest account and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore, no disallowance should be made in the hands of the assessee. Accordingly, we direct the AO to delete the said disallowance after verifying the contention of the assessee that the amount of donation has not been claimed by the assessee. 7. In Ground no. 4 the assessee has challenged the estimate of net profit rate of 8% from the sale of development rights. The brief facts are that, the assessee is engaged in the business of construction and during the year it has sold its development rights to another person for ₹ 70 lakhs. On the said project, the assessee had incurred cost/expenses of ₹ 68 lakhs and therefore, the assessee had only gained ₹ 2 lakhs from the said project. The assessing officer held that the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d only after the purchase of development rights after January 2003. While the bills attached are all pertaining to year 94-95 and not paid by the assessee company. Therefore, disallowance made in the assessment order u/s 143(3) amounting to ₹ 3,60,000/- has been rightly made. The Ld. CIT(A) has confirmed the order action of the AO based on the remand report. The sole ground for rejecting the assessee s contention by the AO is that, the development rights and agreement has been executed by the assessee in January 2003, whereas the bills for payments attached are pertaining to year 1994-95 and 1995-96, which mainly consisted of amount paid to the list of the member of the Trimurti Cooperative Housing Society and CIDCO and that the s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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