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Commissioner of Income Tax, Delhi-IV Versus DLF Universal Ltd.

2017 (9) TMI 489 - DELHI HIGH COURT

Nature of expenditure - expenditure incurred in protecting the land from the acquisition - Land was held as stock-in-trade of the Assessee - revenue or capital expenditure - Held That:- the fact that the Assessee is holding land in question as stock in trade is not in dispute. The expenditure incurred by it for protecting the land from acquisition in the circumstances should be held to be revenue expenditure. - the Court finds no error committed by the ITAT in coming to the conclusion that the e .....

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e Revenue against the order dated 6th June 2008 passed by the Income Tax Appellate Tribunal ( ITAT ) in ITA No. 1848/Del./2000 & ITA No.1803/Del./2000 for the Assessment Year ( AY ) 1995-96. 2. While admitting this appeal by order dated 30th November, 2011, this Court framed following questions of law: 1. Whether the Income Tax Appellate Tribunal was correct in law in setting aside the Commissioner of Income Tax (Appeals) order wherein it was held that the method of accounting followed by th .....

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r of Income Tax (Appeals) were correct in law in re-working the cost of land at the average purchase price of land in Qutub Enclave Complex now known as DLF city by dividing the end of the year by saleable area including lands earmarked for schools, hospitals, clubs and other community building, in each phase? 4. Whether the Income Tax Appellate Tribunal was correct in law deleting the addition of ₹ 4,92,27,360/- made by the Assessing Officer on account of contribution to the Shelter Fund? .....

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94- 95. 4. As far as Question No. 5 is concerned, it stands answered in favour of the Assessee by the order dated 18th May 2017 passed by this Court in ITA No. 407/2009 which is the Assessee s own case for AY 1997-98. 5. As far as Question No. 4 is concerned, the facts relevant to this question are that the Assessee had to pay to the Land and Building Department of the Government of Delhi a certain sum as a part of the contribution to the Shelter Fund, failing which, the land was to be acquired .....

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xpenditure towards contribution to the Government Shelter Fund, the AO added it back to the total income of the Assessee. 6. After the CIT (A) affirmed the above order, the Assessee went in appeal before the ITAT. In the impugned order, the ITAT observed that the expenditure incurred was not to acquire additional area of land or to improve the title on the land already acquired. The cost was incurred to defend the title over the land already acquired. In that view of the matter, the Assessee s e .....

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ring for the Assessee, states that the said decision distinguished the earlier decision of the same High Court in CST v. Brihan Maharashtra Sugar Syndicate Ltd. [1987] 165 ITR 275 (Bom). The facts of the latter case were similar to the case in hand in as much as the land that was the subject matter of acquisition under the ULCRA was held as stock-in-trade. Mr. Vohra further placed reliance on the decision of the Supreme Court in Empire Jute Co. Ltd. v. CIT [1980] 124 ITR 1 (SC). 9. The facts in .....

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field and does not in any manner affect the day to day running of the appellant s business. It was held that, for protecting the land from acquisition, the Assessee there was getting rid of defective title or a threat to litigation . It was held threat to a certain acquisition would on a higher footing than a threat to litigation . 10. In the considered view of the Court, the facts of the present case are closer to the facts in Brihan Maharashtra Sugar Syndicate Ltd. (supra). There, the land wa .....

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if it fulfils this requirement, it is not enough; it must further be of revenue as distinguished from capital nature. Here, in the present case, it was not contended on behalf of the Revenue that the sum of ₹ 2,03,255/- was not laid out wholly and exclusively for the purpose of the assessee's business but the only argument was, and this argument found favour with the High Court, that it represented capital expenditure and was hence not deductible Under Section 10(2)(xv). The sole quest .....

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