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2015 (6) TMI 1042 - ITAT CHANDIGARH

2015 (6) TMI 1042 - ITAT CHANDIGARH - TMI - Disallowance of expense incurred on maintenance of colonies - CIT(A) deleted the addition - Held that:- The nature of expenses is upliftment of street lighting, development and laying of roads, underground tanks etc. These assets would never belong to the assessee but would belong to the community living in the colony and therefore, it cannot be said that assessee has derived enduring benefit from such expenses, therefore, in our opinion, the assessee .....

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> The appeal by the Revenue is directed against the separate orders dated 27.12.2013 and 18.7.2014 respectively of CIT(A), Panchkula. 2. Since the issue involved in both the appeals is identical, therefore, the appeals were heard together and are being disposed of by this common and consolidated order. 3. We shall deal with the grounds raised in ITA No. 246/Chd/2014 wherein Revenue has raised the following grounds:- 1. On the facts and circumstances of the cas .....

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nce of various colonies. According to Assessing Officer such expenses could not be said to be incurred for the purpose of business and, therefore, the same was disallowed. 4. On appeal, it was mainly submitted that assessee procured land from various government agencies and after construction of houses; the colonies were handed over to the concerned municipal committee or local authority for future maintenance. Since the colonies at Chakkparpur (Gurgaon) did not fall in the municipal .....

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Counsel for the assessee submitted that identical issue has been decided by the Bench in the case of Punjab Urban Development Authority, Mohali v ACIT, Chandigarh in ITA No. 759/Chd/2008 for assessment year 2004-05 wherein it was held that expenses incurred on maintenance of colonies is of Revenue nature. 7. We have considered the rival submissions carefully and find that identical issue came up before the consideration of the Tribunal in the case of Punjab Urban Development Authori .....

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ears depending on the same. That means that maintenance and development in respect of developed sectors and undeveloped sectors was being done by PUDA. Staff and infrastructure available with the PUDA was jointly shared by the developed and undeveloped sectors. The assessee had debited entire cost in respect of this expenditure and claimed the same as revenue expenditure. The assessee was asked to bifurcate these expenses into two parts i.e. the expenditure on .....

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e expenses were 34,40,02,391/-. Since a separate addition on account of CPF contribution was made and this amount was reduced from total expenditure and out of balance amount 50% expenditure was disallowed being of capital nature. 111 On appeal before the ld. CIT(A) it was mainly submitted that addition made by the Assessing Officer was not in accordance with AS7 as well as general accounting principles. It was submitted that administrative expenses which could not be identified were .....

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eted without general administration expenses and accordingly confirmed the addition. 113 Before us, the ld. counsel of the assessee reiterated the submissions made before the ld. CIT(A). He further submitted that the assessee was following cash system of accounting and the Assessing Officer has himself held that installments received in cash on account of sale of houses and flats under hire purchase agreement were taxable which means he has totally followed cash system of accounting .....

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r bifurcation of the same which was not given. She further submitted that even if the assessee was following cash system of accounting and when the assessee was not showing receipt from a particular project then the expenses against the same could not be allowed. 115 We have heard the rival submissions carefully. We have already discussed the implications of cash system of accounting while adjudicating ground No. 5 of revenue s appeal in ITA No. 762/Chd/2008. Basically once the cash .....

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