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2016 (11) TMI 1368 - DELHI HIGH COURT

2016 (11) TMI 1368 - DELHI HIGH COURT - TMI - Entitlement to set off interest finance and professional and other charges from the interest income for the next assessment year - prior period expenditure - Held that:- 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 Departmentís stand in other group cases that they could be included in the case of land a .....

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ize or include the interest component as part of the cost of land has not been disputed. If such is correct course of action, the reverse situation whereby the transaction does not mature, should also attract a similar treatment that the interest paid but not shown as deductible expenditure for the previous period should be permitted as prior period expenditure. - Decided in favour of the assessee - ITA 128/2004 - Dated:- 16-11-2016 - MR. S. RAVINDRA BHAT & MR. NAJMI WAZIRI JJ. Appellant Thr .....

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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 ₹ 4.88 crores, in furtherance whereof it paid ₹ 2.20 crores as earnest money. Substan .....

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uired lands in village situated in Distt. Gurgaon and entered into agreement to sell with DLF Universal Ltd. Accordingly, the business has already commenced and the revenue expenses have been claimed in the Profit & Loss A/C and in the return of income, except interest & finance/ legal charges which have been excluded on the basis of stand of the department in other group cases that the same is includible in the cost of land (stock-in-trade). It is, however, claimed that the above disall .....

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of stock-in-trade. This was on account of the assessee s adoption of the then prevailing standard applicable to project completion method for recognizing revenue and other expenditure. 4. For AY 1991-1992 and 1992-1993 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 ban .....

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ransactions of several group companies had been scrutinized in various assessments. It relied upon the decision of the Income Tax Appellate Tribunal ( ITAT ) in Vee Dee Investment & Agencies Ltd. vs ACIT ITA No. 7663/Del/91. The CIT(A) also relied upon his own decision dated 13.12.1994 in appeal nos. 34/94-95 and 42/94-95 in the case of Kum Kum Cultivation Pvt. Ltd. The gist of the CIT(A) reasoning was that having regard to the assessee s method of accounting, which recognized expenditure by .....

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