9911796707
TMI Blog2020 (7) TMI 461X X X X Extracts X X X X X X X X Extracts X X X X ..... amas Builders Private Limited without appreciating the fact that the aforesaid receipt of amount is part of outstanding payment due from Adamas Builders Private Limited. 4. That on the facts and in the circumstances of the case and in law, the Ld. AO / Ld. CIT (A) erred in determining an addition of INR 729,706 on account of disallowance of depreciation on fixed assets. 5. That on the facts and in the circumstances of the case and in law, the Ld. AO / Ld. CIT(A) erred in determining an addition of INR 1,89,08,562 on account of disallowance of legal and professional charges. 6. That the Ld. AO / Ld. CIT(A) have grossly erred in law and on the facts in not appreciating that the expenditure of INR 1,89,08,562 under the head Legal and Professional Charges were incurred wholly and exclusively for the purpose of business and applicable taxes were deducted at source on such payments and were duly deposited." 3. Three issues are involved in this appeal as under :- i. Addition of Rs. 2,10,73,800 as reflected in Form No. 26AS and received from Adamas Builders Private Limited claimed that the aforesaid receipt of amount is part of outstanding payment due from Adamas Builders Private ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 3,14,58,417/- from M/s. Adamass Builders Pvt. Ltd and on the above sum TDS was deducted u/s 194J of the Act. The ld AO found that out of those receipts Rs. 5,00,000/- is lease rent, Rs. 64,79,080/- as miscellaneous income and Rs. 34,05,537/- as service tax receipts. All these receipts were found to be properly booked and income is offered. Therefore, there is no dispute to that extent. However ld AO found that the assessee has not shown balance receipt of Rs. 2,10,73,800/- as its income and therefore, same was also added. 5. The assessee preferred an appeal before the ldCIT (A), who passed an order dated 19.08.2019. With respect to the addition of Rs. 2, 10, 73,800/- on account of sum received from M/s. Adamass Builders Pvt. Ltd not shown by the Assessee as its income during the year as per Form No. 26AS, it was confirmed. He further confirmed the disallowance of depreciation of Rs. 729706/-. With respect to the legal and professional expenses of Rs. 18908562/- he confirmed the same. Therefore, the Assessee is in appeal before us. 6. Ground No. 1 and 2 of the appeal are general in nature, Ground no 7 and 8 are on interest u/s 234B, C etc and Initiation of penalty proceedin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act and how it is reflected in Form NO. 26AS. Therefore, he confirmed the above addition. 8. Before us, ld AR vehemently reiterated the above facts. He referred to the profit and loss account of the Assessee wherein in March 2013 the Assessee has sold a project to M/s. Adamass Builders Pvt. Ltd and shown the net profit on sale of project of Rs. 1,99,71,48,604/-. He submitted that out of the above sale consideration part of that was to be received from Adamass Builders and part of that was subject to certain conditions such as various approvals and compliances, which Admass Builder got done as per agreement and debited the account of the assessee towards outstanding payable. As the payments were for various charges of statutory authorities etc, it also deducted TDS u/s 194 J of the act while debiting the account of assessee. He referred to Form No. 26AS for AY 2014-15 wherein, total payment of Rs. 3,14,58,417/- is shown to have been received from / adjusted by M/s. Adamass Builders Pvt. Ltd. He submitted that the buyer has deducted tax therein for the reason that various statutory charges were covered u/s 194J as per buyer. He submitted the copy of the account of M/s Adamas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expenses. During the year , assesse credited account of Admass Builders Pvt Limited in its books by Rs. 3,14,58,429/- . This sum is also reflected in form No 26 AS of the assesse on which buyer deducted tax at source u/s 194J of the act. i. A sum of Rs. 316688/- was adjusted by Admass Builders towards amount payable to Airport Authority of India. When the above amount is shown to have been debited to the account of Admass Builders on 10th April 2013. ii. Further sum of Rs. 1635069/- was paid by Admass Builders by debiting the account of the Assessee on final receipt of NOC from Bangalore Water Supply and Sewerage Board. This also apparent from the account entry dated 10.04.2013. iii. Further Rs. 1377934/- was paid by Admass Builders to Bangalore Electricity Supply Company on 15.07.2013 and debited the account of assessee. iv. Similarly, Rs. 3307361/- was paid to the Fire Department and Rs. 6970643/- was paid to Pollution Control Department. v. Further, Rs. 9459060/- was paid to Industrial Area Development Board towards final approval. vi. It included some other such related expenditure of that project. vii. Over and above sum assessee was also paid Rs. 5 lakhs was al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tted that the claim of the depreciation of assessee is on routine business assets such as computers, air conditioners, motor cars etc. He therefore, submitted that these assets were used for the purposes of the business therefore, depreciation should be allowed. 14. The ld DR submitted that assesseeis a real estate company and there is no real estate project therefore there is no business carried out by the Assessee during the year. Therefore, depreciation cannot be allowed. 15. We have carefully considered the rival contentions and perused the orders of the lower authorities. During the year,assessee has earned gross revenue of Rs. 81,50,271/- such as miscellaneous income and lease rent income etc. These incomes is offered by the assessee as business income and accepted by the ld AO in the assessment. The assessee has been allowed several business expenditure during the year. Further, the assets on which depreciation is claimed by the assessee are also general asset as per Schedule No. 5 of the balance sheet. They are in the nature of air conditioner, fax machine, Xerox machine, computers, motor cars. These assets were not purchased during the year but was part of the assets i. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rred the expenditure during the year on account of consultancy and professional charges towards the Global Technology Park project. The consultancy expenses included drawing preparation and documentation charges, electricity approval, consultation charges, legal and professional charges etc during the year. The ledger account shows that the assessee received the bills of the parties during the year and itwas accrued during the year. The assessee also supported the above payment by production of the necessary bills as well as the receipt of the payment made. As per the agreement, some of the expenses were on account of assessee. Those expenseswere incurred during the year as bills of the same were received during the year, they were acknowledged in this year, and consequently obligation to pay by assessee and right to receive by the service providers arose in this year. Therefore, assessee incurred this expenditure during this year. Under section 209(3)(b) of the Companies Act, 1956 [now section 128(1) of the Companies Act, 2013], all companies are required to follow the accrual basis of accounting However the profit on sale of the project Global Technology park was offered for tax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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