TMI Blog2011 (10) TMI 627X X X X Extracts X X X X X X X X Extracts X X X X ..... and Unauthorized Development Act, 2001 which was a scheme for regularization of unauthorized construction and thereby the payment was compensatory payment . 2 Briefly stated the facts are that the assessee is a firm engaged in the business of construction. During the year under consideration, it has organized the project of residential flats in Shree Raj Residency at Adajan, Surat. For the assessment year under appeal, it filed the return of income showing total income at ₹ 9,90,440/- on 31-10-2005. The AO framed the assessment u/s 143(3) on 18-12-2007 wherein he disallowed ₹ 12,50,000/- on the ground that this is fine / default as per Surat Municipal Corporation Rules and Regulations. 3 On appeal before the learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nner provided therein. However, in an earlier case of CIT, Delhi- IV V/s Lokenath and Co (Construction), the Assessee had violated the sanctioned plan by the NDMC of a building of 13 storeys. According to the by-laws of the NDMC, the second floor of the building could cover only 35%, while the Assessee had covered 50%, thereby exceeding the permissible limit laid down in the by-laws. Time for revalidation of the plan having expired, the Assessee applied for the sanction of a revised plan of the building with only 12 storeys, on the ground that there had been excess construction on the second floor. The revised plan was sanctioned, condoning the additional coverage and other irregularities, on the condition that the Assessee pay an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paid by the Assessee was clearly allowable as a permissible deduction. The AO is directed to delete the addition of' ₹ 12,15,000. 5 Aggrieved with the order of the learned CIT(A) deleting the addition of ₹ 12,50,000/-, the Revenue is in appeal before the Tribunal. Despite the service of notice, none was present from the side of the assessee. We, therefore, proceed to decide this appeal on the basis of submissions made by the learned DR and material available on record. 6 Shri B L Yadav, learned DR appeared on behalf of the Revenue and relying upon Explanation to section 37(1), he contended that penalty / fine paid by the assessee for violating the sanctioned plan is not allowable. 7 After hearing the learned DR ..... X X X X Extracts X X X X X X X X Extracts X X X X
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