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TMI Blog2016 (11) TMI 1368X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee for the assessment year 1993-94? 2. Whether the order of the learned ITAT dated 16.12.2002 dismissing the appeal of the Revenue is perverse and as it is a non speaking and non reasoned order and does not deal with the reasoning and facts mentioned by the Assessing Officer?" 2. The assessee, which deals in real estate, entered into an agreement for purchase of 24,000 sq. yards of commercial land on 27.08.1990 for consideration of Rs. 4.88 crores, in furtherance whereof it paid Rs. 2.20 crores as earnest money. Substantial amounts were borrowed for this purpose from American Express Bank. For Assessment Year ('AY') 1991-1992 it paid Rs. 25,61,661/-, and Rs. 49,73,775/- for AY 1992-1993, as interest, to the banker. In additi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment was framed and the recognition i.e. self-disallowance was accepted. In the assessment year in question i.e. 1993-1994 the assessee reported that the transaction had fallen through and was rescinded. It consequently returned the earnest money and also re-paid the bank. It also received back its earnest money together with interest of over Rs. 91 lakhs. As against this, the assessee sought to set off the total interest expenditure as "prior period" expenses. This was disallowed by the AO, held that since the expenditure was not incurred during the relevant assessment year in question the claim of prior period expenditure could not be allowed. 5. The Commissioner of Income Tax (Appeals) [CIT(A)] reversed the AO's reasoning. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmissions. The note appended to the computation of income file along with the return by the assessee in this case clearly stated that interest and legal charges were excluded on the basis of the Income Tax Department's stand in other group cases that they could be included in the case of land and were done by way of "abundant caution" as a disallowance. 8. Having regard to this circumstance and further the fact that other group company cases i.e. Kum Kum Cultivation involved a similar and identical exercise where ultimately the disallowance was set aside by the ITAT, the adoption of the same course of action in this case cannot be said to have been erroneous. Furthermore, in the eventuality of the transaction itself maturing the likelihood ..... X X X X Extracts X X X X X X X X Extracts X X X X
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